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:

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:

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 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.

			~~Page~~PAGE
PART I			1
	~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~	1
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1723
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2834
	ITEM 4.	4 CONTROLS AND PROCEDURES	2834
~~PART II~~			29
PART II	~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~	29
	~~ITEM 1A.~~	~~RISK FACTORS~~	29
ITEM 1 LEGAL PROCEEDINGS	35
ITEM 2.1A RISK FACTORS	35
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3035
	ITEM 3.	3 DEFAULTS UPON SENIOR SECURITIES	3035
	ITEM 4.	4 MINE SAFETY ~~DISCLOSURE~~DISCLOUSRES	3035
	ITEM 5.	5 OTHER INFORMATION	3035
ITEM 6 EXHIBITS	~~ITEM 6.~~36

~~EXHIBITS~~

302

~~PART I~~

~~ITEM 1.~~

~~FINANCIAL STATEMENTS~~

~~Professional Diversity Network, Inc.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

September 30, December 31,
2017 2016
(Unaudited)
Current Assets:
Cash and cash equivalents $ 2,821,729 $ 6,068,973
Accounts receivable, net 1,799,013 2,170,529
Incremental direct costs 241,235 423,023
Prepaid expenses and other current assets 490,581 957,140
Total current assets 5,352,558 9,619,665

Property and equipment, net 291,774 277,534
Capitalized technology, net 141,573 173,368
Goodwill 10,280,885 20,201,190
Intangible assets, net 7,035,139 9,183,439
Merchant reserve 780,849 1,426,927
Security deposits 239,059 220,754
Other assets - 35,000
Total assets $ 24,121,837 $ 41,137,877

Current Liabilities:
Accounts payable $ 1,232,510 $ 2,172,332
Accrued expenses 1,172,435 962,172
Deferred revenue 4,422,715 5,485,599
Total current liabilities 6,827,660 8,620,103

Deferred tax liability 2,492,837 3,653,274
Deferred rent 60,959 55,718
Other liabilities 78,481 33,159
Total liabilities 9,459,937 12,362,254

Commitments and contingencies

Stockholders' Equity
Common stock, $0.01 par value; 45,000,000 shares authorized; 3,936,399 shares and 3,623,899
shares issued as of September 30, 2017 and December 31, 2016, respectively; and 3,931,838 shares
and 3,619,338 shares outstanding as of September 30, 2017 and December 31, 2016, respectively
39,329 36,204
Additional paid in capital 79,783,969 76,234,772
Accumulated other comprehensive loss (1,435 ) -
Accumulated deficit (65,122,846 ) (47,458,236 )
Treasury stock, at cost; 1,048 shares at September 30, 2017 and December 31, 2016 (37,117 ) (37,117 )
Total stockholders' equity 14,661,900 28,775,623

Total liabilities and stockholders' equity $ 24,121,837 $ 41,137,877

Item 1. FINANCIAL STATEMENTS

Professional Diversity Network, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS (Unaudited)


	March 31, 2023			December 31, 2022
	(Unaudited)
Current Assets:
Cash and cash equivalents	$	964,306		$	1,236,771
Accounts receivable, net		1,133,124			1,318,217
Other receivables		252,156			350,000
Prepaid expense and other current assets		326,047			347,807
Current assets from discontinued operations		4,600			4,600
Total current assets		2,680,233			3,257,395

Property and equipment, net		34,786			35,341
Capitalized technology, net		83,694			64,499
Goodwill		1,417,753			1,274,785
Intangible assets, net		646,928			225,221
Right-of-use assets		349,053			365,324
Security deposits		66,340			66,340
Other assets		1,350,000			1,350,000
Long-term assets from discontinued operations		197,287			197,228
Total assets	$	6,826,074		$	6,836,133

Current Liabilities:
Accounts payable	$	451,782		$	338,600
Accrued expenses		1,019,464			1,071,842
Deferred revenue		2,191,244			1,925,788
Lease liability, current portion		80,814			103,555
Current liabilities from discontinued operations		482,391			503,090
Total current liabilities		4,225,695			3,942,875

Lease liability, non-current portion		344,746			341,165
Other long-term liabilities		-			100,000
Deferred tax liability		131,597			143,069
Total liabilities		4,702,038			4,527,109

Commitments and contingencies		-			-

Stockholders’ Equity
Common stock, $0.01 par value; 45,000,000 shares authorized, 10,270,054 and 10,898,376 shares issued as of March 31, 2023 and December 31, 2022, and 10,269,530 and 10,367,431 shares outstanding as of March 31, 2023 and December 31, 2022.		102,696			103,675
Additional paid in capital		101,807,710			101,728,600
Accumulated other comprehensive (loss) income		(8,417	)		(10,986	)
Accumulated deficit		(99,451,467	)		(98,382,540	)
Treasury stock, at cost; 524 and 530,945 shares at March 31, 2023 and December 31, 2022		(37,117	)		(892,482	)
Total Professional Diversity Network, Inc. stockholders’ equity		2,413,405			2,546,267
Noncontrolling interest		(289,369	)		(237,243	)
Total stockholders’ equity		2,124,036			2,309,024
Total liabilities and stockholders’ equity	$	6,826,074		$	6,836,133

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

~~Professional Diversity Network, Inc.~~

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

Three Months Ended September 30,
Nine Months Ended
September 30,

2017 2016 2017 2016

Revenues:
Membership fees and related services $ 2,204,909 $ 3,748,334 $ 7,465,202 $ 13,047,652
Lead generation 1,370,465 1,554,370 4,699,399 4,489,919
Recruitment services 694,454 954,887 1,977,101 2,295,556
Product sales and other 18,285 52,857 91,226 544,440
Education and training 68,890 - 898,584 -
Consumer advertising and marketing solutions 65,188 49,719 189,217 176,771
Total revenues 4,422,191 6,360,167 15,320,729 20,554,338

Costs and expenses:
Cost of revenues 658,297 745,159 2,193,224 2,433,550
Sales and marketing 2,275,585 3,064,454 8,114,908 10,314,145
General and administrative 3,236,848 3,010,862 11,322,513 8,928,493
Litigation settlement 155,216 - 155,216 500,000
Goodwill impairment charge - - 9,920,305 -
Depreciation and amortization 806,898 819,894 2,443,511 2,498,136
Total costs and expenses 7,132,844 7,640,369 34,149,677 24,674,324

Loss from operations (2,710,653 ) (1,280,202 ) (18,828,948 ) (4,119,986 )

Other (expense) income
Interest expense - (215,781 ) (12,399 ) (216,948 )
Interest and other income 4,117 150 9,218 801
Other finance income 5,318 - 7,082 -
Other (expense) income, net 9,435 (215,631 ) 3,901 (216,147 )

Change in fair value of warrant liability - (401,000 ) - (401,000 )

Loss before income tax benefit (2,701,218 ) (1,896,833 ) (18,825,047 ) (4,737,133 )
Income tax benefit (213,133 ) (623,699 ) (1,160,437 ) (1,218,092 )
Net loss (2,488,085 ) (1,273,134 ) (17,664,610 ) (3,519,041 )

Other comprehensive loss:
Foreign currency translation adjustment (3,056 ) - (1,435 ) -
Comprehensive loss $ (2,491,141 ) $ (1,273,134 ) $ (17,666,045 ) $ (3,519,041 )

Net loss per common share, basic and diluted $ (0.63 ) $ (0.70 ) $ (4.52 ) $ (1.94 )

Weighted average shares used in computing net
loss per common share:

Basic and diluted 3,932,886 1,809,676 3,912,282 1,809,676

Professional Diversity Network, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)


	Three Months Ended March 31,
	2023			2022
Revenues:
Membership fees and related services	$	128,923		$	196,009
Recruitment services		1,103,395			1,333,364
Contracted software development		698,266			477,092
Consumer advertising and marketing solutions		24,625			46,415
Total revenues		1,955,209			2,052,880

Costs and expenses:
Cost of revenues		1,074,481			861,672
Sales and marketing		821,503			718,629
General and administrative		1,053,231			1,107,520
Depreciation and amortization		132,774			281,272
Total costs and expenses		3,081,989			2,969,093

Loss from continuing operations		(1,126,780	)		(916,213	)

Other income (expense)
Interest and other income		6,584			901
Other income (expense), net		6,584			901

Loss before income tax benefit		(1,120,196	)		(915,312	)
Income tax benefit		(10,873	)		(25,788	)
Loss from continuing operations, net of tax		(1,109,323	)		(889,524	)
Loss from discontinued operations		(11,730	)		(18,292	)
Net loss including non-controlling interests	$	(1,121,053	)	$	(907,816	)
Net loss attributable to non-controlling interests		52,126			204,551
Net loss attributable to Professional Diversity Network, Inc.	$	(1,068,927	)	$	(703,265	)

Other comprehensive loss, net of tax:
Net loss attributable to Professional Diversity Network, Inc.	$	(1,068,927	)	$	(703,265	)
Foreign currency translation adjustments		2,569			900
Comprehensive loss, net of tax	$	(1,066,358	)	$	(702,365	)

Basic and diluted loss per share:
Continuing operations	$	(0.11	)	$	(0.11	)
Discontinued operations	$	(0.00	)	$	(0.00	)
Net loss per share	$	(0.11	)	$	(0.11	)

Weighted-average outstanding shares used in computing net loss per common share:
Basic and diluted		10,016,603			8,103,557

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

~~Professional Diversity Network, Inc.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

Nine Months Ended
September 30,

2017 2016
Cash flows from operating activities:
Net loss $ (17,664,610 ) $ (3,519,041 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 2,443,511 2,498,136
Deferred tax (1,160,437 ) (1,218,092 )
Gain on lease cancellation - (423,998 )
Goodwill impairment charge 9,920,305 -
Stock-based compensation expense 731,322 217,547
Provision for bad debt 155,077 -
Amortization of deferred financing costs - 156,594
Amortization of prepaid license fees - 112,500
Amortization of customer deposits - (112,500 )
Chang in fair value of warrant liability - 401,000
Changes in operating assets and liabilities:
Accounts receivable 219,391 671,056
Prepaid expenses and other current assets 467,339 181,903
Incremental direct costs 181,788 476,300
Accounts payable (940,051 ) 893,210
Accrued expenses 209,458 681,779
Deferred revenue
(1,067,652
) (3,560,351 )
Deferred rent 5,241 10,279
Other liabilities 45,322 45,098
Net cash used in operating activities (6,453,996 ) (2,488,580 )

Cash flows from investing activities:
Proceeds from maturities of short-term investments - 500,000
Costs incurred to develop technology (122,597 ) -
Purchases of property and equipment (154,295 ) -
Security deposit (17,603 ) 194,411
Net cash (used in) provided by investing activities (294,495 ) 694,411

Cash flows from financing activities:
Proceeds from the sale of common stock 3,000,000 -
Payment of offering costs (144,000 ) -
Proceeds from line of credit - 1,942,625
Payment of deferred issuance costs related to Master Credit Facility - (488,082 )
Payment of deferred offering costs related to CFL Transaction - (1,049,026 )
Merchant reserve 646,078 (166,078 )
Net cash provided by financing activities 3,502,078 239,439

Effect of exchange rate fluctuations on cash and cash equivalents (831 ) -
Net decrease in cash and cash equivalents (3,247,244 ) (1,554,730 )
Cash and cash equivalents, beginning of period 6,068,973 2,070,693
Cash and cash equivalents, end of period $ 2,821,729 $ 515,963

Supplemental disclosures of other cash flow information:
Cash paid for income taxes $ 1,702 $ 4,605
Cash paid for interest $ - $ 21,740
Issuance of warrants in connection with Master Credit Facility $ - $ 783,458
Reclassification of derivative liability to additional paid in capital $ - $ 781,000

Professional Diversity Network, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

	Shares			Amount			Capital			Deficit			Shares			Amount			Income (Loss)			Subsidiary			Equity
																			Accumulated			Non-
	Common Stock						Additional Paid in			Accumulated			Treasury Stock						Other Comprehensive			controlling Interest in			Total Stockholders’
	Shares			Amount			Capital			Deficit			Shares			Amount			Income (Loss)			Subsidiary			Equity

Balance at January 1, 2023		10,367,431		$	103,675		$	101,728,600		$	(98,382,540	)		530,945		$	(892,482	)	$	(10,986	)	$	(237,243	)	$	2,309,024
Acquisition of RemoteMore		-			-			-			-			-			-			-			-			-
Sale of common stock		333,181			3,332			696,668			-			-			-			-			-			700,000
Issuance of common stock		99,339			993			199,007			-			-			-			-			-			200,000
Share-based compensation		-			-			33,496			-			-			-			-			-			33,496
Stock Buyback Plan		(530,421	)		(5,304	)		(850,061	)		-			(530,421	)		855,365			-			-			-
Translation adjustments		-			-			-			-			-			-			2,569			-			2,569
Net loss		-			-			-			(1,068,927	)		-			-			-			(52,126	)		(1,121,053	)
Balance at March 31, 2023		10,269,530			102,696			101,807,710			(99,451,467	)		524			(37,117	)		(8,417	)		(289,369	)		2,124,036

															Accumulated		Non-
	Common Stock				Additional Paid in		Accumulated			Treasury Stock					Other Comprehensive		controlling Interest in			Total Stockholders’
	Shares		Amount		Capital		Deficit			Shares		Amount			Income (Loss)		Subsidiary			Equity

Balance at January 1, 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
Acquisition of RemoteMore		139,860		1,398		398,602		-			-		-			-					400,000
Share-based compensation		-		-		124,484					-		-			-					124,484
Stock buyback plan		-		-		-		-			70,994		(139,979	)		-					(139,979	)
Translation adjustments		-		-		-		-			-		-			900					900
Net loss		-		-		-		(703,265	)		-		-			-		(204,551	)		(907,816	)
Balance at March 31, 2022		8,173,487	$	81,735	$	99,043,595	$	(96,483,083	)		71,518	$	(177,096	)	$	7,465	$	112,878		$	2,585,494
Balance		8,173,487	$	81,735	$	99,043,595	$	(96,483,083	)		71,518	$	(177,096	)	$	7,465	$	112,878		$	2,585,494

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

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

~~1. Description of Business~~

Professional Diversity Network, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Loss from continuing operations	$	(1,109,323	)	$	(889,524	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities - continuing operations:
Depreciation and amortization		132,774			281,272
Deferred income taxes		(11,472	)		(25,787	)
Noncash lease expense		22,847			22,847
Stock-based compensation expense		33,496			124,484
Litigation settlement reserve		-			16,789
Allowance for credit losses		8,816			(66,208	)
Reduction of merchant reserve		-			190,000
Changes in operating assets and liabilities, net of effects of discontinued operations:
Accounts receivable		176,276			361,178
Prepaid expenses and other current assets		119,604			(370,572	)
Accounts payable		113,179			212,321
Accrued expenses		(52,374	)		(182,547	)
Lease liability		(25,736	)		(25,123	)
Deferred revenue		197,755			63,527
Net cash used in operating activities - continuing operations		(394,158	)		(287,343	)
Net cash used in operating activities - discontinued operations		(29,607	)		(1,240	)
Net cash used in operating activities		(423,765	)		(288,583	)

Cash flows from investing activities:
Costs incurred to develop technology		(29,801	)		-
Purchases of property and equipment		(1,920	)		(1,791	)
Acquisition of assets of Expo Experts		(400,000	)		-
Additional acquisition of equity interest in RemoteMore USA, Inc.		(116,667	)		-
Net cash used in investing activities - continuing operations		(548,388	)		(1,791	)
Net cash used in investing activities		(548,388	)		(1,791	)

Cash flows from financing activities:
Proceeds from the sale of common stock		700,000			-
Stock buyback plan		-			(139,979	)
Net cash provided by financing activities - continuing operations		700,000			(139,979	)
Net cash provided by (used in) financing activities		700,000			(139,979	)

Effect of exchange rate fluctuations on cash and cash equivalents		(312	)		1,242
Net decrease in cash and cash equivalents		(272,465	)		(429,111	)
Cash, cash equivalents, beginning of period		1,236,771			3,402,697
Cash and cash equivalents, end of period		964,306			2,973,586

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.

Professional Diversity Network, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Description of Business

The accompanying 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 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 consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 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 ~~“Company,” “we,” “our,” “us,”~~ “PDN Network,” ~~“PDN”~~ or the “Professional Diversity Network”) and a holding company ~~for:~~

~~NAPW, Inc., a Delaware corporation and wholly-owned subsidiary of the Company and the operator of the National Association of Professional Women (the “NAPW Network” or “NAPW”);~~

Noble Voice LLC and Compliant Lead LLC (collectively, “Noble Voice”), both Delaware limited liability companies, each of which is a wholly-owned subsidiary of the Company and together provide career consultation services;

AETSI, Inc. (“AETSI”), a Delaware corporation and wholly-owned subsidiary of the Company, which was created to facilitate the Company’s prospective U.S.-China education partnerships, expected to begin later in 2017;

PDN HK International Education Ltd. and PDN HK International Education Information Co. Ltd. (collectively, “PDN Hong Kong”), both Hong Kong limited companies and wholly-owned subsidiaries which were created during the first quarter of 2017 to support the Company’s China expansion; and

PDN (China) International Culture Development Ltd. Co. (“PDN China”), a China wholly-owned foreign enterprise company and wholly-owned subsidiary created during the first quarter of 2017 to operate the China Operations described below.

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 ~~Transgender (LGBT)~~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 January 2023, the Company purchased the assets and operations 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 ~~an exclusive women-only~~a networking organization for professional ~~networking organization,~~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. ~~Noble Voice monetizes its consumer transactions by using proprietary technology~~

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 ~~drive inexpensive online traffic to our offline call center and generating value-added leads for the Company’s strategic partners who provide continuing education and career services.~~

find meaningful jobs regardless of their location. As of March 31, 2023, PDN, Inc. owned 65.62% of RemoteMore USA, Inc. (“RemoteMore USA” or “RemoteMore”). The Company ~~began business~~consolidates RemoteMore USA’s operations ininto 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 ~~first quarter~~consolidated statements of ~~2017, similar to those in the United States, focusing on providing tools, products~~operations and services which will assist in personal and professional development. The Company intends to cooperate with existing companies and organizations in China to efficiently and promptly deliver valuable products and services to its registered users. The Chinese operations focus on the following areas:

Women’s Networking, which is the Chinese expansion of the NAPW segment, and is called “The International Association of Women” or “IAW,” the first marketing event for which was held near the end of the second quarter of 2017;

Secondary Education Services for Chinese Children, which will provide services to assist families in China identify, prepare for and attend secondary education schools in the United States and other countries, with U.S. operations managed by AETSI and China operations managed by PDN China; and

Education and Training for Accomplished Chinese Business People, through PDN China, which is providing education and training seminars in China, as reflected in the Company’s “China Operations / Education and Training” segment information below.

comprehensive loss as net loss from discontinued operations.

2. ~~Liquidity, Financial Condition~~Going Concern and Management’s Plans

At ~~September 30, 2017,~~March 31, 2023, the Company’s principal sources of liquidity were its cash and cash ~~equivalents and the net proceeds from the closings of the CFL Transaction (as defined in Note 7).~~

equivalents.

The Company had an accumulated deficit of ~~approximately $65,123,000~~$(99,451,467) at ~~September 30, 2017.~~March 31, 2023. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, the Company generated a loss from continuing operations, net ~~loss~~ of ~~approximately $17,665,000 (including a goodwill impairment charge~~tax, of ~~$9,920,000),~~$(1,109,323). During the three months ended March 31, 2023, the Company used cash in continuing operations of ~~approximately $6,454,000, which includes $1,450,000 paid to LinkedIn as a litigation settlement, and the Company expects that it will continue to generate operating losses for the foreseeable future.~~$394,158. At ~~September 30, 2017,~~March 31, 2023, the Company had a cash balance of ~~approximately $2,822,000.~~$964,306. Total revenues were approximately ~~$4,422,000~~$1,955,000 and ~~$6,360,000~~$2,053,000 for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and approximately $15,321,000 and $20,554,000 for the nine months ended September 30, 2017 and 2016, respectively.~~2022. The Company had a working capital deficit from continuing operations of approximately ~~($1,475,000)~~$1,068,000 and ~~$1,000,000~~$187,000 at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016, respectively.~~

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 consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

On November 7, 2016, the Company consummated the issuance and sale of 1,777,417 shares of the Company’s common stock to Cosmic Forward Limited, a Republic of Seychelles company wholly-owned by a group of Chinese investors (“CFL”), in a private placement, at a price of $9.60 per share (“Share Issuance”). In addition, on November 7, 2016, the Company completed the repurchase of 312,500 shares of its common stock at a price of $9.60 per share (“Tender Offer”). The Company received total gross proceeds of $17,063,000 from the Share Issuance, or $14,063,000 after giving effect to the payment for the 312,500 shares of common stock from the Tender Offer. The Company received approximately $9,000,000 in net proceeds from the Share Issuance, after repayment of all amounts outstanding under its Master Credit Facility and the payment of transaction-related expenses.

On January 18, 2017, the Company consummated the issuance and sale of 312,500 shares of the Company’s common stock to CFL at a price of $9.60 per share, for total gross proceeds of $3,000,000, or $2,821,000 after giving effect to the payment of transaction-related expenses.

Management believes that its available ~~funds~~ cash on hand and cash ~~generated~~flow from operations ~~will~~may be sufficient to meet ~~its~~our working capital requirements ~~at least~~for the fiscal period ending December 31, 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 ~~November 2018. However, there~~the issuance of common stock, or through a strategic merger or acquisition. There can be no assurances that ~~the~~our business plans and actions ~~proposed by management~~ will be successful, that ~~the Company~~we will generate anticipated revenues, or that unforeseen circumstances will not require additional funding sources in the future or ~~effectuate~~require an acceleration of plans to conserve liquidity. Future efforts to ~~raise additional funds~~improve liquidity through the issuance of our common stock may not be successful, or if available, they may not be available on acceptable ~~terms, if at all.~~

terms.

3. Summary of Significant Accounting Policies

Basis of Presentation– - The accompanying ~~unaudited interim condensed~~ consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the SEC on March 31, 2017 (the “Annual Report”), which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis, for the years ended December 31, 2016 and 2015. The financial information as of December 31, 2016 is derived from the audited financial statements presented in the Annual Report. The interim results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any future interim periods.

GAAP.

Use of Estimates– The preparation of ~~unaudited 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 ~~unaudited 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 ~~unaudited interim condensed consolidated~~ 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~~include: the fair value of acquired assets and liabilities associated with ~~acquisitions;~~acquisitions, the assessment of goodwill for impairment, ~~other~~ intangible assets and long-lived assets for ~~impairment;~~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.

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

Principles of Consolidation– - The accompanying ~~unaudited condensed~~ consolidated financial statements include the accounts of the Company, ~~and~~ its wholly-owned ~~subsidiaries.~~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.

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 March 31, 2023 and December 31, 2022, the allowance for doubtful accounts was approximately $111,000 and $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 March 31, 2023 and December 31, 2022, the balance in other receivables as reported on the consolidated balance sheets was deemed collectible.

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 three months ended March 31, 2023 and 2022 was approximately $2,000 and $2,000, respectively, and is recorded in depreciation and amortization expense in the accompanying 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 Company entered into a new office lease agreement for 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.

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 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.

~~Prior to January 1, 2017, when~~

When conducting its annual goodwill impairment assessment, the Company initially ~~performed~~performs a qualitative evaluation of whether it is more likely than not that goodwill ~~was~~is impaired. If it ~~was~~is determined by a qualitative evaluation that it ~~was~~is more likely than not that goodwill ~~was~~is impaired, the Company then ~~applied a two-step impairment test. The two-step impairment test first compared~~compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit ~~exceeded~~exceeds its carrying value, goodwill ~~was~~is not impaired and the Company ~~was~~is not required to perform further testing. If the carrying value of the reporting unit exceeded its fair value, the Company determined the implied fair value of the reporting unit's goodwill and if the carrying value of the reporting unit's goodwill exceeded its implied fair value, then an impairment loss equal to the difference was recorded in the consolidated statements of operations.

Effective January 1, 2017, the Company prospectively adopted the provisions of ASU 2017-04, ““Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates the second step of the goodwill impairment test. Therefore, for goodwill impairment tests occurring after January 1, 2017, 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 ~~result~~reduction of ~~the recurring operating losses incurred in NAPW since its acquisition in September 2014, the Company undertook a review of the carrying amount of its goodwill as of~~ ~~June~~ 30, 2017. The Company performed its review based on both qualitative and quantitative factors and determined that carrying value of NAPW’s goodwill exceeded its implied fair value. Accordingly, the Company recorded a goodwill impairment charge of $9,920,305stockholders’ equity in the accompanying ~~condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2017.~~

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.

~~Membership Fees~~ (See Note 5 – Revenue Recognition.)

Deferred revenue includes customer payments which are received prior to performing services and ~~Related Services~~

~~Membership~~revenues are recognized upon the completion of these services. Annual membership fees ~~are~~ collected ~~up-front and member benefits become available immediately; however those benefits must remain available over the 12 month membership period. At~~at the time of enrollment ~~membership fees are recorded as deferred revenue and~~ are recognized as revenue ratably over the ~~12 month~~membership period, which are typically for a 12-month membership period. ~~Members who are enrolled~~

Discontinued Operations

China Operations

The Company previously disclosed in ~~this plan may cancel their membership~~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 ~~program at any time and receive~~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 ~~partial refund (amount remaining~~judgment in ~~deferred revenue) or due to consumer protection legislation, a full refund based on the policies~~favor of the ~~member’s credit card company.~~

~~Revenue from related membership services are derived from fees for development~~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 ~~set-up of a member’s personal on-line profile and/or press release announcements. Fees related~~was reflected in its consolidated balance sheets subsequent to the occurrence.

The Company has asserted its claim to these ~~services are recognized~~funds as ~~revenue at~~ the ~~time~~genuine owner to the ~~on-line profile is complete~~Chinese officials and ~~press release is distributed.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

~~Lead Generation~~

Professional Diversity Network provides career opportunities to our registered users. As part of our employment services we interact with over 27,500 job seekers via telephone on a weekly basis. Our Career Advisors suggest job opportunitiesasked for ~~our registered users based on~~ their location and profile. In certain circumstances our Career Advisers offer career support services to our registered users, including resume writing, education opportunities and economic consultations. In certain circumstances we receive compensation from various business partners resulting from our job seeker referrals.return. The Company ~~derives lead generation revenues pursuant~~plans to ~~arrangements with its business partners. Under~~pursue all possible legal alternatives to have these ~~arrangements,~~funds returned to the Company matches its business partners with potential candidates, pursuant to specific parameters defined in each arrangement. The Company invoices on a monthly basis based upon the number of leads provided. Revenues related to lead generation are recognized in the month when the leads are sent to its business partners.

~~The Company's business partners include educational institutions~~but such as Keypath Education, QuinStreet and Education Dynamics in Noble Voice's traditional, core business, as well as a broad array of corporations such as Avon Products, American Airlines, and Uber, among others.

~~Recruitment Services~~

~~The Company’s recruitment services revenue~~return is ~~derived from~~uncertain at this time.

All historical operating results for 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 month that the event takes place and e-commerce sales are for one month job postings and the revenue from those sales are recognized in the month the sale is made. Our 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 National Association for the Advancement of Colored People and the National Urban League

~~• OFCCP job promotion and recordation services~~

~~• Diversity job fairs, both in person and virtual fairs~~

~~• Diversity recruitment job advertising services~~

• Cost per application, a service that employers can purchase whereby PDN sources qualified candidates and charges only for those applicants who meet the employers’ minimum qualifications

~~• Diversity executive staffing services~~

~~The Company's customers in recruitment services include Starbucks, PNC Bank, and US Dept. of Treasury, among others.~~

~~Product Sales and Other Revenue~~

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 costsChina operations are included in ~~cost~~a loss from discontinued operations, net of ~~sales~~tax, in the accompanying ~~consolidated~~ statements of operations. For the three months ended March 31, 2023, loss from discontinued operations was approximately $12,000 as compared to a loss from discontinued operations of approximately $18,000 for the three months ended March 31, 2022.

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 as of each of March 31, 2023 and December 31, 2022, and long-term assets from discontinued operations were $197,000 at each of March 31, 2023, and December 31, 2022. As of March 31, 2023, current liabilities from discontinued operations were $482,000, compared to $503,000 as of December 31, 2022.

~~Education and Training~~

Operating Results of Discontinued Operations

The ~~Company works with its business partners to provide education and training seminars to business people in China. Revenues~~following table represents the components of operating results from discontinued operations, which are ~~recognized~~included in the ~~month when~~statements of operations and comprehensive loss for the ~~seminar takes place.~~

~~Consumer Advertising~~three months ended March 31, 2023 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. Partner revenue is recognized as jobs are posted to their hosted sites.

~~The Company's partner organizations include NAACP and National Urban League,VetJobs, among others.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

2022, net of intercompany eliminations:

Schedule of Operating Results of Discontinued Operations


	Three Months Ended March 31,
	2023			2022

Revenues	$	-		$	-

General and administrative	$	11,730		$	18,181
Non-operating expense		-			111
Loss from discontinued operations before income tax		(11,730	)		(18,292	)
Income tax expense (benefit)		-			-
Net loss from discontinued operations	$	(11,730	)	$	(18,292	)

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 months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, the Company incurred advertising and marketing expenses of approximately ~~$658,000~~$281,000 and ~~$657,000, respectively. For the nine months ended September 30, 2017 and 2016, the Company incurred advertising and marketing expenses of approximately $2,246,000 and $1,842,000, respectively.~~$255,000. These amounts are included in sales and marketing expenses in the accompanying ~~condensed consolidated~~ statements of ~~comprehensive loss.~~operations. At ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, there were no prepaid advertising expenses, recorded in the accompanying ~~condensed consolidated~~ 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.

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 $131,597 of deferred tax liabilities as of March 31, 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, 2019 through 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 March 31, 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 ~~per share~~ 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~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive.

As of September 30,
2017 2016
Warrants to purchase common stock 170,314 514,064
Stock options 284,897 72,886
Restricted stock units 15,544 -
Unvested restricted stock 2,778 5,556
Total dilutive securities 473,533 592,506

~~Recently Issued~~

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share


	As of March 31,
	2023		2022

Stock options		33,063		33,063
Unvested restricted stock		34,557		79,762
Total dilutive securities		67,620		112,825

Reclassifications - Certain prior year amounts in the Consolidated Statements of Operations and Comprehensive Loss have been reclassified to conform with the current year presentation.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,”Revenue from Contracts with Customers,” which was subsequently modified in August 2015 by ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date.” As a result, the ASU No. 2014-09 is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2017. The core principle of ASU No. 2014-09 is that companies should recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects what the company expects to receive. It requires additional disclosures to describe the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. InJune 2016, the FASB issued ~~additional ASUs that clarify~~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 ~~implementation guidance~~expected credit losses on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteriafinancial instruments and other ~~technical corrections (ASU 2016-20). The Company will adopt the standard on January 1, 2018, using the full retrospective transition method, which may result in~~commitments to extend credit held by a cumulative-effect adjustment for deferred revenue to the opening balance sheet for 2018 and the restatement of the financial statements for all prior periods presented. The Company continues to evaluate the impact of adoption ofreporting entity at each reporting date. To achieve this ~~standard on its consolidated financial statements and disclosures.~~

In February 2016, the FASB issued new lease accounting guidance ASU No. 2016-02, “Leases” (“ASU 2016-02”). Under the new guidance, at the commencement date, lessees will be required to recognize a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is not applicable for leases with a term of 12 months or less. Lessor accounting is largely unchanged. Public business entities should applyobjective, the amendments in ~~ASU 2016-02~~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 ~~December 15, 2018,~~January 2023, including interim periods within those fiscal years. ~~Early application~~The Company has adopted this new guidance on its financial position, results of operations, statement of comprehensive income, and cash flows in the first quarter of fiscal 2023.

4. Business Combinations

RemoteMore

On September 20, 2021, the Company acquired a 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 were met.

In February 2022, in connection with the September 2021 acquisition of the 45.62% interest in RemoteMore, and as a component of the aforementioned $500,000 still to be paid, the 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. As of March 31, 2023, the Company owned a 65.62% interest in RemoteMore.

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 increases the Company’s interest in RemoteMore to 72.62%.

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 of the fair value of assets acquired. No liabilities were 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	$	126,301
Intangible assets		541,400
Deferred revenue		(67,701	)
Business combination total	$	600,000

The goodwill recognized in connection with the acquisition is ~~permitted upon issuance. Lessees (for capital~~primarily attributable to anticipated synergies from future growth and ~~operating leases)~~is expected to be deductible for tax purposes.

Intangible assets purchased in connection with the acquisition primarily represent specific events acquired which are expected to create revenue throughout fiscal 2023 and ~~lessors (for sales-type,~~are reflected in the Company’s consolidated balance sheets at gross amounts, net of accumulated amortization (see Note 7 – Intangible Assets).

Expo Experts’ accounts and operations have been reflected in the PDN Network for segment reporting purposes (see 14. Segment Information).

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.

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 ~~financing,~~sales to customers for recruitment services and ~~operating leases) must apply~~events, as well as revenue from the Company’s direct e-commerce sales. Direct sales to customers are most typically a ~~modified retrospective transition approach~~twelve-month contract for ~~leases existing~~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.

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 ~~entered into after,~~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.

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 three months ended March 31, 2023 and 2022, the Company recorded approximately 10% and 11% 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 March 31, 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 $2,191,000 are included in current deferred revenues, on the consolidated balance sheets as of March 31, 2023. For the three months ended March 31, 2023, we recognized revenue associated with contract liabilities of approximately $1,153,000 that were included in the contract liabilities balance at the beginning of the ~~earliest comparative~~period.

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, ~~presented in~~which are typically for a 12-month membership period.

Transaction price allocated to the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. 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 ~~currently evaluating~~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 ~~impact~~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

Credit loss activity consists of the ~~new guidance on its consolidated financial statements.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 was issued as part of the FASB’s simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. Early adoption is permitted. The Company adopted the methodologies prescribed by ASU 2014-15 as of January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on the Company’s financial position or results of operations.

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting “(“ASU 2017-09”). ASU 2017-09 provides clarity and reduces both (i) diversity in practice and (ii) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for all annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. ~~The adoption of ASU 2017-09 is not expected to have an impact on the Company’s financial position or results of operations.~~

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 eliminates the requirement to consider “down round” features when determining whether certain equity-linked financial instruments or embedded features are indexed to an entity’s own stock. It is effective for annual periods beginning after December 31, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

~~4. Capitalized Technology~~

~~Capitalized technology, net is as follows:~~

September 30,
2017

December 31,
2016

Capitalized cost:
Balance, beginning of period $ 1,888,791 $ 1,888,791
Additional capitalized cost 122,597 -
Balance, end of period $ 2,011,388 $ 1,888,791

Accumulated amortization:
Balance, beginning of period $ 1,715,423 $ 1,432,268
Provision for amortization 154,392 283,155
Balance, end of period $ 1,869,815 $ 1,715,423
Capitalized Technology, net $ 141,573 $ 173,368

~~Amortization expense of approximately $41,000 and $62,000~~following for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively,~~2022, respectively:

Schedule of Allowance for Credit Loss Activity

	2023		2022

Balance, beginning of period	$	102,515	$	247,190
Credit loss expense		8,816		(66,208	)
Balance, end of period	$	111,331	$	180,982

There were no write-offs or recoveries during the three months ended March 31, 2023 and ~~approximately $154,000~~2022, respectively.

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 ~~$216,000~~utilizing historical loss percentages adjusted for the ~~nine~~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


	March 31, 2023			December 31, 2022
Capitalized cost:
Balance, beginning of period	$	64,499		$	43,038
Additional capitalized cost		29,800			45,196
Provision for amortization		(10,605	)		(23,735	)
Balance, end of period	$	83,694		$	64,499

For the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, amortization expense was approximately $10,600 and $4,400, respectively, and is recorded in depreciation and amortization expense in the accompanying ~~condensed consolidated~~ statements of ~~operations and comprehensive loss.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

5. operations.

7. Intangible Assets

Intangible assets, net iswas as follows:

September 30, 2017
Useful Lives
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Long-lived intangible assets:
Sales Process 10 $ 3,970,000 $ (1,196,514 ) $ 2,773,486
Paid Member Relationships 5 890,000 (536,472 ) 353,528
Member Lists 5 8,957,000 (5,399,081 ) 3,557,919
Developed Technology 3 978,000 (959,666 ) 18,334
Trade Name/Trademarks 4 480,000 (359,861 ) 120,139
Customer Relationships 5 280,000 (158,667 ) 121,333
$ 15,555,000 $ (8,610,261 ) 6,944,739
Indefinite-lived intangible assets:
Trade Name 90,400

Intangible assets, net $ 7,035,139

December 31, 2016
Useful Lives
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Long-lived intangible assets:
Sales Process 10 $ 3,970,000 $ (898,764 ) $ 3,071,236
Paid Member Relationships 5 890,000 (402,972 ) 487,028
Member Lists 5 8,957,000 (4,055,531 ) 4,901,469
Developed Technology 3 978,000 (718,166 ) 259,834
Trade Name/Trademarks 4 480,000 (269,861 ) 210,139
Customer Relationships 5 280,000 (116,667 ) 163,333
$ 15,555,000 $ (6,461,961 ) 9,093,039
Indefinite-lived intangible assets:
Trade Name 90,400

Intangible assets, net $ 9,183,439

~~Future annual~~

Schedule of Intangible Assets

	Useful Lives		Gross Carrying		Accumulated			Net Carrying
March 31, 2023	(Years)		Amount		Amortization			Amount
Long-lived intangible assets:
Sales Process		10	$	2,130,956	$	(2,016,645	)	$	114,311
Paid Member Relationships		5		803,472		(803,472	)		-
Member Lists		5		8,186,181		(8,094,514	)		91,667
Developed Technology		3		648,000		(648,000	)		-
Trade Name/Trademarks		4		442,500		(441,250	)		1,250
Contracts and events acquired in acquisitions		3 - 12 months		1,377,083		(1,027,783	)		349,300
				13,588,192		(13,031,664	)		556,528
Indefinite-lived intangible assets:
Trade name									90,400
Intangible assets, net								$	646,928

	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 March 31, 2023, estimated amortization expense in future fiscal years is summarized as follows:

Years ending December 31,
2017 (three months) $ 653,933
2018 2,563,872
2019 1,846,697
2020 397,000
2021 397,000
2022 397,000
Thereafter 689,237
$ 6,944,739

Schedule of Future Annual Estimated Amortization ~~expense of $714,000 and $717,000 for~~Expense


Year ended December 31,
Remaining of 2023	$	432,081
2024		91,114
2025		33,333
Net Carrying Amount	$	556,528

For the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, amortization expense was approximately $120,000 and $275,000, respectively, and ~~$2,148,000 and $2,151,000 for the nine months ended September 30, 2017 and 2016, respectively,~~ is recorded in depreciation and amortization expense in the accompanying ~~condensed~~ consolidated statements of ~~operations and comprehensive loss.~~

operations.

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

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 shares of its common stock to Seller in a private placement (the “Consideration Shares”). The Consideration Shares were valued at $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 recorded in the consolidated balance sheet as long-term investments.

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 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.

~~Rent expense, amounting to approximately $268,000~~

As of March 31, 2023, right of use assets and ~~$258,000 for~~related lease obligations were $349,053 and $425,560, as recorded on the three months ended September 30, 2017 and 2016, respectively, and approximately $811,000 and $808,000 for the nine months ended September 30, 2017 and 2016, respectively, is included in general and administrative expense in the condensedCompany’s consolidated ~~statements of operations and comprehensive loss. Included in rent expense is sublease income~~balance sheets.

Other - PDN China’s bank account with a balance of approximately ~~$96,000 and $90,000 for~~$195,000, at March 31, 2023, was frozen by Guangzhou Police due to the ~~three months ended September 30, 2017 and 2016, respectively, and approximately $288,000 and $279,000 for the nine months ended September 30, 2017 and 2016, respectively.~~

~~Legal Proceedings~~

Gatewang Case. The Company has previously disclosed that it and its wholly-owned subsidiary, NAPW, Inc., are parties to litigation captioned Gauri Ramnath, et al. v. Professional Diversity Network, Inc., et al., No. BC604153 (Los Angeles Superior Ct.),classified this entire cash balance as a ~~putative class action filed~~long-term asset presented in ~~January 2016 alleging violations~~discontinued operations (see Note 3 - Summary of various California Labor Code (wage & hour) sections. During the first quarter of 2016, the Company executed a settlement agreement, subject to later Court approval, in which the Company agreed in principle to pay $500,000 for a global settlement of the class action. During the first quarter of 2016, the Company also recorded a litigation settlement expense in the amount of $500,000. On November 28, 2016, the Court approved the proposed settlement. In December of 2016 the Company paid the settlement amount in the Court’s fund and the third-party administrator began distributing payments to class members. On August 2, 2017, the Court notified the parties that the case is “reported as complete without the need for a further status conference.” This matter is therefore concluded and will not be further reported.

Significant Accounting Policies – Discontinued Operations).

Legal Proceedings

The Company and its ~~wholly-owned~~wholly owned subsidiary, NAPW, Inc., are parties to a proceeding captioned ~~In re~~Deborah Bayne, et al. vs. NAPW, Inc. and Professional Diversity Network, ~~Cases 31-CA-159810 and 31-CA-162904,~~Inc., No. 18-cv-3591 (E.D.N.Y.), filed ~~with the National Labor Relations Board (“NLRB”) in~~on June ~~2015~~20, 2018, and alleging violations of the ~~National~~Fair Labor ~~Relations~~Standards Act ~~(“NLRA”) against the Company~~ and ~~its wholly-owned subsidiary, NAPW, Inc., where employee was allegedly terminated for asserting rights under Section 7~~certain provisions of the ~~NLRA. While 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 ~~rights were impacted,~~liability and intends to vigorously defend against these claims. The matter is in the ~~NLRB has issued its order requiring~~final stages of discovery, and we have completed depositions of relevant witnesses. During the first quarter of 2020, the Company ~~to take certain remedial actions~~recorded a $450,000 litigation settlement reserve in the ~~form~~event of ~~posting notices and revising certain policies, as well as to pay the claimant certain back pay and offer reinstatement. The Company has complied with the order~~an unfavorable outcome in all respects except back pay and reinstatement. The Company disputes the amount of back pay owed to the claimant and disputes that reinstatement is appropriate under the circumstances and an evidentiary hearing on the issue of back pay is currently scheduled for January of 2018. ~~The amount of back pay and other potential liabilities ordered by NLRB is $146,000.~~

~~The Company is~~this proceeding. In November 2020, both parties entered into mediation proceedings, but a party to a proceeding captioned Paul Sutcliffe v. Professional Diversity Network, Inc., No. 533-2016-00033 (EEOC), filed with the Equal Employment Opportunity Commission (“EEOC”) in April 2016 and alleging violations of Title VII and the Age Discrimination in Employment Act, where employeesettlement was ~~allegedly terminated due to his race (Caucasian) and his age (over 40). The EEOC has~~ not ~~yet notified the Company that it has issued a right-to-sue letter, and the complainant has not yet filed a lawsuit.~~

The Company is a party to a proceeding captioned Wei Aniton v. Professional Diversity Network, Inc., No. 440-2017-04717 (EEOC), filed with the Equal Employment Opportunity Commission (“EEOC”) on July 6, 2017 and alleging violations of Title VII and the Equal Pay Act of 1963, where employee alleges she was discriminated by the Company due to her race and her sex and was paid less than similarly situated white males. On September 20, 2017, the EEOC issued its Notice of Dismissal and Notice of Rights, effectively terminating this matter before the EEOC.

In a letter dated October 12, 2017, White Winston Select Asset Funds (“White Winston”) threatened assertion of a claim against the Company. The letter alleges that White Winston suffered $2,241,958 in damages as a result of the Company’s alleged conduct that caused a delay in White Winston’s ability to sell shares in the Company during a period when the Company’s stock price was generally falling. The Company denies liability for any such claim.

reached.

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.

10. CFL Transaction

On ~~January 13, 2017,~~August 12, 2016, the Company entered into a stock purchase agreement (the “Purchase Agreement”), with ~~Cosmic Forward Ltd. (“CFL”), pursuant~~CFL, a Republic of Seychelles company wholly-owned by a group of Chinese investors. Pursuant to ~~which,~~the Purchase Agreement, the Company agreed to issue and sell to CFL, ~~(the “Second Share Issuance”),~~ and CFL agreed to purchase, ~~at a price of $9.60 per share (the “Per Share Price”),~~ upon the terms and subject to the conditions set forth in the Purchase Agreement, ~~312,500~~a number of shares of the Company’s common ~~stock.~~stock, par value $0.01 per share (the “Common Stock”), such that CFL would hold shares of Common Stock equal to approximately 51% of the outstanding shares of Common Stock, determined on a fully-diluted basis, after giving effect to the consummation of the transactions contemplated by the Purchase Agreement.

At the closing of the CFL 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 March 31, 2023, CFL beneficially holds shares of the Company’s outstanding Common Stock equal to approximately 25.0%. 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, par value $0.01 per share (the “Common Stock”), between the range of 1.5 to 1 and 5 to 1 at the direction of the management (the “Split Ratio”), depending upon which exact ratio is deemed necessary and desirable to achieve a minimum ‎share price of at least $1.00 per share in the market trading price of the Common Stock. On January ~~18, 2017,~~3, 2023, the board of directors of the Company ~~consummated~~(the “Board”) adopted resolutions by unanimous written consent, pursuant to which the ~~Second Share Issuance.~~Board determined that it is advisable and in ‎the best interests of the Company to fix the Split Ratio at 2 to 1. As a result of the ~~completion of the Second Share Issuance, as of January 18, 2017, CFL beneficially owned 54.64% of the Company’s outstanding~~effected Reverse Stock Split, all shares of common stock ~~on a fully diluted basis.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

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 ~~received total gross proceeds~~has no preferred stock issued. The Company’s amended and restated certificate of ~~$3,000,000 from~~incorporation and amended and restated bylaws include provisions that allow the ~~Second Share Issuance, or approximately $2,821,000 in net proceeds after payment~~Company’s Board of ~~transaction-related expenses.~~Directors to issue, without further action by the stockholders, up to 1,000,000 shares of undesignated preferred stock.

Common Stock – The Company ~~retained Aegis Capital Corp. (“Aegis”) as~~has one class of common stock outstanding with a total number of shares authorized of 45,000,000. As of March 31, 2023, the ~~exclusive placement agent~~Company had 10,269,530 shares of common stock outstanding.

In January 2023, in connection with the ~~transaction. Aegis received~~acquisition of Expo Experts, the Company issued 99,339 shares of its common stock, with a ~~cash placement fee~~value of ~~$144,000~~$200,000, to the co-founders of Expo Experts (see Note 4 – Business Combinations).

In 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 ~~transaction. The Company accounted for the fee paid to Aegis as a cost~~purchase by Ms. Gu of ~~the transaction resulting in a charge directly to stockholders’ equity.~~

At the closing of the Second Share Issuance, and as contemplated by the Purchase Agreement, the Company entered into an amendment, dated as of January 18, 2017 (the “Amendment”), to the Stockholders’ Agreement with CFL and the CFL shareholders. The Amendment increased the cap on the amount of common stock that CFL, the CFL shareholders and their respective affiliates (collectively, the “CFL Group”) may, directly or indirectly acquire, agree to acquire or publicly propose or offer to acquire from the Company, or pursuant to a tender or exchange offer for any333,181 shares of common stock ~~from 51%~~ of the ~~then~~Company at a price of approximately $2.10 per share for aggregate gross proceeds of $700,000.

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 is 750,000 shares.

On April 11, 2023, the Board of Directors adopted a new equity incentive plan, the Professional Diversity Network, Inc. 2023 Equity Compensation Plan (the “2023 Equity Compensation Plan”), subject to the approval of the Company’s stockholders. The 2023 Equity Compensation Plan is intended to supersede and replace 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 ~~on a fully-diluted basis,~~for issuance of awards to ~~54.64%~~directors, officers, employees and qualifying consultants of the ~~then outstanding shares~~Company and its affiliates.

Stock Options

The fair value of ~~common~~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 onprice as well as assumptions regarding a ~~fully-diluted basis. The Amendment also clarifies that~~number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the ~~312,500 shares of common stock purchased by CFL in the Second Share Issuance are subject to all~~term of the ~~restrictions contained in~~awards, and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the ~~Stockholders’ Agreement, as amended. All other terms and conditions~~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 ~~Stockholders’ Agreement remain in full force~~life of options using the simplified method, and ~~effect and were ratified and affirmed by~~forfeitures are estimated on the ~~parties in~~date of grant based on certain historical data. The Company utilizes the ~~Amendment.~~

~~8. Employment Agreements~~

~~Katherine Butkevich, formerly Chief Executive Officer~~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 ~~wholly-owned subsidiary, NAPW, Inc., was party~~history and expectation of dividend payouts.

Forfeitures are required to ~~an employment contract with~~be estimated at the ~~Company dated September 30, 2016. As the Company previously reported~~time of grant and revised, if necessary, in its August 30, 2017 Form 8-K, Ms. Butkevich notified the Company that she was resigning her employment effective September 18, 2017, thereby terminating the employment contract as of the resignation date.

~~Chris Wesser, formerly~~subsequent periods if actual forfeitures differ from those estimates.

The following table summarizes the Company’s Executive Vice President, General Counsel and Corporate Secretary, was party to an employment contract with the Company dated September 24, 2014. Mr. Wesser’s employment contract expired on September 24, 2017. As the Company previously published via press release and reported in its September 29, 2017 Form 8-K, on September 26, 2017 Mr. Wesser and the Company entered into an Employment Separation and Consulting Agreement having a one-year term, under which Mr. Wesser will provide the Company with consulting services on an independent contractor basis.

~~9. Income Taxes~~

~~The effective income tax rate~~stock option activity for the three months ended ~~September 30, 2017~~Mach 31, 2023 and ~~2016~~2022:

Schedule of Stock Option Activity

					Weighted
					Average
			Weighted		Remaining
			Average		Contractual		Aggregate
	Number of		Exercise		Life		Intrinsic
	Options		Price		(in Years)		Value
Outstanding - January 1, 2023		33,063	$	9.04		6.8	$	-
Granted		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Outstanding - March 31 2023		33,063	$	9.04		6.5	$	-

Exercisable at March 31, 2023		23,063	$	11.14		5.7	$	-

					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 - March 31 2022		33,063	$	9.04		7.5	$	-

Exercisable at March 31, 2022		18,063	$	13.06		6.1	$	-

Total unrecognized stock-based compensation expense related to unvested stock options at March 31, 2023 was ~~7.9%~~approximately $13,000 and ~~32.9%, respectively, resulting in~~is expected to be recognized through the second quarter of 2024.

Restricted Stock Units

As of March 31, 2023 and 2022, the following is a ~~$213,000~~summary of restricted stock unit activity:

Schedule of Restricted Stock Unit Activity

	Number of
	Shares
Outstanding - January 1, 2023		69,114
Granted		-
Forfeited		-
Vested		-
Outstanding – March 31, 2023		69,114

	Number of
	Shares
Outstanding - January 1, 2022		79,763
Granted		-
Forfeited		-
Vested		-
Outstanding – March 31, 2022		79,763

During the period ended March 31, 2023, the Company granted no restricted stock units.

The Company recorded non-cash stock-based compensation expense of approximately $33,000 and ~~$624,000 income tax benefit, respectively. The effective income tax rate for the nine months ended September 30, 2017~~$124,000 as a component of general and ~~2016 was 6.2% and 25.7%, respectively, resulting in a $1,160,000 and $1,218,000 income tax benefit, respectively. The difference~~administrative expenses in the ~~effective income tax rate~~accompanying consolidated statements of operations for the three months ended ~~September 30, 2017, compared~~March 31, 2023 and 2022, respectively, pertaining to granting of restricted stock awards.

Total unrecognized stock-based compensation expense related to unvested restricted stock at March 31, 2023 was approximately $22,000 and is expected to be recognized in the second quarter of 2023.

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 30, 2016, is mainly attributable to~~March 31, 2023 and 2022, the ~~change in the valuation allowance. The difference in the effective~~Company recorded income tax ~~rate for~~benefit of $10,873 and $25,788, respectively. The decrease in income tax benefit during the ~~nine months ended September 30, 2017,~~current three-month period, as compared to the ~~nine months ended September 30, 2016, is mainly attributable to the impairment charge recognized on NAPW’s goodwill and the change~~same periods in the ~~valuation allowance.~~ prior year, was primarily due to a decrease in discrete tax items and changes in the Company’s net operating losses.

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 ~~the~~ 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 30, 2017 and December~~March 31, ~~2016.~~

2023. The ~~Company has not provided deferred income taxes on~~valuation allowance at March 31, 2023 was approximately $10,230,315. The net change in the undistributed earnings of its foreign subsidiaries. The amount of such earnings was insignificant. These earnings have been permanently reinvested and the Company does not plan to initiate action that would precipitate the payment of income taxes thereon. It is not practicable to estimate the amount of additional tax that might be payable on the undistributed earnings of its foreign subsidiaries.

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

~~10. 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. The Company amended the 2013 Plan to increase the number of authorized shares of common stock under the Plan by 390,000 shares, which the Company’s stockholders approved on June 26, 2017. The Company is now authorized to issue 615,000 shares under the amended 2013 Plan.

~~Stock Options~~

~~The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2017:~~

Number of
Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life
(in Years)

Aggregate
Intrinsic
Value

Outstanding - December 31, 2016 69,950 $ 12.07 9.0 $ 156,975
Granted 240,000 10.72
Exercised - -
Forfeited/Canceled/Expired (25,053 ) (13.93 )
Outstanding – September 30, 2017 284,897 $ 10.77 9.3 $ -

Exercisable – September 30, 2017 124,897 $ 10.83 9.2 $ -

The Company granted 210,000 and 30,000 stock options to Messrs. Wang and Xiao, respectively, in connection with their employment agreements. These options had an aggregate fair value of $1,060,800, using the Black-Scholes option-pricing model with the following assumptions:

~~Risk-free interest rate~~		~~2.13~~	%
~~Expected dividend yield~~		~~0.00~~	%
~~Expected volatility~~		~~41.78~~	%
~~Expected term~~	~~5.5 years~~

The options are exercisable at an exercise price of $10.72 per share over a ten-year term and vest over two years, with one-third vested upon grant. The Company recorded $88,000 and $560,000 as compensation expensevaluation allowance during ~~the three and nine months ended September 30, 2017, respectively, pertaining to these grants.~~

~~Total non-cash compensation expense for grants recorded by the Company amounted to approximately $88,000 and $90,000 for~~ the three months ended ~~September 30, 2017 and 2016, respectively, and $618,000 and $135,000 for the nine months ended September 30, 2017 and 2016, respectively, as a component~~March 31, 2023 was an increase of ~~general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss pertaining to stock options.~~

~~Total unrecognized compensation expense related to unvested stock options at September 30, 2017 amounts to~~ approximately ~~$501,000 and is expected to be recognized over a remaining weighted average period of 1.4 years.~~

~~Warrants~~

As of September 30, 2017, there were 170,314 warrants outstanding and exercisable, with a weighted average exercise price of $32.44 per share. The weighted average remaining contractual life of the warrants at September 30, 2017 and December 31, 2016 was 3.6 and 4.3 years, respectively, and the aggregate intrinsic value was 0.

$252,000.

14. Segment Information

The Company ~~did not grant any warrants to purchase shares of common stock during the nine months ended September 30, 2017.~~

~~No compensation cost was recognized for the three and nine months ended September 30, 2017 and 2016 pertaining to warrants.~~

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

~~Restricted Stock and Restricted Stock Units~~

On June 26, 2017, the Company granted 15,544 restricted stock units (“RSUs”) to certain Board members. The RSUs vest 100% on June 28, 2018, subject to continued service on the vesting date. The RSUs have no voting or dividend rights. The fair value of the common stock on the date of grant was $7.72 per share, based upon the closing market price on the grant date. The aggregate grant date fair value of the combined awards amounted to $120,000.

~~A summary of the restricted stock award activity for the nine months ended September 30, 2017 is as follows:~~

	~~Number of~~ ~~Shares~~

~~Unvested Outstanding at December 31, 2016~~		~~2,778~~
~~Granted~~		~~15,544~~
~~Forfeited~~		-
~~Vested~~		-
~~Unvested Outstanding at September 30, 2017~~		~~18,322~~

The Company recorded non-cash compensation expense of approximately $58,000 and $28,000 for the three months ended September 30, 2017 and 2016, respectively, and approximately $113,000 and $83,000 for the nine months ended September 30, 2017 and 2016, respectively.

Total unrecognized compensation expense related to unvested restricted stock and unvested restricted stock units at September 30, 2017 amounts to approximately $108,000 and is expected to be recognized over a weighted average period of 0.6 year.

~~11. Segment Information~~

~~Beginning in January 2017, the Company~~ operates in the following segments: (A) United States: (i) PDN Network, (ii) NAPW Network and (iii) Noble Voice operations, and (B) China Operations. The segments are categorized based on their business activities and organization. Prior to January 2017, the Company operated solely in the United States in the following segments: (i) PDN Network, (ii) NAPW Network, and (iii) ~~Noble Voice operations.~~ 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 March 31, 2023 and December 31, 2022 and results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016:~~

2022:

Schedule of Segment Information


	Three Months Ended March 31, 2023
	PDN			NAPW						Corporate
	Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services	$	-		$	128,923		$	-		$	-		$	128,923
Recruitment services		1,103,395			-			-			-			1,103,395
Contracted software development		-			-			698,266			-			698,266
Consumer advertising and marketing solutions		24,625			-			-			-			24,625
Total revenues		1128,020			128,923			698,266			-			1,955,209
Income (loss) from continuing operations		(354,632	)		(247,066	)		(104,884	)		(420,198	)		(1,126,780	)
Depreciation and amortization		112,760			19,667			347			-			132,774
Income tax expense (benefit)		(3,080	)		(3,571	)		850			(5,072	)		(10,873	)
Net loss from continuing operations, net of tax		(348,726	)		(243,442	)		(102,029	)		(415,126	)		(1,109,323	)


	As of March 31, 2023
Goodwill	$	465,752	$	-	$	952,001		$	-	$	1,417,753
Intangibles assets, net		531,367		114,311		1,250			-		646,928
Assets from continuing operations		6,787,713		209,964		(373,490	)		-		6,624,187

Three Months Ended September 30, 2017
United States

PDN
Network

NAPW
Network
Noble Voice
China
Operations
Consolidated

Membership fees and related services $ - $ 2,204,909 $ - $ - $ 2,204,909
Lead generation - - 1,370,465 - 1,370,465
Recruitment services 694,454 - - - 694,454
Products sales and other - 18,285 - - 18,285
Education and training - - - 68,890 68,890
Consumer advertising and marketing solutions 65,188 - - - 65,188
Total revenues 759,642 2,223,194 1,370,465 68,890 4,422,191
Loss from operations (249,017 ) (1,651,322 ) (448,310 ) (362,004 ) (2,710,653 )
Depreciation and amortization 13,213 740,489 49,754 3,442 806,898
Income tax expense (benefit) (17,311 ) (123,091 ) (29,688 ) (43,043 ) (213,133 )
Net loss (217,589 ) (1,528,231 ) (418,622 ) (323,643 ) (2,488,085 )
Capital expenditures 93,676 - (5,575 ) 12,356 100,457

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

Nine Months Ended September 30, 2017
United States

PDN
Network

NAPW
Network
Noble Voice
China
Operations
Consolidated

Membership fees and related services $ - $ 7,465,202 $ - $ - $ 7,465,202
Lead generation - - 4,699,399 - 4,699,399
Recruitment services 1,977,101 - - - 1,977,101
Products sales and other - 91,226 - - 91,226
Education and training - - - 898,584 898,584
Consumer advertising and marketing solutions 189,217 - - - 189,217
Total revenues 2,166,318 7,556,428 4,699,399 898,584 15,320,729
Loss from operations (2,001,870 ) (14,969,177 ) (1,449,279 ) (408,622 ) (18,828,948 )
Depreciation and amortization 67,099 2,220,806 149,499 6,107 2,443,511
Income tax expense (benefit) (125,444 ) (943,633 ) (91,360 ) - (1,160,437 )
Net loss (1,864,520 ) (14,025,544 ) (1,357,919 ) (416,627 ) (17,664,610 )
Capital expenditures 100,823 10,646 (5,234 ) 48,060 154,295

September 30, 2017
Goodwill $ 339,451 $ 9,941,434 $ - $ - $ 10,280,885
Intangible assets, net 90,400 6,793,406 151,333 - 7,035,139
Total assets 1,814,350 18,425,123 1,624,568 2,257,796 24,121,837

Three Months Ended September 30, 2016
PDN Network
NAPW
Network
Noble Voice Consolidated

Membership fees and related services $ - $ 3,748,334 $ - $ 3,748,334
Lead generation - - 1,554,370 1,554,370
Recruitment services 954,887 - - 954,887
Products sales and other - 52,857 - 52,857
Consumer advertising and marketing solutions 49,719 - - 49,719
Total revenues 1,004,606 3,801,191 1,554,370 6,360,167
Loss from operations (118,948 ) (894,361 ) (266,893 ) (1,280,202 )
Depreciation and amortization 33,471 738,473 47,950 819,894
Income tax expense (benefit) (222,808 ) (289,767 ) (111,124 ) (623,699 )
Net loss (512,771 ) (604,594 ) (155,769 ) (1,273,134 )

Nine Months Ended September 30, 2016
PDN Network
NAPW
Network
Noble Voice Consolidated

Membership fees and related services $ - $ 13,047,652 $ - $ 13,047,652
Lead generation - - 4,489,919 4,489,919
Recruitment services 2,295,556 - - 2,295,556
Products sales and other - 544,440 - 544,440
Consumer advertising and marketing solutions 176,771 - - 176,771
Total revenues 2,472,327 13,592,092 4,489,919 20,554,338
Loss from operations (839,840 ) (2,173,251 ) (1,106,895 ) (4,119,986 )
Depreciation and amortization 130,121 2,207,703 160,312 2,498,136
Income benefit (373,717 ) (557,439 ) (286,936 ) (1,218,092 )
Net loss (1,083,270 ) (1,615,812 ) (819,959 ) (3,519,041 )

~~Professional Diversity Network, Inc.~~

~~Condensed Consolidated Notes to Financial Statements (Unaudited)~~

December 31, 2016
Goodwill $ 339,451 $ 19,861,739 $ - $ 20,201,190
Intangible assets, net 90,400 8,809,706 283,333 9,183,439
Total assets 7,643,471 31,457,958 2,036,448 41,137,877

~~12.~~


	Three Months Ended March 31, 2022
	PDN		NAPW						Corporate
	Network		Network			RemoteMore			Overhead			Consolidated
Membership fees and related services	$	-	$	196,009		$	-		$	-		$	196,009
Recruitment services		1,333,364		-			-			-			1,333,364
Contracted software development		-		-			477,092			-			477,092
Consumer advertising and marketing solutions		46,415		-			-			-			46,415
Total revenues		1,379,779		196,009			477,092			-			2,052,880
Income (loss) from continuing operations		272,290		(207,877	)		(378,279	)		(602,347	)		(916,213	)
Depreciation and amortization		6,222		19,432			255,618			-			281,272
Income tax expense (benefit)		9,087		(13,017	)		-			(21,858	)		(25,788	)
Net income (loss) from continuing operations, net of tax		266,221		(194,696	)		(380,560	)		(580,489	)		(889,524	)


	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

15. Subsequent Events

The Company ~~evaluates~~has evaluated subsequent events ~~and transactions that occur after~~through the balance sheet date up to the date that the condensed consolidated financial statements were issued for potential recognition or disclosure. The Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

~~ITEM~~ 2.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Unless we specify otherwise, all references in~~filing of this Quarterly Report on Form 10-Q ~~(the “Quarterly Report~~”)and determined that there have been no events that have occurred that would require adjustments to our disclosures in the ~~“Company,” “we,” “our,”~~consolidated financial statements other than those disclosed in Note 4 Business Combinations and ~~“us” refer to Professional Diversity Network, Inc. and its consolidated subsidiaries. The following discussion and analysis~~Note 12 Stock-Based Compensation.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Basis of ~~our financial condition and results of operations~~Presentation

This MD&A should be read in conjunction with ~~our~~the accompanying consolidated financial statements and the ~~related~~ notes thereto, and the audited consolidated financial statements and notes thereto included in ~~Item 1, “Financial Statements,”~~our 2022 Form 10-K.

Forward-looking statements in ~~Part I~~this MD&A are not guarantees of ~~this Quarterly Report. This discussion contains forward-looking statements, which are based on our assumptions about the~~ future ~~of our business. Our~~performance and may involve risks and uncertainties that could cause actual results ~~will likely~~to differ materially from those ~~contained in~~projected. Refer to the ~~forward-looking statements. Please read “Special Note~~“Note Regarding Forward-Looking Statements” ~~for additional information regarding forward-looking statements used in~~section of this Quarterly ~~Report.~~

Report on Form 10-Q and Item 1A. Risk Factors of our 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 ~~(LGBT+~~(LGBTQ+).

, 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 ~~four~~three business ~~segments: (i) Professional Diversity~~segments. PDN Network, (“ ~~PDN Network~~ ~~”), which~~our primary business segment, includes online professional ~~networking~~job seeking communities with career resources tailored to the needs of various diverse cultural groups and employers looking to hire members of such ~~groups, (ii) National Association~~groups. Our second business segment consists of ~~Professional Women (“~~the NAPW Network, ~~”),~~ a women-only professional networking ~~organization, (iii) Noble Voice operations (“~~ ~~Noble Voice~~ ~~”), a career consultation~~organization. Our third business segment consists of RemoteMore, which connects companies with reliable, cost-efficient software developers with less effort and ~~lead generation service,~~friction, and ~~(iv) China operations (~~ ~~“China Operations”~~ ~~), which focus on providing tools, products and services in China which will assist women, students and business professionals in personal and professional development.~~

~~Our value proposition is simple: (i) we provide a robust online and in-person network for our women members~~empowers developers to ~~make professional and personal connections for our diverse audience~~find meaningful jobs regardless of women: African Americans, Hispanics, Asians, Veterans, individuals with disabilities and members of the Gay community (with the ability to roll out to our other affinities); (ii) we assist our registered users, or members, in their efforts to connect with like-minded individuals and identify career opportunities within the network; (iii) we help employers address their workforce diversity needs by connecting them with the right candidates; and (iv) we leverage our U.S. expertise and China connections to deliver these values to China, the world’s fastest-growing market.

In January of 2017, the Company established PDN Hong Kong through its two wholly-owned subsidiaries there and in March of 2017 the Company established PDN China through its subsidiary there. We are currently executing our strategic plan to build in China entirely new networking, training and education businesses. We believe that coupling the Company’s expertise in networking and careers with our Chinese executives’ expertise in the China market will provide us with an opportunity for success with our overseas expansion. During the first two quarters of 2017, we held seven events as part of our education and training business line’s “Shared Economy” summit series, attracting over 7,800 paid attendees. Additionally, during the second quarter of 2017, we held a selective marketing event to introduce IAW, the PDN China women’s networking business.

In the third quarter of 2017, IPDN China began to transact IAW memberships in China, ranging from RMB 20,000 to RMB200,000 (Approximately $3,000 to $30,000 annual memberships). Additionally IAW China held its first IAW VIP China event at the Women’s Forum Global Meeting, in Paris, France. Also in the third quarter, IPDN China finalized plans and secured commitments to hold its largest education and training event of the year. The event will be held on December 2, 2017 in Beijing, China, “The International Capital Leadership Summit”. Mr. Bruce Aust, Vice Chairman of the Nasdaq Exchange will be featured at the event.

Through the third quarter of 2017, our PDN Network, NAPW Network, Noble Voice and China Operations businesses represented 14.1%, 49.3%, 30.7% and 5.9% of our revenues, respectively. As of September 30, 2017, we had approximately 10.0 million registered users in our PDN Network; approximately 952,000 registered users, or members, in the NAPW Network; and over 1,000 companies utilizing our products and services in our combined PDN Network and Noble Voice operations. 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.~~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.

Sources of Revenue

We generate revenue from (i) paid membership subscriptions and related services, (ii) ~~lead generation, (iii)~~ recruitment services, ~~(iv) product sales, (v) education~~(iii) contracted software development, and ~~training and (vi)~~(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.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017 2016 2017 2016
Percentage of revenue by product:
Membership fees and related services 49.9 % 58.9 % 48.7 % 63.5 %
Lead generation 31.0 % 24.5 % 30.7 % 21.8 %
Recruitment services 15.7 % 15.0 % 12.9 % 11.2 %
Products sales and other 0.4 % 0.8 % 0.6 % 2.6 %
Education and training 1.5 % 0.0 % 5.9 % 0.0 %
Consumer advertising and consumer marketing solutions 1.5 % 0.8 % 1.2 % 0.9 %

~~Paid~~

	Three Months Ended March 31,
	2023			2022
Revenues:
Membership fees and related services		6.6	%		9.5	%
Recruitment services		56.4	%		64.9	%
Contracted software development		35.7	%		23.2	%
Consumer advertising and marketing solutions		1.3	%		2.3	%

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 ~~Subscriptions~~Fees and Related ~~Services~~. 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.napw.com~~www.iawomen.com and “virtual” ~~eChapter~~ events which occur in a webcast setting, as well as through in-person networking ~~at approximately 190~~ 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. ~~Upgraded packages include (i)~~The basic package is the ~~VIP membership,~~Initiator level, which provides ~~members with additional promotional and publicity tools~~online benefits only. Upgrades to an Innovator membership include the Initiator benefits, as well as ~~free access (including guest) to~~membership in local chapters. The most comprehensive level, the ~~National Networking Summits~~Influencer, provides all the aforementioned benefits plus expanded opportunities for marketing and ~~free continuing education programs~~promotion, including the creation and ~~(ii) the~~distribution of a press release, ~~package,~~ which ~~provides members~~is sent over major newswires. Additionally, all memberships offer educational programs with discounts or at no cost, based on the ~~opportunity to work with professional writers to publish personalized press releases and thereby secure valuable online presence.~~membership level. NAPW Membership is renewable and fees are payable on an annual or monthly basis, with the first ~~annual~~ fee payable at the commencement of the membership. NAPW Membership subscriptions represented approximately 99.2% and 98.6%, respectively, of revenue attributable to the NAPW Network business segment for the three months ended September 30, 2017 and 2016, and 98.8% and 96.0%, respectively, for the nine months ended September 30, 2017 and 2016.

~~Lead Generation.~~ We monetize our career consultations conducted by our Noble Voice segment by generating and selling value-added leads to our strategic partners who provide continuing education and career services. We also generate revenue from sales of data not used in the lead generation process. Lead generation sales represented 100% of the revenue attributable to the Noble Voice business segment for the three and nine months ended September 30, 2017 and 2016.

~~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, semantic search technology and paid access to, and placement in, or advertising around our career and networking events. 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. Recruitment advertising revenue constituted approximately 91.4% and 95.0%, respectively, of revenue attributable to the PDN Network business segment for the three months ended September 30, 2017 and 2016. For the nine months ended September 30, 2017 and 2016, recruitment advertising revenue constituted approximately 91.3% and 92.8%, respectively, of the revenue attributable to the PDN Network business segment.

~~Product Sales~~. We offer to new purchasers of our NAPW ~~Network~~ memberships the opportunity to purchase ~~up to two~~a commemorative wall ~~plaques~~plaque at the time of ~~membership~~ purchase. ~~Product sales represented approximately 0.8% and 1.4%, respectively, of~~

Contracted Software Development. RemoteMore generates revenue ~~attributable~~by providing contracted programmers to the NAPW Network business segment for the three months ended September 30, 2017 and 2016, and 1.2% and 4.0%, respectively, of revenue attributable to the NAPW Network business segment for the nine months ended September 30, 2017 and 2016.assist customers with their software solutions through customized software development.

~~Education and Training~~. In March of 2017 we began our China Operations by creating a Shared Economy summit series designed to provide education and training to Chinese business people. Our initial event was a paid event which generated revenue through paid event admission fees. Education and training represented 100% of the revenue attributable to China Operations for the three months ended September 30, 2017. Because China Operations first began in March of 2017 there is no period-over-period comparison.

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. Consumer advertising and marketing solutions represented approximately 8.6% and 5.0%, respectively, of the revenue attributable to the PDN Network business segment for the three months ended September 30, 2017 and 2106. For the nine months ended September 30, 2017 and 2016, consumer advertising and consumer marketing solutions revenue constituted approximately 8.7% and 7.2%, respectively, of the revenue attributable to the PDN Network business segment.

Cost of Revenue

Cost of revenue primarily consists of ~~data and related costs to generate leads for our Noble Voice customers,~~ costs of producing job fair and other events, revenue sharing with partner organizations, costs of ~~producing education and training events, and costs of~~ web hosting and operating our websites for the PDN Network. Costs of ~~producing wall plaques,~~ hosting member conferences and local chapter meetings are also included in the cost of revenue for NAPW Network.

~~Financial Overview~~

~~During~~ Costs of paying outside developers are included in the ~~quarter and nine months ended September 30, 2017, we experienced losses as we continued~~cost of revenue for RemoteMore.

	Three Months Ended March 31,
	2023			2022
Cost of revenues:
PDN Network		34.4	%		57.6	%
NAPW Network		5.0	%		13.6	%
RemoteMore		60.6	%		28.8	%

Results of Operations

Revenues

Total Revenues

The following tables set forth our ~~efforts to integrate new management and China Operations, reduce costs and streamline our business. For~~revenue for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

	Three Months Ended March 31				Change			Change
	2023		2022		(Dollars)			(Percent)
	(in thousands)
Revenues:
Membership fees and related services	$	129	$	196	$	(67	)		(34.2	)%
Recruitment services		1,103		1,333		(230	)		(17.3	)%
Contracted software development		698		477		221			46.3	%
Consumer advertising and marketing solutions		25		47		(22	)		(46.8	)%
Total revenues	$	1,955	$	2,053	$	(98	)		(4.8	)%

Total revenues for the three months ended ~~September 30, 2017, we realized a net loss~~March 31, 2023 decreased approximately $98,000, or 4.8 percent, to approximately $1,955,000 from approximately $2,053,000 during the same period in the prior year. The decrease was predominately attributable to recruitment services revenues of approximately $~~2,489,000, a $1,216,000~~ ~~increase from the comparable prior year period. This increase in net loss was primarily driven by a decrease of $1,578,000 in NAPW segment revenues from membership fees, related services~~$230,000 and product sales period-over-period, partially offset by a decrease of $788,000 in overall sales and marketing expenses. For the nine months ended September 30, 2017, we realized a net loss of approximately $~~17,666,000, a $14,147,000~~ ~~increase from the comparable prior year period. This increase in net loss is primarily related to~~ ~~goodwill impairment charge~~ ~~of $9,920,000, the~~an approximate $67,000 decrease in membership fees and related services ~~revenue, an increase in stock-based compensation, and an increase in legal expenses.~~

~~Recent Events~~

On January 13, 2017, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with Cosmic Forward Ltd. (“CFL”), pursuant to which, the Company agreed to issue and sell to CFL (the “Second Share Issuance”), and CFL agreed to purchase, at a price of $9.60 per share (the “Per Share Price”), upon the terms and subjectrevenues, as compared to the ~~conditions set forth~~same period in the ~~Purchase Agreement, 312,500 shares~~prior year. Partially offsetting the decrease were increases of approximately $221,000 of contracted software development related to RemoteMore, as compared to the same period in the prior year, and approximately $83,000 of event revenue from the recently acquired Expo Experts for which there was no comparable revenue in the same period of the Company’s common stock. On January 18, 2017, the Company consummated the Second Share Issuance. As a result of the completion of the Second Share Issuance, as of January 18, 2017, CFL beneficially owned 54.64% of the Company’s outstanding shares of common stock, on a fully diluted basis. The Company received total gross proceeds of $3,000,000 from the Second Share Issuance, or approximately $2,821,000 in net proceeds after payment of transaction-related expenses.prior year.

~~Key Metrics~~

We believe that one of the key metrics in evaluating and measuring our performance is the number of registered users or members. We offer free memberships and in our NAPW segment we also offer a paid membership, one that provides a greater level of services and networking potential. The vast majority of our registered users are non-paid members. We define a registered user as an individual job seeker who affirmatively visited one of PDN Network’s properties, opted into an affinity group and provided us with demographic or contact information enabling us to match him or her with employers and/or jobs (“PDN Network registered user”). We believe that a higher number of registered users will result in increased sales of our products and services, as employers will have access to a larger pool of professional talent.

We define a member as a consumer who has viewed our marketing material, opted into membership in the NAPW Network, provided demographic information and engaged in an onboarding call with a membership coordinator (the “NAPW Network member”). NAPW Network total membership is therefore comprised of members who paid for additional services (“Paid Members”) as well as members who opted into the NAPW Network and have not yet paid for additional services (“Unpaid Members”). The number of Unpaid Members at the NAPW Network segment is significantly higher than the number of Paid Members. We believe that a higher number of NAPW Network Unpaid Members will result in increased conversions to Paid Members, which will further translate into increased revenues through membership subscriptions.

Revenues by Segment

The following table sets forth each operating segment’s revenues for the ~~number~~periods presented. The period-to-period comparison is not necessarily indicative of ~~registered users on~~future results.

	Three Months Ended March 31,				Change			Change
	2023		2022		(Dollars)			(Percent)
	(in thousands)
PDN Network	$	1,128	$	1,380	$	(252	)		(18.3	)%
NAPW Network		129		196		(67	)		(34.2	)%
RemoteMore		698		477		221			46.3	%
Total revenues	$	1,955	$	2,053	$	(98	)		(4.8	)%

During the three months ended March 31, 2023, our PDN Network generated approximately $1,128,000 in revenues compared to approximately $1,380,000 in revenues during the three months ended March 31, 2022, a decrease of approximately $252,000 or 18.3 percent. The decrease in revenues was primarily driven by the continued softening in client hiring due to the macroeconomic environment change in the latter half of 2022, which continued in the first quarter of 2023. In addition, we recorded $74,000 of job placement commissions in the three months ended March 31, 2022, for which there were no comparable transactions in the same period of the current year. Offsetting the decrease was an increase in event revenues of $83,000 related to Expo Experts operations for which there was no comparable activity in the same period of the prior year.

During the three months ended March 31, 2023, NAPW Network revenues were approximately $129,000, compared to revenues of approximately $196,000 during the same period in the prior year, a decrease of approximately $67,000 or 34.2 percent. We believe that the membership services that we provide to our customers continue to represent a discretionary spending item and ~~total membership~~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.

During the three months ended March 31, 2023, RemoteMore revenue was approximately $698,000, compared to revenues of approximately $477,000 during the same period in the prior year, an increase of approximately $221,000, or 46.3 percent.

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 March 31,				Change			Change
	2023		2022		(Dollars)			(Percent)
	(in thousands)
Cost and expenses:
Cost of revenues	$	1,074	$	862	$	212			24.6	%
Sales and marketing		822		719		103			14.3	%
General and administrative		1,053		1,107		(54	)		(4.9	)%
Depreciation and amortization		133		281		(148	)		(46.8	)%
Total pre-tax cost and expenses:	$	3,082	$	2,969	$	113			3.8	%

Cost of revenues: Cost of revenues during the three months ended March 31, 2023 was approximately $1,074,000, an increase of approximately $212,000, or 24.6 percent, from approximately $862,000 during the same period of the prior year. The increase was predominately attributed to an increase of approximately $184,000 of contracted software development costs related to RemoteMore, as compared to the same period of the prior year.

Sales and marketing expense: Sales and marketing expense during the three months ended March 31, 2023 was approximately $822,000, an increase of approximately $103,000, or 14.3 percent, from $719,000 during the same period in the prior year.

General and administrative expense: General and administrative expenses decreased by approximately $54,000, or 4.9 percent, to approximately $1,053,000 during the three months ended March 31, 2023, as compared to the same period in the prior year. The decrease was predominately due to decreases in accounting expenses of approximately $113,000, $91,000 in share based compensation expenses, and legal expense of $19,000, as compared to the same period in the prior year. Offsetting the decrease were increases in salary-related costs of approximately $84,000, other purchased services of approximately $53,000, and bad debt expenses of $40,000.

Depreciation and amortization expense: Depreciation and amortization expense during the three months ended March 31, 2023 was approximately $133,000, a decrease of approximately $148,000, compared to approximately $281,000 during the same period in the prior year. The decrease was primarily attributable to approximately $255,000 of amortization expense related to RemoteMore’s intangible assets in the first quarter of 2022, for which there were no comparable charges in the same period of the current year, and assets and 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.

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 March 31,				Change			Change
	2023		2022		(Dollars)			(Percent)
	(in thousands)
PDN Network	$	1,481		1,107		374			33.8	%
NAPW Network		376		404		(28	)		(6.9	)%
RemoteMore		803		856		(53	)		(6.1	)%
Corporate Overhead		422		602		(180	)		(29.9	)%
Total costs and expenses:	$	3,082	$	2,969	$	113			3.8	%

For the three months ended March 31, 2023, costs and expenses related to our PDN Network segment increased by approximately $374,000, or 33.8 percent, as compared to the same period in the prior year. The increase is primarily as a result of increases of approximately $260,000 related to Expo Experts for which there were no comparable expenses in the same period of the prior year. Also, primarily contributing to the period increase as compared to the same period of the prior were approximately $80,000 of salary related costs, and $38,000 related to bad debt expense.

For the three months ended March 31, 2023, costs and expenses related to the NAPW Network decreased by approximately $28,000, or 6.9 percent. The decrease is primarily as result of approximately $17,000 of legal expenses and approximately $25,000 related to costs of revenues, sales and marketing, as compared to the same period in the prior year. Partially offsetting the decrease was an increase in general and administrative and other costs of approximately $14,000.

For the three months ended March 31, 2023, cost and expenses related to RemoteMore was approximately $803,000, a decrease of approximately $53,000, as compared to the same period in the prior year, predominately consisting of decreases in amortization expenses of approximately $255,000 offset by increases in contractor costs of approximately $184,000, and other operating costs of approximately $18,000, as compared to the same period of the prior year.

For the three months ended March 31, 2023, costs and expenses related to Corporate Overhead decreased by approximately $180,000, or 29.9 percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in accounting costs of approximately $113,000 and stock-based compensation costs of approximately $91,000, and other costs of approximately $11,000. Partially offsetting the reductions was an increase in payroll related costs of approximately $35,000, as compared to the same period in the prior year.

Income Tax Benefit

	Three Months Ended March 31,						Change		Change
	2023			2022			(Dollars)		(Percent)
	(in thousands)
Income tax expense (benefit)	$	(11	)	$	(26	)	$	15		57.7	%

During the three months ended March 31, 2023, and 2022, we recorded income tax benefits of approximately $11,000 and $26,000. The 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.

Net loss from Continuing Operations

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 March 31,						Change			Change
	2023			2022			(Dollars)			(Percent)
	(in thousands)
PDN Network	$	(349	)		266			(615	)		(231.2	)%
NAPW Network		(243	)		(195	)		(49	)		25.2	%
RemoteMore		(102	)		(381	)		279			73.3	%
Corporate Overhead		(415	)		(580	)		165			(28.4	)%
Consolidated net loss from continuing operations	$	(1,109	)	$	(890	)	$	(220	)		24.7	%

Consolidated Net Loss from Continuing Operations. As the result of the factors discussed above, during the three months ended March 31, 2023, we incurred a net loss of approximately $1,109,000 from continuing operations, an increase in the net loss of approximately $220,000 or 24.7 percent, compared to a net loss of approximately $890,000 during the three months ended March 31, 2022.

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 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 months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Revenues	$	-		$	-

General, administrative and other expenses	$	12		$	18
Non-operating expense		-			0
Loss from discontinued operations before income tax		(12	)		(18	)
Income tax expense (benefit)		-			-
Net loss from discontinued operations	$	(12	)	$	(18	)

Liquidity and Capital Resources

The following table summarizes our liquidity and capital resources as of March 31, 2023 and December 31, 2022:

	March 31, 2023			December 31, 2022
	(in thousands)
Cash and cash equivalents	$	964		$	1,237
Working deficiency from continuing operations	$	(1,068	)	$	(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 March 31, 2023, we had cash and cash equivalents of $964,000 compared to cash and cash equivalents of $1,237,000 at December 31, 2022. We had an accumulated deficit of $99,451,467 at March 31, 2023.

We continue to focus on our ~~NAPW Network~~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 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 consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

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 ~~the periods presented:~~

our other assets or discontinue business lines.

As of September 30, Change
2017 2016 (Percent)
(in thousands)
PDN Network Registered Users (1) 9,975 8,951 11.4 %
NAPW Network Total Membership (2) 952 880 8.2 %

~~(1)~~

While we believe that our cash and cash equivalents at March 31, 2023 and cash flow from operations may be sufficient to meet our working capital requirements for the fiscal year ending December 31, 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. 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 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.

	Three Months Ended March 31,
	2023			2022
Cash provided by (used in) continued operations	(in thousands)
Operating activities	$	(394	)	$	(287	)
Investing activities		(548	)		(2	)
Financing activities		700			(140	)
Effect of exchange rate fluctuations on cash and cash equivalents		0			1
Cash provided by (used in) discontinued operations		(30	)		(1	)
Net increase (decrease) in cash and cash equivalents	$	(272	)	$	(429	)

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 March 31, 2023 and December 31, 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 three months ended March 31, 2023, was approximately $394,000. We had a net loss from continuing operations of approximately $1,109,000 during the three months ended March 31, 2023, which included stock-based compensation expense of approximately $33,000, depreciation and amortization expense of approximately $133,000, allowance for credit losses of approximately 9,000, and noncash lease expense of $23,000, which was partially offset by deferred tax benefit of approximately $11,000. Changes in operating assets and liabilities provided approximately $529,000 of cash during the three months ended March 31, 2023, consisting primarily of decreases in accounts receivable, prepaid expenses, accounts payable and lease liability, partially offset by increases in and accrued expenses and deferred revenues.

~~The number of registered users may be higher than the number of actual users due to various factors. For more information, see “Risk Factors—The reported number of our registered users is higher than the number of actual individual users, and a substantial majority of our visits are generated by a minority of our users~~ ~~” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Annual Report”).~~

~~(2)~~

~~Includes both Paid Members and Unpaid Members.~~

Net cash used in operating activities from continuing operations during the three months ended March 31, 2022, was approximately $287,000. We had a net loss of approximately $890,000 during the three months ended March 31, 2022, which included a stock-based compensation expense of approximately $124,000, depreciation of amortization expense of $281,000 and noncash lease expense of 23,000, which was partially offset by allowance for credit losses of approximately $127,000, and deferred tax benefit of approximately $26,000. Changes in operating assets and liabilities used approximately $120,000 of cash during the three months ended March 31, 2022, consisting primarily of increases in accounts receivable, accounts payable, lease liability, deferred revenue and accrued expenses, partially offset by decreases in deferred revenue.

Net Cash Used in Investing Activities

Net cash used in investing activities from continuing operations during the three months ended March 31, 2023, was approximately $548,000, which consisted of $400,000 related to the acquisition of Expo Experts, $116,667 related to additional investment in RemoteMore, and $32,000 related to investments in developed technology and computer equipment purchases.

Net cash used in investing activities from continuing operations during the three months ended March 31, 2022, was approximately $2,000, related to computer equipment purchases.

Net Cash Provided by Financing Activities

Net cash provided in financing activities from continuing operations during the three months ended March 31, 2023 was approximately $700,000 representing the proceeds from the sale of restricted stock.

Net cash used in financing activities from continuing operations during the three months ended March 31, 2022 was $140,000, which consisted of the reacquisition of previously issued 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.

The following table provides a reconciliation of ~~Net Loss~~net loss from continuing operations to Adjusted EBITDA for the three months ended March 31, 2023 and 2022, the most directly comparable GAAP measure reported in our consolidated financial statements:

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(in thousands)
Net loss $ (2,488 ) $ (1,273 ) $ (17,665 ) $ (3,519 )
Stock-based compensation expense 146 118 731 218
Goodwill impairment charge - - 9,920 -
Litigation Settlement 155 - 155 500
Gain on lease cancellation - - - (424 )
Depreciation and amortization 807 820 2,444 2,498
Change in fair value of Warrant Liability - 401 - 401
Interest Expense - 216 12 217
Interest and other income (4 ) - (9 ) (1 )
Income tax benefit (213 ) (624 ) (1,160 ) (1,218 )
Adjusted EBITDA $ (1,597 ) $ (342 ) $ (5,572 ) $ (1,328 )

~~Results of Operations~~

~~Revenues~~

~~Total Revenues~~

~~The following tables set forth our revenues 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
2017 2016 (Dollars) (Percent)
(in thousands)
Revenues
Membership fees and related services $ 2,205 $ 3,748 $ (1,543 ) (41.2 )%
Lead generation 1,370 1,554 (184 ) (11.8 )%
Recruitment services 694 955 (261 ) (27.3 )%
Products sales and other 18 53 (35 ) (66.0 )%
Education and training 69 - 69 100.0 %
Consumer advertising and marketing solutions 65 50 15 30.0 %
Total revenues $ 4,421 $ 6,360 $ (1,939 ) (30.5 )%

Nine Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
Revenues
Membership fees and related services $ 7,465 $ 13,048 $ (5,583 ) (42.8 )%
Lead generation 4,699 4,490 209 4.7 %
Recruitment services 1,977 2,295 (318 ) (13.9 )%
Products sales and other 91 544 (453 ) (83.3 )%
Education and training 899 - 899 100.0 %
Consumer advertising and marketing solutions 189 177 12 6.8 %
Total revenues $ 15,320 $ 20,554 $ (5,234 ) (25.5 )%

Total revenues decreased $1,939,000, or 30.5% for the three months ended September 30, 2017, compared to the same prior year period, and $5,234,000, or 25.5%, for the nine months ended September 30, 2017, compared to the same prior year period, due primarily to decrease in membership fees and products sales as the management focuses on cost reduction efforts, including the reduction in the salesforce.

~~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
2017 2016 (Dollars) (Percent)
(in thousands)
NAPW Network $ 2,223 $ 3,801 $ (1,578 ) (41.5 )%
PDN Network 759 1,005 (246 ) (24.5 )%
Noble Voice 1,370 1,554 (184 ) (11.8 )%
China 69 - 69 100.0 %
Total revenues $ 4,421 $ 6,360 $ (1,939 ) (30.5 )%

Nine Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
NAPW Network $ 7,556 $ 13,592 $ (6,036 ) (44.4 )%
PDN Network 2,166 2,472 (306 ) (12.4 )%
Noble Voice 4,699 4,490 209 4.7 %
China 899 - 899 100.0 %
Total revenues $ 15,320 $ 20,554 $ (5,234 ) (25.5 )%

During the three months ended September 30, 2017, our NAPW Network generated $2,223,000 in revenue from membership fees and related services and product sales, compared to $3,801,000 for the same period in the prior year, a decrease of $1,578,000, or 41.5%. During the nine months ended September 30, 2017, our NAPW Network generated $7,556,000 in revenue from membership fees and related services and product sales and other, compared to $13,592,000 for the same period in the prior year, a decrease of $6,036,000, or 44.4%. The decrease was mainly attributable to reductions of the NAPW sales staff while the Company re-tooled its lead-generation and other marketing activities and replaced and re-trained sales staff on new sales practices we expect to lead to improved long-term productivity. During the third quarter, the Company formed a transition team and tasked the team on transitioning NAPW to long-term profitability. The core transition team’s objections are to increase the value for members, enhance membership sales productivity and to develop new methods of deriving revenue. To date the transition team has revamped membership outreach, new membership marketing and reducing indirect labor costs. In 2018 the Company will be investing in increasing women’s networking membership sales and expanding from NAPW (National Association of Professional Women), a national organization to IAW (International Association of Women), an international women’s networking organization. The C~~ompany believes that in a global market place, the IAW organization can offer all the value of today’s NAPW and add an international platform to enhance membership value.~~

During the three months ended September 30, 2017, our PDN Network generated $759,000 in revenue, compared to $1,005,000 for the same period in the prior year, a decrease of $246,000, or 24.5%. During the nine months ended September 30, 2017, our PDN Network generated $2,166,000 in revenue, compared to $2,472,000 for the same period in the prior year, a decrease of $306,000, or 12.4%. While Q1 2017 saw a modest uptick in sales and revenue generation over the prior year’s performance, Q2, and Q3 experienced a decline. The sales team experienced a reduction in staff with a corresponding drop in revenue generation. Additionally, sales strategy and operational changes implemented in Q2 are expected to result in an increase in revenue during Q4 and beyond.

During the three months ended September 30, 2017, our Noble Voice business generated $1,370,000 of lead generation revenue, compared to $1,554,000 for the same period in the prior year, a decrease of $184,000 or 11.8%. The decrease was caused by an unexpected loss of a business partner at the end of Q2, which disrupted our business and resulted in a reduction in staff while the business re-strategized. During the nine months ended September 30, 2017, our Noble Voice business generated $4,699,000 of lead generation revenue, compared to $4,490,000 for the same period in the prior year, an increase of $209,000 or 4.7%. The increase was mainly attributable to sales increase in the first half of 2017 due to an improvement in the private education marketplace, coupled with strategic internal initiatives to increase volume and better lead quality.

We started our operations in China in Q1 2017. During the three months ended September 30, 2017, China Operations generated $69,000 of revenue. During the nine months ended September 30, 2017, China Operations generated $899,000 of revenue. During the third quarter of 2017, we developed 18 IAW members with total membership fees of $278,000, which we ~~recognize ratably over the membership period (ranging from 12 to 36 months)~~.

~~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
2017 2016 (Dollars) (Percent)
(in thousands)
Costs and expenses:
Cost of revenue $ 658 $ 745 $ (87 ) (11.7 )%
Sales and marketing 2,276 3,064 (788 ) (25.7 )%
General and administrative 3,237 3,011 226 7.5 %
Litigation settlement 155 - 155 100.0 %
Depreciation and amortization 807 820 (13 ) (1.6 )%
Total costs and expenses $ 7,133 $ 7,640 $ (507 ) (6.6 )%

During the three months ended September 30, 2017, total costs and expenses were $7,133,000, compared to $7,640,000 for same period in the prior year, a decrease of $507,000 or 6.6%. The decrease is mainly attributable to $788,000 or 25.7% decrease in sales and marketing expense mostly due to reduction in sales force, a decrease of $87,000 or 11.7% in cost of revenue, and a slight decrease of $13,000 or 1.6% in depreciation and amortization. The decrease in expenses was partially offset by an decrease of $226,000 or 7.5% in general and administrative expense, and $155,000 litigation settlement expenses in Q3 2017, of which $146,000 was accrued for the potential back pay related to the “NLRB” legal proceeding (please refer to “Legal Proceedings” for details).

Nine Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
Costs and expenses:
Cost of revenue $ 2,193 $ 2,434 $ (241 ) (9.9 )%
Sales and marketing 8,115 10,314 (2,199 ) (21.3 )%
General and administrative 11,323 8,928 2,395 26.8 %
Litigation settlement 155 500 (345 ) (69.0 )%
Goodwill impairment charge 9,920 - 9,920 100.0 %
Depreciation and amortization 2,444 2,498 (54 ) (2.2 )%
Total costs and expenses $ 34,150 $ 24,674 $ 9,476 38.4 %

During the nine months ended September 30, 2017, total costs and expenses were $34,150,000, compared to $24,674,000 for the same period in the prior year, and increase of $9,476,000, or 38.4%. The increase is primarily a result of goodwill impairment charge of $9,920,000, an increase of $2,395,000 or 26.8% in general and administrative expense, partially offset by a decrease of $2,199,000 or 21.3% in sales and marketing, a decrease of $345,000 litigation settlement, a decrease of $241,000 or 9.9% in cost of revenue and a decrease of $54,000 or 2.2% in depreciation and amortization.

~~Cost of revenue~~: Cost of revenues during the three months ended September 30, 2017 were $658,000, compared to $745,000 for the same period in the prior year, a decrease of $87,000, or 11.7%, mainly attributable to a decrease of $85,000 in the PDN segment and a decrease of $44,000 in the Noble Voice segment due to decline in revenue, partially offset by an increase of $70,000 related to our China Operations that was launched in March 2017. Cost of revenues during the nine months ended September 30, 2017 were $2,193,000, compared to $2,434,000 for the same period in the prior year, a decrease of $241,000, or 9.9%, mainly attributable to a decrease of $271,000 in the PDN segment as a result of improved efficiencies in spending, and a decrease of $221,000 in the Noble Voice segment as a result of improved efficiencies in lead data sourcing and spending, partially offset by an increase of $338,000 related to our China Operations that was launched in March 2017.

~~Sales and marketing expense~~: ~~Sales and marketing expense~~ during the three months ended September 30, 2017 were $2,276,000, compared to $3,064,000 for the same period in the prior year, a decrease of $788,000, or 25.7%. Sales and marketing during the nine months ended September 30, 2017 were $8,115,000, compared to $10,314,000 for the same period in the prior year, a decrease of $2,199,000, or 21.3%. The decreases for the three and nine months ended September 30, 2017 are primarily due to reduction in the NAPW segment sales force from 64 sales representatives as of September 30, 2016 to 51 as of September 30, 2017.

~~General and administrative expense~~: General and administrative expense for the three months ended September 30, 2017 was $3,237,000, compared to $3,011,000 for the same period in the prior year, an increase of 226,000 or 7.5%. The increase was mainly attributable to a $268,000 general and administrative expense related to our China Operations that were launched in March 2017, a $183,000 rent liability accrual related to the unused space at our Garden City office related to NAPW segment, a $183,000 severance accrual for reduction in force in NAPW segment, and a $115,000 increase in compensation to independent board directors. This was partially offset by a $106,000 decrease in credit card fees due to lower sales and lower credit card rates, a $101,000 decrease in legal expenses, an $83,000 decrease in salaries and benefits, an $83,000 decrease in corporate insurance expenses, and a $52,000 decrease in consulting fees. General and administrative expense for the nine months ended September 30, 2017 was $11,323,000, compared to $8,928,000 for the same period in the prior year, an increase of $2,395,000 or 26.8%. The increase was mainly attributable to a $774,000 increase related to our China Operations that was launched in March 2017, a $616,000 increase in legal fees, a $514,000 increase in stock based compensation, ~~a gain on lease cancellation of $424,000 related to the closing of its Los Angeles, CA office recorded in prior year, and a $364,000 increase in compensation to independent board directors. This was partially offset by a $253,000 decrease in credit card fees due to lower sales volume, and a $92,000 decrease in professional fees.~~

~~Litigation settlement:~~ Litigation settlement for the three and nine months ended September 30, 2017 represents primarily $146,000 expense that was accrued for the potential back-pay related to the “NLRB” legal proceeding (please refer to “Legal Proceedings” for details). Litigation settlement for the nine months ended September 30, 2016 represents the expense related to a $500,000 settlement of a class action lawsuit that was recorded during the first quarter of 2016.

~~Goodwill impairment charge~~: As a result of the recurring operating losses incurred in NAPW since its acquisition in September 2014, the Company undertook a review of the carrying amount of its goodwill as of June 30, 2017. Accordingly, the Company recorded a goodwill impairment charge of $9,920,000 for the nine months ended September 30, 2017. No goodwill impairment charge was recorded during the three and nine months ended September 30, 2016.

~~Depreciation and amortization expense: Depreciation and amortization expense~~ for the three months ended September 30, 2017 was $807,000, compared to $820,000 for the same period in the prior year, a decrease of $13,000 or 1.6%. Depreciation and amortization expense for the nine months ended September 30, 2017 was $2,444,000, compared to $2,498,000 for the same period in the prior year, a decrease of $54,000 or 2.2%. The decrease for the three and nine months ended September 30, 2017 was mainly attributable to a reduction in amortization expense resulting from the amortization of the capitalized technology costs.

~~Income Tax Benefit~~

Three Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
Total $ (213 ) $ (624 ) $ 411 (65.9 )%

Nine Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
Total $ (1,160 ) $ (1,218 ) $ 58 (4.8 )%

The effective income tax rate for the three months ended September 30, 2017 and 2016 was 7.9% and 32.9%, respectively, resulting in a $213,000 and $624,000 income tax benefit, respectively. The effective income tax rate for the nine months ended September 30, 2017 and 2016 was 6.2% and 25.7%, respectively, resulting in a $1,160,000 and $1,218,000 income tax benefit, respectively. The difference in the effective income tax rate for the three months ended September 30, 2017, compared to the three months ended September 30, 2017, is mainly attributable to the change in the valuation allowance. The difference in the effective income tax rate for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2017, is mainly attributable to the impairment charge recognized on NAPW’s goodwill and the change in the valuation allowance. 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 the 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 30, 2017 and December 31, 2016.

~~Net Loss~~

~~The following table sets forth each operating segment’s net loss for the periods presented. The period-to-period comparison is not necessarily indicative of future results.~~

Three Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
NAPW Network $ $(1,528 ) $ (604 ) $ (924 ) 153.0 %
PDN Network (218 ) (513 ) 295 (57.5 )%
Noble Voice (419 ) (156 ) (263 ) 168.6 %
China (324 ) - (324 ) 100.0 %
Consolidated Net Loss $ (2,489 ) $ (1,273 ) $ (1,216 ) 95.5 %

Nine Months Ended
September 30, Change Change
2017 2016 (Dollars) (Percent)
(in thousands)
NAPW Network $ (14,026 ) $ (1,616 ) $ (12,410 ) 767.9 %
PDN Network (1,865 ) (1,083 ) (782 ) 72.2 %
Noble Voice (1,358 ) (820 ) (538 ) 65.6 %
China (417 ) - (417 ) 100.0 %
Consolidated Net Loss $ (17,666 ) $ (3,519 ) $ (14,147 ) 402.0 %

As the result of the factors discussed above, during the three and nine months ended September 30, 2017 we incurred $2,489,000 and $17,666,000 respectively, of net losses, an increase (decrease) of 95.5% and 402.0% from net loss of $1,273,000 and $3,519,000 during the three and nine months ended September 30, 2016. The $1,216,000 increase in net loss for the three months ended September 30, 2017 was primarily driven by a decrease of $1,578,000 in NAPW segment revenues from membership fees, related services and product sales period-over-period, partially offset by a decrease of $788,000 in overall sales and marketing expenses. The $14,147,000 increase in net loss for the nine months ended September 30, 2017 was primarily driven by a decrease of $6,036,000 in NAPW segment revenues from membership fees, related services and product sales period-over-period, along with NAPW segment goodwill impairment charge of $9,920,000, and an increase of $2,395,000 in overall general and administrative expenses, partially offset by a decrease of $2,199,000 in overall sales and marketing expenses.

~~During the three and nine months ended September 30, 2017, we incurred a net loss of $1,528,000 and $14,026,000,~~ ~~respectively,~~ attributable to the NAPW Network segment, compared to net loss of $604,000 and $1,616,000 for the three and nine months ended September 30, 2016, respectively. The increase in net loss for the three months ended September 30, 2017 was primarily driven by a decrease of $1,578,000 in NAPW segment revenues from membership fees, related services and product sales period-over-period, partially offset by a decrease of $734,000 in sales and marketing expenses. The $12,410,000 increase in net loss for the nine months ended September 30, 2017 was primarily driven by a decrease of $6,036,000 in NAPW segment revenues from membership fees, related services and product sales period-over-period, along with NAPW segment goodwill impairment charge of $9,920,000, and partially offset by a decrease of $2,479,000 in sales and marketing expenses.

During the three months ended September 30, 2017, we incurred a net loss of $218,000, attributable to the PDN Network segment, compared to net loss of $513,000 for the three months ended September 30, 2016, a decrease of $295,000, or 57.5%. The decrease in net loss is mainly a result of $216,000 interest expense, and a loss of $401,000 as a result of change in fair value of warrant liability, both recorded during three months ended September 30, 2016, partially offset by a $246,000 decrease in revenues. During the nine months ended September 30, 2017, we incurred a net loss of $1,865,000, compared to net loss of $1,083,000 for the nine months ended September 30, 2016, an increase of $782,000, or 72.2%. The increase in net loss was primarily attributable to $616,000 increase in non recurring legal expense, $513,000 increase in stock based compensation, along with a $306,000 decrease in revenues, partially offset by a $216,000 interest expense, and $401,000 change in fair value of warrant liability, both recorded during three months ended September 30, 2016.

~~During the three and nine months ended September 30, 2017, we incurred a net loss of $419,000 and $1,358,000,~~ ~~respectively,~~ attributable to the Noble Voice segment, compared to $156,000 and $820,000 for the three and nine months ended September 30, 2016, respectively. The increase in net loss was primarily attributable to by higher corporate overhead allocation.

~~Liquidity and Capital Resources~~

The following table summarizes our liquidity and capital resources as of September 30, 2017 and December 31, 2016, respectively, and is intended to supplement the more detailed discussion that follows:

September 30, December 31,
2017 2016
(in thousands)
Cash and cash equivalents $ 2,822 $ 6,069
Working capital (deficiency) $ (1,475 ) $ 1,000

Our principal sources of liquidity are our cash and cash equivalents, including the net proceeds from the recent issuances of Common Stock to CFL. As of September 30, 2017 and December 31, 2016, we had working capital (deficiency) of approximately $(1,475,000) and $1,000,000. During the nine months ended September 30, 2017, we generated a net loss of approximately $17,665,000 (including a non-cash impairment charge of $9,920,000), used cash in operations of approximately $6,454,000, which includes $1,450,000 paid to LinkedIn related to litigation that was settled in 2016, and we expect that we will continue to generate operating losses for the foreseeable future.

~~We are closely monitoring operating costs and capital requirements and have developed an operating plan for 2017. We have had cost reductions in the areas of staffing levels and operating budgets.~~

On November 7, 2016, we consummated the issuance and sale of 1,777,417 shares of Common Stock to CFL, at a price of $9.60 per share. We received total gross proceeds of approximately $17.1 million from the Share Issuance, or $14.1 million after giving effect to the payment for 312,500 shares of Common Stock tendered and not withdrawn in the Tender Offer. We received approximately $9.0 million in net proceeds from the Share Issuance, after repayment of outstanding indebtedness and the payment of transaction-related expenses at the closing.

On January 18, 2017, we sold 312,500 shares of Common Stock to CFL at a price of $9.60 per share, for total gross proceeds of $3,000,000, or $2,821,000 after giving effect to the payment of transaction-related expenses.

~~We currently anticipate that our available funds~~ ~~and cash generated from operations~~ will be sufficient to meet our working capital requirements through November of 2018. Since the Company expects that it will continue to generate operating losses for the mid-term, the Company may require additional funding sources or need to further decrease expenses in order 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.

We collect NAPW Network 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. Our PDN Network also sells recruitment services to employers, generally on a one year contract basis. This revenue is also deferred and recognized over the life of the contract. Our payment terms for PDN Network and Noble Voice 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. Cash and cash equivalents and short term investments consist primarily 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.

Nine Months Ended
September 30,
2017 2016
(in thousands)
Cash provided by (used in):
Operating activities $ (6,454 ) $ (2,489 )
Investing activities (294 ) 694
Financing activities 3,502 239
Effect of exchange rate fluctuations on cash and cash equivalents (1 ) -
Net decrease in cash and cash equivalents $ (3,247 ) $ (1,556 )

~~Net Cash Used in Operating Activities~~

~~For the nine months ended September 30, 2017, net cash used in operating activities was $6,454,000. We had a net loss of $17,665,000, a deferred income tax benefit of $1,160,000, which was offset by~~ ~~non-cash~~ ~~NAPW goodwill impairment charge of $9,920,000, depreciation and amortization of $2,444,000 and stock-based compensation expense of $731,000. Changes in operating assets and liabilities used $879,000~~ of cash during the nine months ended September 30, 2017, consisting primarily of decreases in deferred revenue and accounts payable, partially offset by increases in accrued expenses and decreases in accounts receivable and prepayments.

Net cash used in operating activities for the nine months ended September 30, 2016 was $2,489,000. We had a net loss of $3,519,000 during the nine months ended September 30, 2016, a deferred tax benefit of $1,218,000 and a gain on lease cancellation of $424,000, which were partially offset by non-cash depreciation and amortization of $2,498,000, an increase in the fair value of warrant liabilities of $401,000, stock-based compensation expense of $218,000 and deferred financing cost amortization of $157,000. Changes in operating assets and liabilities used $601,000 of cash during the nine months ended September 30, 2016, consisting primarily of decreases in deferred revenue and increased prepaid expenses partially offset by increases in accrued expenses.

~~Net Cash (Used in) Provided by Investing Activities~~

Net cash used in investing activities for the nine months ended September 30, 2017 was $294,000, consisting of $123,000 invested to develop technology, $154,000 in purchases of property and equipment, partially offset by $18,000 of returned security deposits.

Net cash provided by investing activities for the nine months ended September 30, 2016 was $694,000, consisting of $500,000 of proceeds from the maturities of short-term investments and $194,000 of returned security deposits.

~~Net Cash Provided by Financing Activities~~

Net cash provided by financing activities during the nine months ended September 30, 2017 was $3,502,000, consisting of the $3,000,000 in gross proceeds from the January 18, 2017 issuance, $646,000 refund of merchant reserve, partially offset by the $144,000 payment of offering costs to third-party professionals.

Net cash provided by financing activities during the nine months ended September 30, 2016 was $239,000, consisting of $1,943,000 of proceeds drawn on our Master Credit Facility, partially offset by $488,000 of costs related to securing that facility, payment of $1,049,000 of costs related to the CFL Transaction and $166,000 due to the increase in the merchant reserve for NAPW Network.

	Three Months Ended March 31,
	2023			2022
	(in thousands)
Loss from Continuing Operations	$	(1,109	)	$	(890	)
Stock-based compensation		33			124
Litigation settlement reserve		-			17
Loss attributable to noncontrolling interest		52			205
Depreciation and amortization		133			281
Other (expense) income, net		(7	)		(3	)
Income tax expense (benefit)		(11	)		(26	)
Adjusted EBITDA	$	(909	)	$	(292	)

Off-Balance Sheet Arrangements

Since inception, we have not engaged in any off-balance sheet activities ~~as defined in~~within the meaning of Item 303 of Regulation S-K ~~Item 303(a)(4).~~

Critical Accounting Policies and Estimates

~~Pursuant to the provisions of the Jumpstart Our Business Startups Act (the “JOBS Act~~”), as an “emerging growth company,” we may delay adoption of new or revised accounting standards applicable to public companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period for complying with such new or revised accounting standards. We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Upon issuance of new or revised accounting standards that apply to our consolidated financial statements, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting guidelines.

Our management’s discussion and analysis of financial condition and results of operations is based on our 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 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 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.

~~There have been no material changes to the Company’s critical~~

While our significant accounting policies ~~and estimates as compared to the critical accounting policies and estimates~~are more fully described in ~~the 2016 Annual~~Note 3 to our consolidated financial statements included in Part I, Item I of this Quarterly Report, ~~which~~ we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our ~~business and the understanding of our~~reported financial results ~~of operations~~ and affect the more significant judgments and estimates that we use in the preparation of our consolidated financial statements.

~~Special Note Regarding Forward-Looking Statements~~

~~This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A~~

Accounts Receivable

Our policy is to reserve for uncollectible accounts based on our best estimate of the ~~Securities Act~~amount of ~~1933, as amended,~~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 ~~Section 21E~~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 ~~Securities Exchange Act~~allowance after all means of ~~1934, as amended. These statements concern expectations, beliefs, projections, plans~~collection have been exhausted 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:~~

the potential for recovery is considered remote.

~~our beliefs regarding our ability to create enhanced value for our members and customers;~~32

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.

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 consolidated statements of comprehensive loss.

·	~~our beliefs regarding the relation between the number of members or registered users and our revenues;~~33

~~our expectations regarding future changes in our salesforce;~~

~~our expectations regarding the changes in revenues in 2017, 2018 and 2019;~~

~~our expectations regarding future increases in sales and marketing costs and general and administrative expenses; 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~~

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 ~~current views about future events~~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.

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 ~~subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could~~recognized in the ~~future affect~~month work is performed.

Revenue Concentration

We are in an alliance with another company to build, host, and manage our ~~actual results~~job boards 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 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;~~

~~we may not be able to reverse the significant decline in our revenues;~~

~~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 protection for our intellectual property;~~

~~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 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 II, Item 1A, “~~Risk Factors” of this Quarterly Report and to Part I, Item 1A, “Risk Factors~~”website. This alliance member also sells two of our ~~2016 Annual Report for additional information regarding factors that could affect~~recruitment services products and bills customers, collects fees, and provides customer services. For the three months ended March 31, 2023 and 2022, we recorded approximately 10% and 11% of our ~~results~~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 ~~operations, financial condition~~disclosure controls 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.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Not applicable.~~

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

~~Disclosure Controls and Procedures~~

procedures

As of ~~September 30, 2017,~~March 31, 2023, our management conducted an evaluation ~~under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer,~~ of the effectiveness of the design and operation of our disclosure controls and ~~procedures;~~procedures, as such term is defined inunder Rule 13a-15(e) ofpromulgated under the Securities Exchange Act of 1934, as amended ~~(the “~~ (“Exchange Act”)~~. We recognize that there are material weaknesses related to~~, under the supervision of and with the participation of our ~~internal controls. Therefore, our~~management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer ~~have~~and Chief Financial Officer, concluded that our disclosure controls and procedures were ~~not~~ effective as of the end of the period covered by this Quarterly Report. This includes ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Furthermore, to provide reasonable assurance that information required to be disclosed is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Changes in Internal Control over Financial Reporting~~

~~During the third quarter of 2017, we continued to undertake certain initiatives to improve and remediate material weaknesses related to our internal control over financial reporting that~~on March 31, 2023.

There were identified for the year ended December 31, 2016. We continued making necessary changes and implementing new policies to enhance the overall internal control structure, including requiring pre-approval for travel and certain purchases and ensuring employees are cross trained for certain key tasks. There have been no ~~other~~ 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 ~~the third~~our first quarter of ~~2017~~fiscal 2023, that have materially affected, or are reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

We anticipate that the actions described above and resulting improvements in controls will strengthen the Company’s internal control over financial reporting and will, over time, address the related material weaknesses. However, because many of the controls in the Company’s system of internal controls rely extensively on manual review and approval, the successful operation of these controls may be required for several quarters prior to management being able to conclude that the material weaknesses have been remediated.

~~PART II~~

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

~~The Company has previously disclosed that it~~

PART II

ITEM 1 – LEGAL PROCEEDINGS

We and its wholly-owned subsidiary, NAPW, Inc., are parties to litigation captioned Gauri Ramnath, et al. v. Professional Diversity Network, Inc., et al., No. BC604153 (Los Angeles Superior Ct.), a putative class action filed in January 2016 alleging violations of various California Labor Code (wage & hour) sections. During the first quarter of 2016, the Company executed a settlement agreement, subject to later Court approval, in which the Company agreed in principle to pay $500,000 for a global settlement of the class action. During the first quarter of 2016, the Company also recorded a litigation settlement expense in the amount of $500,000. On November 28, 2016, the Court approved the proposed settlement. In December of 2016 the Company paid the settlement amount in the Court’s fund and the third-party administrator began distributing payments to class members. On August 2, 2017, the Court notified the parties that the case is “reported as complete without the need for a further status conference.” This matter is therefore concluded and will not be further reported.

~~The Company and its~~our wholly-owned subsidiary, NAPW, Inc., are parties to a proceeding captioned ~~In re~~Deborah Bayne, et al. vs. NAPW, Inc. and Professional Diversity Network, ~~Cases 31-CA-159810 and 31-CA-162904,~~Inc., No. 18-cv-3591 (E.D.N.Y.), filed ~~with the National Labor Relations Board (“NLRB”) in~~on June ~~2015~~20, 2018 and alleging violations of the ~~National~~Fair Labor ~~Relations~~Standards Act ~~(“NLRA”)~~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.

General Legal Matters

From time to time, the Company ~~and its wholly-owned subsidiary, NAPW, Inc., where employee was allegedly terminated for asserting rights under Section 7~~is involved in legal matters arising in the ordinary course of ~~the NLRA.~~business. While the Company ~~disputes~~believes that ~~any rights were impacted,~~such matters are currently not material, there can be no assurance that matters arising in the ~~NLRB has issued its order requiring~~ordinary course of business for which the Company ~~to take certain remedial actions~~is, or could be, involved in the form of posting notices and revising certain policies, as well as to pay the claimant certain back pay and offer reinstatement. The Company has complied with the order in all respects except back pay and reinstatement. The Company disputes the amount of back pay owed to the claimant and disputes that reinstatement is appropriate under the circumstances and an evidentiary hearing on the issue of back pay is currently scheduled for January of 2018. ~~The amount of back pay and other potential liabilities ordered by NLRB is $146,000.~~

The Company is a party to a proceeding captioned Paul Sutcliffe v. Professional Diversity Network, Inc., No. 533-2016-00033 (EEOC), filed with the Equal Employment Opportunity Commission (“EEOC”) in April 2016 and alleging violations of Title VII and the Age Discrimination in Employment Act, where employee was allegedly terminated due to his race (Caucasian) and his age (over 40). The EEOC haslitigation, will not ~~yet notified the Company that it has issued a right-to-sue letter, and the complainant has not yet filed a lawsuit.~~

~~ITEM 1A.~~

~~RISK FACTORS~~

~~The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our 2016 Annual Report.~~

~~The proceeds from the January 2017 Share Issuance may not be sufficient to implement our productivity improvement initiatives.~~

We received net proceeds of approximately $2,856,000 from the January 18, 2017 Share Issuance, partially offset by approximately $144,000 in third-party professional fees. We expect to use the net proceeds for general corporate and working capital purposes including to implement the productivity improvement initiatives that we have identified as key to our ability to deliver profitable growth over the long term. We cannot be certain that the proceeds from the Share Issuance will be sufficient to implement all or any of the initiatives or that these initiatives will improve our short and long-term business performance or prospects. In the event that we cannot implement these initiatives or that these initiatives are not successful, we could again face liquidity and going concern issues, which could result in your losing your entire investment in the Company.

~~The Company is controlled by CFL, and CFL’s interests may differ from the interests of our other stockholders.~~

CFL beneficially owns 54.64% of our outstanding shares of Common Stock on a fully diluted basis. Five out of nine members of our Board of Directors are nominated by CFL. CFL may not exercise its rights as our controlling stockholder in a manner consistent with the interests of our other stockholders. By virtue of its ownership of a majority of our Common Stock and the power to designate the majority of our Board of Directors, CFL is in a position to influence the Company’s actions for its own benefit.

~~Public sales of a substantial number of shares of our Common Stock by CFL could cause our stock price to fall.~~

CFL beneficially owns 54.64% of our outstanding shares of Common Stock on a fully diluted basis. Pursuant to the Stockholders’ Agreement, dated November 7, 2016, by and among the Company, CFL and CFL shareholders, CFL, CFL shareholders and their respective affiliates (collectively, the “ ~~CFL Group~~ ”) are subject to a one-year lock-up with respect to all shares of Common Stock owned by members of the CFL Group, subject to certain exceptions. However, after the one-year period, it may generally sell its shares in the public markets, subject to applicable securities laws. Furthermore, we have granted CFL and the CFL shareholders certain registration rights that provide them the ability to register for resale, from time to time and in accordance with the terms of the registration rights agreement, all shares of Common Stock owned by members of the CFL Group, subject to certain exceptions. Sales of a substantial number of shares of our Common Stock in the public market or the perception that these sales might occur, could depress the market price of our Common Stock and could 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 ~~trading price of~~risk factors described in Part I, Item 1A, “Risk Factors” in our ~~Common Stock.~~

~~Because we have a majority stockholder, our public float is more limited~~2022 Annual Report on Form 10-K, which could ~~impact your ability~~materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to ~~sell your shares~~us or that we currently deem to be immaterial also may materially and ~~could result in increased volatility in~~adversely affect our ~~stock price.~~

business, financial condition and/or operating results.

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

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

CFL beneficially owns 54.64% of the outstanding shares of our Common Stock. As a result, the trading volume of our Common Stock could be more limited than if our shares were more-widely held. In addition, because we are a relatively small company, the range of investors willing to invest in our shares may be relatively limited. As a result of these factors, it may be more difficult for you to sell your shares of Common Stock at a time and price that you deem appropriate, and could increase the volatility of our stock price.

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~We did not sell any equity securities in transactions that were not registered under the Securities Act of 1933 during the three months ended September 30, 2017.~~

ITEM 6. EXHIBITS

~~ITEM 3.~~10.1

~~DEFAULTS UPON SENIOR SECURITIES~~

Stock Purchase Agreement, dated March 13, 2023 between Professional Diversity Network, Inc. and the investor named therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 15, 2023).

~~None.~~

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURE~~

~~Not applicable.~~

~~ITEM 5.~~31.1

~~OTHER INFORMATION~~

~~None.~~

~~ITEM 6.~~

~~EXHIBITS~~

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

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: May 15, 2023	By:			/s/ Larry Aichler
	Name:			Larry Aichler
~~Date: November 13, 2017~~	~~By:~~Title:		~~/s/ Jiangping (Gary) Xiao~~
		~~Name:~~	~~Jiangping (Gary) Xiao~~
		~~Title:~~	Chief Financial Officer

~~(On behalf of the Registrant and as principal financial~~

~~officer and principal accounting officer)~~

~~EXHIBIT INDEX~~

~~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 XBRL Instance Document~~
~~101.~~	~~SCH XBRL Taxonomy Extension Schema Document~~
~~101.~~	~~CAL XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.~~	~~DEF XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.~~	~~LAB XBRL Taxonomy Extension Labels Linkbase Document~~
~~101.~~	~~PRE XBRL Taxonomy Extension Presentation Linkbase Document~~

Title of each class		Name of each exchange on which registered
Common Stock, $0.01 par value per share		The Nasdaq Stock Market LLC

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐ ☒		Smaller reporting company ☒
Emerging growth company ☐

	●	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.

	●	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.

	September 30,			December 31,
	2017			2016
	(Unaudited)
Current Assets:
Cash and cash equivalents	$	2,821,729		$	6,068,973
Accounts receivable, net		1,799,013			2,170,529
Incremental direct costs		241,235			423,023
Prepaid expenses and other current assets		490,581			957,140
Total current assets		5,352,558			9,619,665

Property and equipment, net		291,774			277,534
Capitalized technology, net		141,573			173,368
Goodwill		10,280,885			20,201,190
Intangible assets, net		7,035,139			9,183,439
Merchant reserve		780,849			1,426,927
Security deposits		239,059			220,754
Other assets		-			35,000
Total assets	$	24,121,837		$	41,137,877

Current Liabilities:
Accounts payable	$	1,232,510		$	2,172,332
Accrued expenses		1,172,435			962,172
Deferred revenue		4,422,715			5,485,599
Total current liabilities		6,827,660			8,620,103

Deferred tax liability		2,492,837			3,653,274
Deferred rent		60,959			55,718
Other liabilities		78,481			33,159
Total liabilities		9,459,937			12,362,254

Commitments and contingencies

Stockholders' Equity
Common stock, $0.01 par value; 45,000,000 shares authorized; 3,936,399 shares and 3,623,899 shares issued as of September 30, 2017 and December 31, 2016, respectively; and 3,931,838 shares and 3,619,338 shares outstanding as of September 30, 2017 and December 31, 2016, respectively		39,329			36,204
Additional paid in capital		79,783,969			76,234,772
Accumulated other comprehensive loss		(1,435	)		-
Accumulated deficit		(65,122,846	)		(47,458,236	)
Treasury stock, at cost; 1,048 shares at September 30, 2017 and December 31, 2016		(37,117	)		(37,117	)
Total stockholders' equity		14,661,900			28,775,623

Total liabilities and stockholders' equity	$	24,121,837		$	41,137,877

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Revenues:
Membership fees and related services	$	2,204,909		$	3,748,334		$	7,465,202		$	13,047,652
Lead generation		1,370,465			1,554,370			4,699,399			4,489,919
Recruitment services		694,454			954,887			1,977,101			2,295,556
Product sales and other		18,285			52,857			91,226			544,440
Education and training		68,890			-			898,584			-
Consumer advertising and marketing solutions		65,188			49,719			189,217			176,771
Total revenues		4,422,191			6,360,167			15,320,729			20,554,338

Costs and expenses:
Cost of revenues		658,297			745,159			2,193,224			2,433,550
Sales and marketing		2,275,585			3,064,454			8,114,908			10,314,145
General and administrative		3,236,848			3,010,862			11,322,513			8,928,493
Litigation settlement		155,216			-			155,216			500,000
Goodwill impairment charge		-			-			9,920,305			-
Depreciation and amortization		806,898			819,894			2,443,511			2,498,136
Total costs and expenses		7,132,844			7,640,369			34,149,677			24,674,324

Loss from operations		(2,710,653	)		(1,280,202	)		(18,828,948	)		(4,119,986	)

Other (expense) income
Interest expense		-			(215,781	)		(12,399	)		(216,948	)
Interest and other income		4,117			150			9,218			801
Other finance income		5,318			-			7,082			-
Other (expense) income, net		9,435			(215,631	)		3,901			(216,147	)

Change in fair value of warrant liability		-			(401,000	)		-			(401,000	)

Loss before income tax benefit		(2,701,218	)		(1,896,833	)		(18,825,047	)		(4,737,133	)
Income tax benefit		(213,133	)		(623,699	)		(1,160,437	)		(1,218,092	)
Net loss		(2,488,085	)		(1,273,134	)		(17,664,610	)		(3,519,041	)

Other comprehensive loss:
Foreign currency translation adjustment		(3,056	)		-			(1,435	)		-
Comprehensive loss	$	(2,491,141	)	$	(1,273,134	)	$	(17,666,045	)	$	(3,519,041	)

Net loss per common share, basic and diluted	$	(0.63	)	$	(0.70	)	$	(4.52	)	$	(1.94	)

Weighted average shares used in computing net loss per common share:
Basic and diluted		3,932,886			1,809,676			3,912,282			1,809,676

	As of September 30,
	2017		2016
Warrants to purchase common stock		170,314		514,064
Stock options		284,897		72,886
Restricted stock units		15,544		-
Unvested restricted stock		2,778		5,556
Total dilutive securities		473,533		592,506

	September 30, 2017		December 31, 2016
Capitalized cost:
Balance, beginning of period	$	1,888,791	$	1,888,791
Additional capitalized cost		122,597		-
Balance, end of period	$	2,011,388	$	1,888,791


Accumulated amortization:
Balance, beginning of period	$	1,715,423	$	1,432,268
Provision for amortization		154,392		283,155
Balance, end of period	$	1,869,815	$	1,715,423
Capitalized Technology, net	$	141,573	$	173,368

September 30, 2017	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Long-lived intangible assets:
Sales Process		10	$	3,970,000	$	(1,196,514	)	$	2,773,486
Paid Member Relationships		5		890,000		(536,472	)		353,528
Member Lists		5		8,957,000		(5,399,081	)		3,557,919
Developed Technology		3		978,000		(959,666	)		18,334
Trade Name/Trademarks		4		480,000		(359,861	)		120,139
Customer Relationships		5		280,000		(158,667	)		121,333
			$	15,555,000	$	(8,610,261	)		6,944,739
Indefinite-lived intangible assets:
Trade Name									90,400

Intangible assets, net								$	7,035,139

December 31, 2016	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Long-lived intangible assets:
Sales Process		10	$	3,970,000	$	(898,764	)	$	3,071,236
Paid Member Relationships		5		890,000		(402,972	)		487,028
Member Lists		5		8,957,000		(4,055,531	)		4,901,469
Developed Technology		3		978,000		(718,166	)		259,834
Trade Name/Trademarks		4		480,000		(269,861	)		210,139
Customer Relationships		5		280,000		(116,667	)		163,333
			$	15,555,000	$	(6,461,961	)		9,093,039
Indefinite-lived intangible assets:
Trade Name									90,400

Intangible assets, net								$	9,183,439

Years ending December 31,
2017 (three months)	$	653,933
2018		2,563,872
2019		1,846,697
2020		397,000
2021		397,000
2022		397,000
Thereafter		689,237
	$	6,944,739

	Number of Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
Outstanding - December 31, 2016		69,950		$	12.07			9.0	$	156,975
Granted		240,000			10.72
Exercised		-			-
Forfeited/Canceled/Expired		(25,053	)		(13.93	)
Outstanding – September 30, 2017		284,897		$	10.77			9.3	$	-

Exercisable – September 30, 2017		124,897		$	10.83			9.2	$	-

	Three Months Ended September 30, 2017
	United States
	PDN Network			NAPW Network			Noble Voice			China Operations			Consolidated

Membership fees and related services	$	-		$	2,204,909		$	-		$	-		$	2,204,909
Lead generation		-			-			1,370,465			-			1,370,465
Recruitment services		694,454			-			-			-			694,454
Products sales and other		-			18,285			-			-			18,285
Education and training		-			-			-			68,890			68,890
Consumer advertising and marketing solutions		65,188			-			-			-			65,188
Total revenues		759,642			2,223,194			1,370,465			68,890			4,422,191
Loss from operations		(249,017	)		(1,651,322	)		(448,310	)		(362,004	)		(2,710,653	)
Depreciation and amortization		13,213			740,489			49,754			3,442			806,898
Income tax expense (benefit)		(17,311	)		(123,091	)		(29,688	)		(43,043	)		(213,133	)
Net loss		(217,589	)		(1,528,231	)		(418,622	)		(323,643	)		(2,488,085	)
Capital expenditures		93,676			-			(5,575	)		12,356			100,457

	Nine Months Ended September 30, 2017
	United States
	PDN Network			NAPW Network			Noble Voice			China Operations			Consolidated

Membership fees and related services	$	-		$	7,465,202		$	-		$	-		$	7,465,202
Lead generation		-			-			4,699,399			-			4,699,399
Recruitment services		1,977,101			-			-			-			1,977,101
Products sales and other		-			91,226			-			-			91,226
Education and training		-			-			-			898,584			898,584
Consumer advertising and marketing solutions		189,217			-			-			-			189,217
Total revenues		2,166,318			7,556,428			4,699,399			898,584			15,320,729
Loss from operations		(2,001,870	)		(14,969,177	)		(1,449,279	)		(408,622	)		(18,828,948	)
Depreciation and amortization		67,099			2,220,806			149,499			6,107			2,443,511
Income tax expense (benefit)		(125,444	)		(943,633	)		(91,360	)		-			(1,160,437	)
Net loss		(1,864,520	)		(14,025,544	)		(1,357,919	)		(416,627	)		(17,664,610	)
Capital expenditures		100,823			10,646			(5,234	)		48,060			154,295

	Three Months Ended September 30, 2016
	PDN Network			NAPW Network			Noble Voice			Consolidated

Membership fees and related services	$	-		$	3,748,334		$	-		$	3,748,334
Lead generation		-			-			1,554,370			1,554,370
Recruitment services		954,887			-			-			954,887
Products sales and other		-			52,857			-			52,857
Consumer advertising and marketing solutions		49,719			-			-			49,719
Total revenues		1,004,606			3,801,191			1,554,370			6,360,167
Loss from operations		(118,948	)		(894,361	)		(266,893	)		(1,280,202	)
Depreciation and amortization		33,471			738,473			47,950			819,894
Income tax expense (benefit)		(222,808	)		(289,767	)		(111,124	)		(623,699	)
Net loss		(512,771	)		(604,594	)		(155,769	)		(1,273,134	)

	Nine Months Ended September 30, 2016
	PDN Network			NAPW Network			Noble Voice			Consolidated

Membership fees and related services	$	-		$	13,047,652		$	-		$	13,047,652
Lead generation		-			-			4,489,919			4,489,919
Recruitment services		2,295,556			-			-			2,295,556
Products sales and other		-			544,440			-			544,440
Consumer advertising and marketing solutions		176,771			-			-			176,771
Total revenues		2,472,327			13,592,092			4,489,919			20,554,338
Loss from operations		(839,840	)		(2,173,251	)		(1,106,895	)		(4,119,986	)
Depreciation and amortization		130,121			2,207,703			160,312			2,498,136
Income benefit		(373,717	)		(557,439	)		(286,936	)		(1,218,092	)
Net loss		(1,083,270	)		(1,615,812	)		(819,959	)		(3,519,041	)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Percentage of revenue by product:
Membership fees and related services		49.9	%		58.9	%		48.7	%		63.5	%
Lead generation		31.0	%		24.5	%		30.7	%		21.8	%
Recruitment services		15.7	%		15.0	%		12.9	%		11.2	%
Products sales and other		0.4	%		0.8	%		0.6	%		2.6	%
Education and training		1.5	%		0.0	%		5.9	%		0.0	%
Consumer advertising and consumer marketing solutions		1.5	%		0.8	%		1.2	%		0.9	%

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(in thousands)
Net loss	$	(2,488	)	$	(1,273	)	$	(17,665	)	$	(3,519	)
Stock-based compensation expense		146			118			731			218
Goodwill impairment charge		-			-			9,920			-
Litigation Settlement		155			-			155			500
Gain on lease cancellation		-			-			-			(424	)
Depreciation and amortization		807			820			2,444			2,498
Change in fair value of Warrant Liability		-			401			-			401
Interest Expense		-			216			12			217
Interest and other income		(4	)		-			(9	)		(1	)
Income tax benefit		(213	)		(624	)		(1,160	)		(1,218	)
Adjusted EBITDA	$	(1,597	)	$	(342	)	$	(5,572	)	$	(1,328	)