Quarterly Report for Quarter Ending June 30, 2022 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to________

Commission file number: 001-35824

Professional Diversity Network, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware		80-0900177
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
55 E. Monroe Street, Suite 2120 Chicago, Illinois		60603
(Address of Principal Executive Offices)		(Zip Code)

(312)614-0950

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No☒

There were 16,682,497shares outstanding of the registrant's common stock as of August 12, 2022.

Note Regarding Forward-Looking Statements

This Quarterly Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this Quarterly Report contains forward-looking statements regarding:

	●	our beliefs regarding our ability to capture and capitalize on market trends;
	●	our expectations on the future growth and financial health of the online diversity recruitment industry and the industry participants, and the drivers of such growth;
	●	our expectations regarding continued membership growth;
	●	our beliefs regarding the increased value derived from the synergies among our segments; and
	●	our beliefs regarding our liquidity requirements, the availability of cash and capital resources to fund our business in the future and intended use of liquidity.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

	●	our ability to raise funds in the future to support operations;
	●	our failure to realize synergies and other financial benefits from mergers and acquisitions within expected time frames, including increases in expected costs or difficulties related to integration of merger and acquisition partners;
	●	inability to identify and successfully negotiate and complete additional combinations with potential merger or acquisition partners or to successfully integrate such businesses;
	●	our history of operating losses;
	●	our limited operating history in a new and unproven market;
	●	increasing competition in the market for online professional networks;
	●	our ability to comply with increasing governmental regulation and other legal obligations related to privacy;
	●	our ability to adapt to changing technologies and social trends and preferences;
	●	our ability to attract and retain a sales and marketing team, management and other key personnel and the ability of that team to execute on the Company's business strategies and plans;
	●	our ability to obtain and maintain intellectual property protection;
	●	any future litigation regarding our business, including intellectual property claims;
	●	general and economic business conditions; and
	●	legal and regulatory developments.

The foregoing list of important factors may not include all such factors. You should consult other disclosures made by the Company (such as in our other filings with the SEC or in company press releases) for additional factors, risks and uncertainties that may cause actual results to differ materially from those projected by the Company. Please refer to Part I, Item 1A, "Risk Factors" of our 2021 Annual Report for additional information regarding factors that could affect our results of operations, financial condition and cash flow. You should consider these factors, risks and uncertainties when evaluating any forward-looking statements and you should not place undue reliance on any forward-looking statement. Forward-looking statements represent our views as of the date of this Quarterly Report, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date of this Quarterly Report.

PROFESSIONAL DIVERSITY NETWORK, INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED JUNE 30, 2022

TABLE OF CONTENTS

	PAGE
PART I
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4 CONTROLS AND PROCEDURES	37
PART II
ITEM 1 LEGAL PROCEEDINGS	38
ITEM 1A RISK FACTORS	38
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	39
ITEM 3 DEFAULTS UPON SENIOR SECURITIES	39
ITEM 4 MINE SAFETY DISCLOUSRES	39
ITEM 5 OTHER INFORMATION	39
ITEM 6 EXHIBITS	40

Item 1. FINANCIAL STATEMENTS

Professional Diversity Network, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

		June 30, 2022			December 31, 2021
		(Unaudited)
Current Assets:
Cash and cash equivalents		$	2,439,386			$	3,402,697
Accounts receivable, net			921,588				1,389,112
Other receivables			350,000				350,000
Prepaid expense and other current assets			508,478				450,784
Current assets from discontinued operations			4,600				4,600
Total current assets			4,224,052				5,597,193
Property and equipment, net			29,213				29,040
Capitalized technology, net			35,995				43,038
Goodwill			1,274,785				1,274,785
Intangible assets, net			469,071				968,281
Right-of-use assets			397,024				427,652
Merchant reserve			190,849				380,849
Security deposits			66,340				66,340
Long-term assets from discontinued operations			197,554				197,595
Total assets		$	6,884,883			$	8,984,773
Current Liabilities:
Accounts payable		$	248,361			$	248,595
Accrued expenses			926,762				1,878,415
Deferred revenue			1,976,612				2,149,885
Stock to be issued			-				400,000
Lease liability, current portion			59,507				81,825
Current liabilities from discontinued operations			460,087				420,850
Total current liabilities			3,671,329				5,179,570
Lease liability, non-current portion			422,076				434,938
Other long-term liabilities			100,000				100,000
Deferred tax liability			146,436				162,360
Total liabilities			4,339,841				5,876,868
Commitments and contingencies			-				-
Stockholders' Equity
Common stock, $0.01par value; 45,000,000shares authorized, 17,100,492shares and 16,068,300shares issued as of June 30, 2022 and December 31, 2021, and 16,682,497and 16,067,252shares outstanding as of June 30, 2022 and December 31, 2021.			166,825				160,673
Additional paid in capital			99,239,433				98,440,172
Accumulated other comprehensive income			(3,817	)			6,565
Accumulated deficit			(96,392,020	)			(95,779,817	)
Treasury stock, at cost; 419,043shares at June 30, 2022 and 1,048shares at December 31, 2021			(423,655	)			(37,117	)
Total Professional Diversity Network, Inc. stockholders' equity			2,586,766				2,790,476
Noncontrolling interest			(41,724	)			317,429
Total stockholders' equity			2,545,042				3,107,905
Total liabilities and stockholders' equity		$	6,884,883			$	8,984,773

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

Professional Diversity Network, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

		Three Months Ended June 30,			Six Months Ended June 30,
		2022			2021			2022			2021
Revenues:
Membership fees and related services		$	161,435			$	259,786				357,444				524,422
Recruitment services			1,341,031				1,151,685				2,674,395				2,326,765
Contracted software development			647,868				-				1,124,960				-
Consumer advertising and marketing solutions			45,173				48,694				91,588				93,830
Total revenues			2,195,507				1,460,165				4,248,387				2,945,017
Costs and expenses:
Cost of revenues			932,443				260,047				1,794,115				521,201
Sales and marketing			700,622				600,784				1,419,251				1,300,499
General and administrative			357,458				1,111,786				1,464,978				2,429,639
Depreciation and amortization			232,037				29,076				513,309				58,683
Total costs and expenses			2,222,560				2,001,693				5,191,653				4,310,022
Loss from continuing operations			(27,053	)			(541,528	)			(943,266	)			(1,365,005	)
Other income (expense)
Interest expense			-				-				-				-
Interest and other income			(10,337	)			1,850				(9,436	)			2,735
Other income (expense), net			(10,337	)			1,850				(9,436	)			2,735
Loss before income tax expense (benefit)			(37,390	)			(539,678	)			(952,702	)			(1,362,270	)
Income tax expense (benefit)			15,547				49,934				(10,241	)			(17,043	)
Loss from continuing operations, net of tax			(52,937	)			(589,612	)			(942,461	)			(1,345,227	)
Loss from discontinued operations			(10,602	)			(46,012	)			(28,894	)			(61,086	)
Net loss including non-controlling interests		$	(63,539	)		$	(635,624	)			(971,355	)			(1,406,313	)
Net loss attributable to non-controlling interests			154,602				-				359,153				-
Net income (loss) attributable to Professional Diversity Network, Inc.		$	91,063			$	(635,624	)			(612,202	)			(1,406,313	)
Other comprehensive loss, net of tax:
Net income (loss) attributable to Professional Diversity Network, Inc.		$	91,063			$	(635,624	)			(612,202	)			(1,406,313	)
Foreign currency translation adjustments			(11,282	)			3,466				(10,382	)			(288,653	)
Comprehensive income (loss), net of tax		$	79,781			$	(632,158	)			(622,584	)			(1,694,966	)
Loss per share attributable to Professional Diversity Network, Inc., basic and diluted:
Continuing operations		$	(0.03	)		$	(0.04	)			(0.06	)			(0.10	)
Discontinued operations		$	(0.00	)		$	(0.00	)			(0.00	)			(0.00	)
Net loss attributable to Professional Diversity Network, Inc.		$	(0.03	)		$	(0.04	)			(0.06	)			(0.10	)
Weighted average shares outstanding:
Basic and diluted			16,405,586				13,472,385				16,207,113				13,368,449

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

Professional Diversity Network, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

		Common Stock			Additional Paid in			Accumulated			Treasury Stock			Accumulated Other Comprehensive			Non-controlling Interest in			Total Stockholders'
		Shares			Amount			Capital			Deficit			Shares			Amount			Income (Loss)			Subsidiary			Equity
Balance at January 01, 2022			16,067,252			$	160,673			$	98,440,172			$	(95,779,818	)			1,048			$	(37,117	)		$	6,565			$	317,429			$	3,107,905
Sale of common stock			-				-				-				-				-				-				-				-				-
Issuance of common stock			279,720				2,797				397,203				-				-				-				-				-				400,000
Share-based compensation			335,525				3,355				402,059				-				-				-				-				-				405,414
Stock Buyback Plan			-				-				-				-				417,995				(386,538	)			-				-				(386,538	)
Translation adjustments			-				-				-				-				-				-				(10,382	)			-				(10,382	)
Net loss			-				-				-				(612,202	)			-				-				-				(359,153	)			(971,355	)
Balance at June 30, 2022			16,682,497			$	166,825			$	99,239,433			$	(96,392,020	)			419,043			$	(423,655	)		$	(3,817	)		$	(41,724	)		$	2,545,042

		Common Stock			Additional Paid in			Accumulated			Treasury Stock			Accumulated Other Comprehensive			Non-controlling Interest in			Total Stockholders'
		Shares			Amount			Capital			Deficit			Shares			Amount			Income (Loss)			Subsidiary			Equity
Balance at January 01, 2021			12,819,843			$	128,198			$	95,985,080			$	(93,022,835	)			1,048			$	(37,117	)		$	292,506				-				3,345,832
Sale of common stock			500,000				5,000				995,000				-				-				-				-				-				1,000,000
Issuance of common stock			279,054				2,791				163,709				-				-				-				-				-				166,500
Share-based compensation			-				-				309,329				-				-				-				-				-				309,329
Adjustment from discontinued operations											(2,591,724	)																			-				(2,591,724	)
Translation adjustments			-				-				-				-				-				-				(288,653	)			-				(288,653	)
Net loss			-				-				-				(1,406,313	)			-				-				-				-				(1,406,313	)
Balance at June 30, 2021			13,598,897			$	135,989			$	94,861,394			$	(94,429,148	)			1,048			$	(37,117	)		$	3,853				-				534,971

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

Professional Diversity Network, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

		Six Months Ended June 30
		2022			2021
Cash flows from operating activities:
Loss from continuing operations		$	(942,461	)		$	(1,345,227	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities - continuing operations:
Depreciation and amortization			513,310				51,818
Deferred tax benefit			(10,241	)			(17,043	)
Amortization of right-of-use asset			(4,552	)			45,693
Stock-based compensation expense			405,414				309,328
Litigation settlement reserve			(908,564	)			75,000
Reduction of merchant reserve			190,000				380,000
Changes in operating assets and liabilities, net of effects of discontinued operations:
Accounts receivable			467,524				(73,344	)
Prepaid expenses and other current assets			(57,694	)			(27,341	)
Incremental direct costs			-				(2,890	)
Accounts payable			(235	)			(352,236	)
Accrued expenses			(48,773	)			(29,086	)
Deferred revenue			(173,273	)			322,255
Net cash used in operating activities - continuing operations			(569,545	)			(663,073	)
Net cash provided by operating activities - discontinued operations			(712	)			(318	)
Net cash used in operating activities			(570,257	)			(663,391	)
Cash flows from investing activities:
Costs incurred to develop technology			(1,907	)			-
Payments for investment deposits			-				(60,000	)
Purchases of property and equipment			(5,322	)			(20,357	)
Net cash used in investing activities - continuing operations			(7,229	)			(80,357	)
Net cash used in investing activities - discontinued operations			-				-
Net cash provided used in investing activities			(7,229	)			(80,357	)
Cash flows from financing activities:
Proceeds from the sale of common stock			-				1,166,500
Stock buyback plan			(386,538	)			-
Net cash provided by financing activities - continuing operations			(386,538	)			1,166,500
Net cash provided by financing activities			(386,538	)			1,166,500
Effect of exchange rate fluctuations on cash and cash equivalents			712				(32,556	)
Net increase (decrease) in cash and cash equivalents			(963,311	)			390,016
Cash, cash equivalents, beginning of period			3,402,697				2,117,569
Cash and cash equivalents, end of period			2,439,386				2,507,585
Supplemental disclosures of other cash flow information:
Non-cash stock issuance		$	400,000			$	166,500
Cash paid for income taxes		$	-			$	-

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

Professional Diversity Network, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Description of Business

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. 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 U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto included in our 2021 Form 10-K.

Professional Diversity Network, Inc. ("PDN, Inc.", "we," "our," or "us,") is both the operator of the Professional Diversity Network (the "PDN Network," or the "Professional Diversity Network") and a holding company for NAPW, Inc., a wholly-owned subsidiary of the Company and the operator of the National Association of Professional Women (the "NAPW Network" or "NAPW"). The PDN Network operates online professional networking communities with career resources specifically tailored to the needs of different diverse cultural groups including: Women, Hispanic-Americans, African-Americans, Asian-Americans, Disabled, Military Professionals, Lesbians, Gay, Bisexual, Transgender and Queer (LGBTQ+). The networks' purposes, among others, are to assist its registered users in their efforts to connect with like-minded individuals, identify career opportunities within the network and connect with prospective employers. The Company's technology platform is integral to the operation of its business. In addition, PDN, Inc. owns 45.62% of RemoteMore USA, Due to having significant influence in its guidance and operations, the Company consolidates RemoteMore USA's operations into its condensed consolidated financial statements.

The NAPW Network is a networking organization for professional women, whereby its members can develop their professional networks, further their education and skills, and promote their business and career accomplishments. NAPW provides its members with opportunities to network and develop valuable business relationships with other professionals through its website, as well as at virtual and in-person events hosted at its local chapters across the country.

RemoteMore USA is an innovative, global entity that provides remote-hiring marketplace services for developers and companies. RemoteMore connects companies with reliable, cost-efficient, vetted developers, and empowers software developers to find meaningful jobs regardless of their location.

In March 2020, our Board of Directors decided to suspend all China operations. The results of China operations are presented in the condensed consolidated statements of operations and comprehensive loss as net loss from discontinued operations.

2. Going Concern and Management's Plans

At June 30, 2022, the Company's principal sources of liquidity were its cash and cash equivalents.

The Company had an accumulated deficit of ($96,392,020) at June 30, 2022. During the six months ended June 30, 2022, the Company generated a net loss from continuing operations of ($942,461). During the six months ended June 30, 2022, the Company used cash in continuing operations of $569,545. At June 30, 2022, the Company had a cash balance of $2,439,386. Total revenues were approximately $4,248,000and $ 2,945,000for the six months ended June 30, 2022 and 2021. The Company had a working capital surplus from continuing operations of approximately $553,000and $418,000at June 30, 2022 and December 31, 2021. These conditions raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that its available cash on hand and cash flow from operations should be sufficient to meet our working capital requirements for the fiscal period ending December 31, 2022, however in order to accomplish our business plan objectives, the Company will need to continue its cost reduction efforts, increase revenues, and raise capital through the issuance of common stock, or through a strategic merger or acquisition. There can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances will not require additional funding sources in the future or require an acceleration of plans to conserve liquidity. Future efforts to improve liquidity through the issuance of our common stock may not be successful, or if available, they may not be available on acceptable terms.

3. Summary of Significant Accounting Policies

Basis of Presentation- The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Use of Estimates - The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future intervening events. Accordingly, the actual results could differ significantly from estimates.

Significant estimates underlying the financial statements include the fair value of acquired assets and liabilities associated with acquisitions; the assessment of goodwill for impairment, intangible assets and long-lived assets for impairment; allowances for doubtful accounts and assumptions related to the valuation allowances on deferred taxes, impact of applying the revised federal tax rates on deferred taxes, the valuation of stock-based compensation and the valuation of stock warrants.

Principles of Consolidation- The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries , and non-wholly-owned subsidiaries that require consolidation per GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents- The Company considers cash equivalents to include all short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

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. 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 June 30, 2022 and December 31, 2021, the allowance for doubtful accounts was approximately $156,000and $247,000, 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 June 30, 2022 the balance in other receivables as reported on the consolidated balance sheet 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 six months ended June 30, 2022 and 2021 was approximately $5,000and $18,000and for three months ended June 30, 2022 and 2021 was approximately $3,000and $8,000, and is recorded in depreciation and amortization expense in the accompanying condensed consolidated statements of operations.

Lease Obligations- The Company leases office space and equipment under various operating lease agreements, including an office for its corporate headquarters, as well as office spaces for its events business, sales and administrative offices under non-cancelable lease arrangements that provide for payments on a graduated basis with various expiration dates.

On September 23, 2020, the Company entered into a new office lease agreement for its corporate headquarters. The office lease is for 4,902square 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 condensed consolidated statements of operations. (See Note 4 - Business Combinations.)

Goodwill and Intangible Assets- The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other ("ASC 350"). ASC 350 requires that goodwill and other intangibles with indefinite lives should be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.

Goodwill is tested for impairment at the reporting unit level on an annual basis (December 31 for the Company) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test.

When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then compares the fair value of the Company's reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of a reporting unit exceeds its fair value, the Company will measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Treasury Stock - Treasury stock is recorded at cost as a reduction of stockholders' equity in the accompanying balance sheets.

Revenue Recognition- Revenue is recognized when all of the following conditions exist: (1) persuasive evidence of an arrangement exists, (2) services are performed, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured.

Recruitment Services

The Company's recruitment services revenue is derived from the Company's agreements through single and multiple job postings, recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and advertising, e-newsletter marketing and research and outreach services. Recruitment revenue includes revenue recognized from direct sales to customers for recruitment services and events, as well as revenue from the Company's direct e-commerce sales. Direct sales to customers are most typically a twelve-month contract for services and as such the revenue for each contract is recognized ratably over its twelve-month term. Event revenue is recognized in the 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 ("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 collected up-front and member benefits become available immediately; however, those benefits remain available over the 12-month membership period. At the time of enrollment, membership fees are recorded as deferred revenue and are recognized as revenue ratably over the 12-month membership period. Members who are enrolled in this plan may cancel their membership in the program at any time and receive a partial refund (amount remaining in deferred revenue) or due to consumer protection legislation, a full refund based on the policies of the member's credit card company.

We also offer a monthly membership for which we collect fees on a monthly basis and we recognize revenue in the same month as we collect the monthly fees.

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 a press release is distributed.

Products offered to NAPW members relate to custom made plaques. Product sales are recognized as deferred revenue at the time the initial order is placed. Revenue is then recognized at the time these products are shipped. The Company's shipping and handling costs are included in cost of sales.

Deferred Revenue - Deferred revenue includes customer payments which are received prior to performing services and revenues are recognized upon the completion of these services. Annual membership fees collected at the time of enrollment are recognized as revenue ratably over the membership period, which are typically for a 12-month membership period.

Contracted software Development

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

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

Discontinued Operations

China Operations

The Company previously disclosed in its Form 10-K for the year ending December 31, 2019 (the "2019 10-K") and subsequently that the assets of PDN China were frozen by Chinese local authorities in November 2019 in connection with the criminal investigation of alleged illegal public fund raising by Gatewang Group (the "Gatewang Case"), a separate company organized under the laws of the People's Republic of China ("Gatewang"), with which Mr. Maoji (Michael) Wang, the former Chairman and CEO of the Company was affiliated. A subsequent investigation led by a special committee of the Board concluded that it did not find any evidence that the Company or PDN China had engaged in the criminal activity of illegal fund-raising as alleged against Gatewang. The Company subsequently discontinued all of its operations in China.

The Company also previously disclosed in the 2019 Form 10-K that the seizure of PDN ‎China's assets had been lifted in March 2020. However, on April 22, 2021, the Company learned that RMB 18,841,064.15(approximately $2.9million) had been seized from the PDN China Account by Longxu District Court of Wuzhou City in Guangxi Province to satisfy a judgment in favor of the plaintiffs in the Gatewang Case. On April 26, 2021, the Company concluded that the seizure of such cash assets was a material reduction of Company assets and was reflected in its condensed consolidated balance sheets subsequent to the occurrence.

The Company has asserted its claim to these funds as the genuine owner to the Chinese officials and asked for their return. The Company plans to pursue all possible legal alternatives to have these funds returned to the Company but such return is uncertain at this time.

All historical operating results for the Company's China operations are included in a loss from discontinued operations, net of tax, in the accompanying statement of operations. For the three and six months ended June 30, 2022, loss from discontinued operations was approximately $16,000and $40,000as compared to a loss from discontinued operations of approximately $46,000and $61,000for the three and six months ended June 30, 2021.

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 June 30, 2022 and December 31, 2021, respectively, and long-term assets from discontinued operations were $197,554at June 30, 2022, compared to $197,595as of December 31, 2021. As of June 30, 2022, current liabilities from discontinued operations were $460,087, compared to $420,850as of December 31, 2021.

Operating Results of Discontinued Operations

The following table represents the components of operating results from discontinued operations, which are included in the statements of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021, net of intercompany eliminations:

		Three Months Ended June 30,			Six Months Ended June 30,
		2022			2021			2022			2021
		(in thousands)			(in thousands)
Revenues		$	-			$	-			$	-			$	-
Cost of Sales			3				18				14				21
Depreciation and amortization			-				-				-				-
Sales and marketing			-				-				-				-
General and administrative			8				21				15				30
Non-operating expense			0				10				0				10
Loss from discontinued operations before income tax			(11	)			(49	)			(29	)			(61	)
Income tax expense (benefit)			-				-				-				-
Net loss from discontinued operations		$	(11	)		$	(49	)			(29	)			(61	)

Advertising and Marketing Expenses - Advertising and marketing expenses are expensed as incurred or the first time the advertising takes place. The production costs of advertising are expensed the first time the advertising takes place. For the three and six months ended June 30, 2022, the Company incurred advertising and marketing expenses of approximately $260,000and $515,000, as compared to approximately $217,000and $410,000in the same periods of the fiscal 2021. These amounts are included in sales and marketing expenses in the accompanying statements of operations. At June 30, 2022 and December 31, 2021, there were no prepaid advertising expenses, recorded in the accompanying balance sheets.

Concentrations of Credit Risk- Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents and accounts receivable. The Company places its cash with high credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on the account.

Income Taxes- The Company accounts for income taxes in accordance with ASC 740, Income Taxes, 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 no unrecognized tax benefits as of June 30, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company may be subject to potential income tax examinations by federal or state authorities. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Tax years that remain open for assessment for federal and state tax purposes include the years ended December 31, 2018 through 2021.

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 June 30, 2022.

Fair Value of Financial Assets and Liabilities- Financial instruments, including cash and cash equivalents, short-term investments and accounts payable, are carried at cost. Management believes that the recorded amounts approximate fair value due to the short-term nature of these instruments.

Net Loss per Share- The Company computes basic net loss per share by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the "treasury stock" and/or "if converted" methods as applicable. The computation of basic net loss per share for the three and six months ended June 30, 2022 and 2021 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive.

		As of June 30,
		2022			2021
Warrants to purchase common stock			-				125,000
Stock options			46,126				36,126
Unvested restricted stock			138,228				159,524
Total dilutive securities			184,354				320,650

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

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

4. Business Combinations

On September 20, 2021, the Company acquired a 45.62% interest in RemoteMore USA, Inc., a software developer recruiting company, for an estimated total purchase price of $1,363,333, paying $863,333in cash and $500,000to be paid within one year. The acquisition is expected to significantly grow the Company's revenues and recruiting platform and also included bringing onboard Boris Krastev and Boris Borisov, the co-founders of RemoteMore.

The purchase price allocation as of the date of the acquisition was based on a detailed analysis about the fair value of assets acquired. No liabilities were assumed. The major classes of assets to which we have allocated the purchase price were as follows:

Goodwill		$	935,334
Intangible assets			427,999
	$	1,363,333

The goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is expected to be deductible for tax purposes.

Intangible assets purchased in connection with the acquisition primarily represent contracts acquired, and to a lesser extent trademarks, and are reflected in the Company's consolidated balance sheets at gross amounts, net of accumulated amortization. The Company expects to fully realize its interest in the revenues associated with the contracts acquired (see Note 7 - Intangible Assets).

Operations for RemoteMore are included in the Company's consolidated financial statements at gross amounts as the Company has significant influence in the way RemoteMore operates. The 54.38% interest retained by the seller are included in the Company's consolidated financial statements as noncontrolling interest. For the six months ended June 30, 2022, RemoteMore generated approximately $1,125,000of revenues and incurred approximately $1,779,000of operating costs, inclusive of amortization expense associated with the aforementioned intangible assets of approximately $461,000, for a loss before income taxes of approximately $668,000.

RemoteMore was incorporated in December 2020 and did not begin operations until on or about July 1, 2021. From January 1, 2021, through the acquisition date of September 20, 2021, revenues and expenses would have been deemed immaterial to the Company's consolidated financial statements.

In February 2022, in connection with the September 2021 acquisition of the 45.62% interest in RemoteMore USA, Inc., and as a component of the $500,000to be paid within one year, the Company issued 279,720shares of its common stock, with a value of $400,000, to the co-founders of RemoteMore. The Company has the option to purchase up to an additional 20% interest in RemoteMore for approximately $100,000.

5. Revenue Recognition

The Company recognizes revenue under the core principle of 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.

The Company may have contracts where there is an extended timing difference between payment and the time when control of the goods or services is transferred to the customer.

Nature of Goods and Services

The following is a description of principal activities from which the Company generates its revenue:

Recruitment Services

The Company's recruitment services revenue is derived from the Company's agreements through single and multiple job postings, recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and advertising, e-newsletter marketing and research and outreach services. Recruitment revenue includes revenue recognized from direct sales to customers for recruitment services and events, as well as revenue from the Company's direct e-commerce sales. Direct sales to customers are most typically a twelve-month contract for services and as such the revenue for each contract is recognized ratably over its twelve-month term. Event revenue is recognized in the period that the event takes place and e-commerce sales are for sixty to ninety-day job postings and the revenue from those sales are recognized when the service is provided. The Company's recruitment services mainly consist of the following products:

●	On-line job postings to our diversity sites and to our broader network of websites including the NAACP, National Urban League, Kappa Alpha Psi, Phi Beta Sigma and many other partner organizations;
●	OFCCP job promotion and recordation services;
●	Diversity job fairs, both in person and virtual fairs;
●	Diversity recruitment job advertising services; and
●	Diversity executive staffing services.

Membership Fees and Related Services

Membership fees are typically month to month; however, members may prepay for a 12-month period. Memberships are collected up-front and member benefits become available immediately. At the time of enrollment, membership fees are recorded as deferred revenue and are recognized as revenue ratably over the membership period. Members who are enrolled in 12-month plan may cancel their membership in the program at any time and receive a partial refund (amount remaining in deferred revenue) or due to consumer protection legislation, a full refund based on the policies of the member's credit card company.

Monthly membership revenues are recognized in the same month fees are collected.

Revenue from related membership services are derived from fees for development and set-up of a member's personal on-line profile and/or press release announcements. Fees related to these services are recognized as revenue at the time the on-line profile is complete and press release is distributed.

Products offered to members relate to custom made plaques. Product sales are recognized as deferred revenue at the time the initial order is placed. Revenue is then recognized at the time these products are shipped. The Company's shipping and handling costs are included in cost of sales in the accompanying condensed consolidated statements of operations.

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 six months ended June 30, 2022 and 2021, the Company recorded approximately 11.2% and 11.0% 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 13 - 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 norecorded contract assets as of June 30, 2022.

Consideration received in advance from customers is recorded as a contract liability, if a contract exists under ASC 606, until services are delivered or obligations are met and revenue is earned. Contract liability represents the excess of amounts invoiced over amounts recognized as revenues. Contract liabilities to be recognized in the succeeding twelve-month period are classified as current contract liabilities and the remaining amounts, if any, are classified as non-current contract liabilities. Contract liabilities of approximately $1,977,000are included in current deferred revenues, on the condensed consolidated balance sheets as of June 30, 2022. For the six months ended June 30, 2022, we recognized revenue associated with contract liabilities of approximately $1,458,000that were included in the contract liabilities balance at the beginning of the period.

Transaction price allocated to the remaining performance obligations

The Company applies the optional exemptions and does not disclose: a) information about remaining performance obligations that have an original expected duration of one year or less or b) transaction price allocated to unsatisfied performance obligations for which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with the series guidance.

The typical duration of all event related and other contracts is one year or less and, as a result, the Company applies the optional exemptions and does not disclose information about remaining performance obligations that have an original expected duration of one year or less.

6. Capitalized Technology

Capitalized Technology, net is as follows:

		June 30, 2022			December 31, 2021
Capitalized cost:
Balance, beginning of period		$	43,038			$	25,867
Additional capitalized cost			1,907				49,970
Provision for amortization			(8,950	)			(32,799	)
Balance, end of period		$	35,995			$	43,038

For the three months ended June 30, 2022 and 2021, amortization expense was approximately $4,600and $9,100, and was approximately $9,000and $18,900for the six months ended June 30, 2022 and 2021, and is recorded in depreciation and amortization expense in the accompanying statements of operations.

7. Intangible Assets

Intangible assets, net was as follows:

		Useful Lives			Gross Carrying			Accumulated			Net Carrying
June 30, 2022		(Years)			Amount			Amortization			Amount
Long-lived intangible assets:
Sales Process			10			$	2,130,956			$	(1,959,489	)		$	171,467
Paid Member Relationships			5				803,472				(803,472	)			-
Member Lists			5				8,086,181				(8,086,181	)			-
Developed Technology			3				648,000				(648,000	)			-
Trade Name/Trademarks			4				442,500				(440,625	)			1,875
Contracts acquired in RemoteMore acquisition			3-12months				935,683				(730,354	)			205,329
							13,046,792				(12,668,121	)			378,671
Indefinite-lived intangible assets:
Trade name															90,400
Intangible assets, net														$	469,071

		Useful Lives			Gross Carrying			Accumulated			Net Carrying
December 31, 2021		(Years)			Amount			Amortization			Amount
Long-lived intangible assets:
Sales Process			10			$	2,130,956			$	(1,921,386	)		$	209,570
Paid Member Relationships			5				803,472				(803,472	)			-
Member Lists			5				8,086,181				(8,086,181	)			-
Developed Technology			3				648,000				(648,000	)			-
Trade Name/Trademarks			4				442,500				(440,208	)			2,292
Contracts acquired in RemoteMore acquisition			3-12months				935,683				(269,664	)			666,019
							13,046,792				(12,168,911	)			877,881
Indefinite-lived intangible assets:
Trade name															90,400
Intangible assets, net														$	968,281

As of June 30, 2022, estimated amortization expense in future fiscal years is summarized as follows:

Year ended December 31,
Remaining of 2022		$	243,850
2023			77,041
2024			57,780
2025			-
Net Carrying Amount		$	378,671

For the three months ended June 30, 2022 and 2021, amortization expense was approximately $225,000and $19,000and for the six months ended June 30, 2022 and 2021 amortization expense was approximately $500,000and $38,000, and is recorded in depreciation and amortization expense in the accompanying statements of operations.

8. 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.

As of June 30, 2022, right of use assets and related lease obligations were $397,024and $481,583, as recorded on the Company's condensed consolidated balance sheets.

Other - PDN China's bank account with a balance of approximately $195,000was frozen by Guangzhou Police due to the Gatewang Case. The Company has classified this entire cash balance as a long-term asset presented in discontinued operations (see Note 3. - Summary of Significant Accounting Policies - Discontinued Operations).

Legal Proceedings

On June 7, 2022, the Company settled a lawsuit whereby NAPW Inc., a wholly-owned subsidiary of the Company, was named as a defendant in a Nassau County (NY) Supreme Court case [NAPW Case index No. LT 000421/2018; NAPW's former Garden City, NY, office], and whereby TL Franklin Avenue Plaza LLC had sued and obtained a judgment against NAPW in the amount of $855,002, plus accrued interest through the settlement date. The settlement was for a cash payment of $70,000to be made to the plaintiff, resulting in the reduction of the Company's reserve and a one-time, non-cash gain to the Company of $908,564reflected in the Company's consolidated financial statements. A stipulation for settlement was filed with the court on June 7, 2022, and the lawsuit was effectively terminated with prejudice upon such filing.

The Company and its wholly owned subsidiary, NAPW, Inc., are parties to a proceeding captioned Deborah Bayne, et al. vs. NAPW, Inc. and Professional Diversity Network, Inc., No. 18-cv-3591 (E.D.N.Y.), filed on June 20, 2018, and alleging violations of the Fair Labor Standards Act and certain provisions of the New York Labor Law. Plaintiffs are seeking monetary damages and equitable relief. The Company disputes that it or its subsidiary violated the applicable laws or that either entity has any liability and intends to vigorously defend against these claims. The matter is in the final stages of discovery, and we have completed depositions of relevant witnesses. During the first quarter of 2020, the Company recorded a $450,000litigation settlement reserve in the event of an unfavorable outcome in this proceeding. In November 2020, both parties entered into mediation proceedings, but a settlement was not reached. While the COVID-19 pandemic has caused delays to the litigation, it is expected that these delays will decrease as the disruption caused by the pandemic subsides.

General Legal Matters

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

9. CFL Transaction

On August 12, 2016, the Company entered into a stock purchase agreement (the "Purchase Agreement"), with CFL, a Republic of Seychelles company wholly-owned by a group of Chinese investors. Pursuant to the Purchase Agreement, the Company agreed to issue and sell to CFL, and CFL agreed to purchase, upon the terms and subject to the conditions set forth in the Purchase Agreement, a number of shares of the Company's common stock, par value $0.01per 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 June 30, 2022, CFL beneficially holds shares of the Company's outstanding Common Stock equal to approximately 31%. The decrease in CFL's percentage of the Company's total outstanding common stock is a result of dilution from other equity offerings.

10. Stockholders' Equity

Preferred Stock - The Company has no preferred stock issued. The Company's amended and restated certificate of incorporation and amended and restated bylaws include provisions that allow the Company's Board of Directors to issue, without further action by the stockholders, up to 1,000,000shares of undesignated preferred stock.

Common Stock - The Company has one class of common stock outstanding with a total number of shares authorized of 45,000,000. As of June 30, 2022, the Company had 16,682,497shares of common stock outstanding.

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

Stock Buyback Plan - The Company has a share repurchase program ("Stock Buyback Plan") under which it is authorized to purchase up to $2.0million of its outstanding common shares. The timing and amount of any shares repurchased under the Stock Buyback Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Purchase Plan may be suspended or discontinued at any time without prior notice. Repurchases may also be made under a plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. Any repurchased shares will be available for use in connection with its stock plans and for other corporate purposes. No shares have been or will be knowingly purchased from Company insiders or their affiliates. Since inception of the Stock Buyback Plan through June 30, 2022, the Company has purchased 417,995shares of its common shares, for a total of approximately $387,000at an average cost of approximately $0.92per share (excluding commissions). Transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At June 30, 2022, the Company has approximately $1,617,000repurchase authority remaining under the current Stock Buyback Plan.

11. 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 number of authorized shares available for issuance of common stock under the Plan is 1,500,000shares.

Stock Options

The fair value of options is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the Black-Scholes pricing model is affected by the Company's stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected life at the time of grant, volatility is based on the average long-term implied volatilities of peer companies, the expected life is based on the estimated average of the life of options using the simplified method, and forfeitures are estimated on the date of grant based on certain historical data. The Company utilizes the simplified method to determine the expected life of its options due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns. The expected dividend assumption is based on the Company's history and expectation of dividend payouts.

Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The following table summarizes the Company's stock option activity for the six months ended June 30, 2022 and 2021:

								Weighted
								Average
					Weighted			Remaining
					Average			Contractual			Aggregate
		Number of			Exercise			Life			Intrinsic
		Options			Price			(in Years)			Value
Outstanding - January 1, 2022			66,126			$	4.52				7.8			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			-				-				-				-
Outstanding - June 30, 2022			66,126			$	4.52				7.2			$	-
Exercisable at June 30, 2022			46,126			$	5.57				6.5			$	-

								Weighted
								Average
					Weighted			Remaining
					Average			Contractual			Aggregate
		Number of			Exercise			Life			Intrinsic
		Options			Price			(in Years)			Value
Outstanding - January 1, 2021			66,126			$	5.24				8.3			$	-
Granted			30,000				2.10				3.9
Exercised			-				-				-
Forfeited			(20,000	)			3.69				-
Outstanding - June 30, 2021			76,126			$	4.41				8.4			$	-
Exercisable at June 30, 2021			26,126			$	8.18				6.5			$	-

Total unrecognized stock-based compensation expense related to unvested stock options at June 30, 2022 was approximately $21,000and is expected to be recognized through the second quarter of 2024.

Warrants

As of June 30, 2022 and December 31, 2021, there were nowarrants outstanding or exercisable.

Restricted Stock

As of June 30, 2022 and 2021, the following is a summary of restricted stock activity:

		Number of
		Shares
Outstanding - January 1, 2022			159,525
Granted			314,228
Forfeited			-
Vested			(335,525	)
Outstanding - June 30, 2022			138,228

		Number of
		Shares
Outstanding - January 1, 2021			233,875
Granted			59,524
Forfeited			-
Vested			(133,875	)
Outstanding - June 30, 2021			159,524

During the period ended June 30, 2022, the Company granted 138,228restricted stock units ("RSUs") to non-employee directors as partial compensation for their service as a director. The aggregate grant date fair value of the combined awards amounted to approximately $125,000. The RSU award to the Board members fully vest on the one-year anniversary after the date of grant. The Company also granted 176,000RSU's to certain officers and managers with immediate vesting. The aggregate grant date fair value of the combined awards amounted to approximately $159,000.

During the period ended June 30, 2020, the Company granted 300,000RSUs to the Company's Chief Executive Officer. The RSU award grant to the CEO vests 1/3 on the grant date and the remaining 2/3 vested equally on the annual grant date anniversary of the award over the remaining two years with the final vesting occurring in the period ended June 30, 2022. The aggregate grant date fair value of the combined awards amounted to approximately $1,107,000.

During the period ended June 30, 2021, the Company granted 59,525RSUs to the Company's non-employee directors as partial compensation for their service as a director. The RSU awards to the Board members fully vested on the one-year anniversary after the date of grant, occurring in the period ended June 30, 2022. The aggregate grant date fair value of the combined awards amounted to approximately $125,000.

The Company recorded non-cash stock-based compensation expense of approximately $400,000and $299,000as a component of general and administrative expenses in the accompanying consolidated statements of operations for the six months ended June 30, 2022 and 2021, respectively, pertaining to restricted stock awards.

Total unrecognized stock-based compensation expense related to unvested restricted stock at June 30, 2022 was approximately $123,000and is expected to be recognized through the second quarter of 2023.

12. 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 June 30, 2022 and 2021, the Company recorded income tax expense of $15,547and $49,934. For the six months ended June 30, 2022 and 2021, the Company recorded a benefit for income tax of $(10,241)and $(17,043). The decrease in income tax expense and benefit during the current three-month and six-month periods, as compared to the same periods in the prior year, was primarily due to an increase 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 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 June 30, 2022. The valuation allowance at June 30, 2022 was approximately $9,462,000. The net change in the valuation allowance during the six months ended June 30, 2022 was an increase of approximately $163,000.

13. Segment Information

The Company operates in the following segments: (i) PDN Network, (ii) NAPW Network, (iii) RemoteMore (beginning in September 2021) and (iv) Corporate Overhead. 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 June 30, 2022 and December 31, 2021 and results of operations for the three and six months ended June 30, 2022 and 2021:

		Three Months Ended June 30, 2022
		PDN			NAPW						Corporate
		Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services		$	-			$	161,435			$	-			$	-			$	161,435
Recruitment services			1,341,031				-				-				-				1,341,031
Contracted software development			-				-				647,868				-				647,868
Consumer advertising and marketing solutions			45,173				-				-				-				45,173
Total revenues			1,386,204				161,435				647,868				-				2,195,507
Income (loss) from continuing operations			177,773				726,222				(275,443	)			(655,605	)			(27,053	)
Depreciation and amortization			6,892				19,527				205,618				-				232,037
Income tax expense (benefit)			8,791				18,658				-				(11,902	)			15,547
Net income (loss) from continuing operations			170,329				707,577				(287,050	)			(643,703	)			(52,937	)

		As of June 30, 2022
Goodwill		$	339,451			$	-			$	935,334			$	-			$	1,274,785
Intangibles assets, net			90,400				171,467				207,204				-				469,071
Assets from continuing operations			6,172,487				494,145				16,097				-				6,682,729

		Three Months Ended June 30, 2021
		PDN			NAPW						Corporate
		Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services		$	-			$	259,786			$	-			$	-			$	259,786
Recruitment services			1,151,685				-				-				-				1,151,685
Contracted software development			-				-				-				-				-
Consumer advertising and marketing solutions			48,694				-				-				-				48,694
Total revenues			1,200,379				259,786				-				-				1,460,165
Income (loss) from continuing operations			293,211				(171,460	)			-				(663,279	)			(541,528	)
Depreciation and amortization			2,419				26,657				-				-				29,076
Income tax benefit			(18,675	)			14,885				-				53,724				49,934
Net loss from continuing operations			313,443				(186,051	)			-				(717,003	)			(589,612	)

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

		Six Months Ended June 30, 2022
		PDN			NAPW						Corporate
		Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services		$	-			$	357,444			$	-			$	-			$	357,444
Recruitment services			2,674,395				-				-				-				2,674,395
Contracted software development			-				-				1,124,960				-				1,124,960
Consumer advertising and marketing solutions			91,588				-				-				-				91,588
Total revenues			2,765,983				357,444				1,124,960				-				4,248,387
Income (loss) from continuing operations			450,063				(518,345	)			(653,722	)			(1,257,952	)			(943,266	)
Depreciation and amortization			13,114				38,959				461,236				-				513,309
Income tax expense (benefit)			17,878				5,641				-				(33,760	)			(10,241	)
Net income (loss) from continuing operations			436,460				512,881				(667,610	)			(1,224,192	)			(942,461	)

		Six Months Ended June 30, 2021
		PDN			NAPW						Corporate
		Network			Network			RemoteMore			Overhead			Consolidated
Membership fees and related services		$	-			$	524,422			$	-			$	-			$	524,422
Recruitment services			2,326,765				-				-				-				2,326,765
Contracted software development			-				-				-				-				-
Consumer advertising and marketing solutions			93,830				-				-				-				93,830
Total revenues			2,420,595				524,422				-				-				2,945,017
Income (loss) from continuing operations			606,035				(417,879	)			-				(1,553,159	)			(1,365,005	)
Depreciation and amortization			3,597				55,086				-				-				58,683
Income tax expense (benefit)			9,431				(5,735	)			-				(20,739	)			(17,043	)
Net income (loss) from continuing operations			599,338				(412,144	)			-				(1,532,420	)			(1,345,227	)

14. Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.

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

Basis of Presentation

This MD&A should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto, and the audited consolidated financial statements and notes thereto included in our 2021 Form 10-K.

Forward-looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Note Regarding Forward-Looking Statements" section of this Quarterly Report on Form 10-Q and Item 1A. Risk Factors of our 2021 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, 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, Military Professionals, and Lesbian, Gay, Bisexual and Transgender (LGBTQ+).

We currently operate in three business segments. PDN Network, our primary business segment, includes online professional job seeking communities with career resources tailored to the needs of various diverse cultural groups and employers looking to hire members of such groups. Our second business segment consists of the NAPW Network, a women-only professional networking organization. Our third business segment consists of RemoteMore, which connects companies with reliable, cost-efficient developers with less effort and friction, and empowers software developers to find meaningful jobs regardless of their location.

We believe that the combination of our solutions allows us to approach recruiting and professional networking in a unique way and thus create enhanced value for our members and customers by:

	●	Helping employers address their workforce diversity needs by connecting them with the right candidates from our diverse job seeking communities such as African Americans, Hispanics, Asians, Veterans, individuals with disabilities and members of the LGBTQ+ community (with the ability to roll out to our other affinities);
	●	Providing a robust online and in-person network for our women members to make professional and personal connections; and
	●	Connecting companies with reliable, cost-efficient developers to meet their software needs.

Impact of COVID-19

The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains and created significant volatility and disruption of financial markets. The COVID-19 pandemic impacted our ability to host in-person events associated with our NAPW Network and we had to use alternative methods such as virtual events to conduct our events. The extent of the impact of the COVID-19 pandemic, including our ability to execute our business strategies as planned, will depend on future developments, including the duration and severity of the pandemic, which are highly uncertain and cannot be predicted, and may have an adverse effect on our business and financial performance.

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

Sources of Revenue

We generate revenue from (i) paid membership subscriptions and related services, (ii) recruitment services, (iii) contracted software development, and (iv) consumer advertising and consumer marketing solutions. The following table sets forth our revenues from each product as a percentage of total revenue for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

		Six Months Ended June 30,
		2022			2021
Revenues:
Membership fees and related services			8.4	%			17.7	%
Recruitment services			62.9	%			79.0	%
Contracted software development			26.5	%			-	%
Consumer advertising and marketing solutions			2.2	%			3.3	%

Membership Fees and Related Services. We offer paid membership subscriptions through our NAPW Network, a women-only professional networking organization, operated by our wholly-owned subsidiary. Members gain access to networking opportunities through a members-only website at www.iawomen.com and "virtual" events which occur in a webcast setting as well as through in-person networking at approximately 100 local chapters nationwide, additional career and networking events such as the National Networking Summit Series, Power Networking Events and the PDN Network events. NAPW members also receive ancillary (non-networking) benefits such as educational discounts, shopping, and other membership perks. The basic package is the Initiator level, which provides online benefits only. Upgrades to an Innovator membership include the Initiator benefits as well as membership in local chapters, and access to live in-person events. The most comprehensive level, the Influencer, provides all the aforementioned benefits plus admission to exclusive "live" events and expanded opportunities for marketing and promotion, including the creation and distribution of a press release, which is prepared by professional writers and sent over major newswires. Additionally, all memberships offer educational programs with discounts or at no cost, based on the membership level. NAPW Membership is renewable and fees are payable on an annual or monthly basis, with the first fee payable at the commencement of the membership. We offer to new purchasers of our NAPW memberships the opportunity to purchase a commemorative wall plaque at the time of purchase. They may purchase up to two plaques at that time.

Recruitment Services. We provide recruitment services through PDN Network to medium and large employers seeking to diversify their employment ranks. Our recruitment services include recruitment advertising, job postings, contingent search and hiring, and career fairs. The majority of recruitment services revenue comes from job recruitment advertising. We also offer to businesses subject to the regulations and requirements of the Equal Employment Opportunity Office of Federal Contract Compliance Program ("OFCCP") our OFCCP compliance product, which combines diversity recruitment advertising with job postings and compliance services.

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

Consumer Advertising and Consumer Marketing Solutions. We work with partner organizations to provide them with integrated job boards on their websites which offer their members or customers the ability to post recruitment advertising and job openings. We generate revenue from fees charged for those postings.

Cost of Revenue

Cost of revenue primarily consists of costs of producing job fair and other events, revenue sharing with partner organizations, costs of web hosting and operating our websites for the PDN Network. Costs of hosting member conferences and local chapter meetings are also included in the cost of revenue for NAPW Network. Costs of paying outside developers are included in the cost of revenue for RemoteMore.

		Six Months Ended June 30,
		2022			2021
Cost of revenues:
PDN Network			35.8	%			87.0	%
NAPW Network			7.9	%			13.0	%
RemoteMore			56.3	%			-	%

Results of Operations

Revenues

Total Revenues

The following tables set forth our revenue for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

		Three Months Ended June 30			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Revenues:
Membership fees and related services		$	161			$	260			$	(99	)			(38.1	)%
Recruitment services			1,341				1,152				189				16.4	%
Contracted software development			648				-				648				100.0	%
Consumer advertising and marketing solutions			45				49				(4	)			(8.2	)%
Total revenues		$	2,195			$	1,461			$	734				50.2	%

Total revenues for the three months ended June 30, 2022 increased approximately $734,000, or 50.2%, to approximately $2,195,000 from approximately $1,461,000 during the same period in the prior year. The increase was predominately attributable to an approximate $648,000 of contracted software development related to RemoteMore for which there was no comparable activity in the same period of the prior year. Also contributing to the increase in the period was an increase in recruitment services revenues of approximately $189,000, partially offset by an approximate $99,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year.

		Six Months Ended June 30			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Revenues:
Membership fees and related services		$	357			$	524			$	(167	)			(31.9	)%
Recruitment services			2,674				2,327				347				14.9	%
Contracted software development			1,125				-				1,125				100.0	%
Consumer advertising and marketing solutions			92				94				(2	)			(2.1	)%
Total revenues		$	4,248			$	2,945			$	1,303				44.2	%

Total revenues for the six months ended June 30, 2022 increased approximately $1,303,000, or 44.2%, to approximately $4,248,000 from approximately $2,945,000 during the same period in the prior year. The increase was predominately attributable to an approximate $1,125,000 of contracted software development related to RemoteMore for which there was no comparable activity in the same period of the prior year. Also contributing to the increase in the period was an increase in recruitment services revenues of approximately $347,000, partially offset by an approximate $167,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year.

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 June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	1,386			$	1,201			$	185				15.4	%
NAPW Network			161				260				(99	)			(38.1	)%
RemoteMore			648				-				648				100.0	%
Total revenues		$	2,195			$	1,461			$	734				50.2	%

During the three months ended June 30, 2022, our PDN Network generated approximately $1,386,000 in revenues compared to approximately $1,201,000 in revenues during the three months ended June 30, 2021, an increase of approximately $185,000 or 15.4 percent. The increase in revenues was primarily driven by event revenues of approximately $111,000, and job placement commissions of approximately $86,000, slightly offset by a decline in other diversity recruitment initiatives by our clients.

During the three months ended June 30, 2022, NAPW Network revenues were approximately $161,000, compared to revenues of approximately $260,000 during the same period in the prior year, a decrease of approximately $99,000 or 38.1 percent. The decrease in revenues was primarily due to an approximate $75,000 decrease in legacy membership retention rates as compared to the same period in the prior year, and the continued effects of COVID-19 causing new membership enrollment to decline throughout 2021 and the second quarter of 2022. Retention rates for new members that have enrolled in 2021 have continued to increase as compared to the same period in prior year. We believe that the membership services that we provide to our customers continues to represent a discretionary spending item and the services that we provide were postponed by the consumer as a result of the financial and economic impact of COVID-19 and the current economy.

During the three months ended June 30, 2022, RemoteMore revenue was approximately $648,000, for which there was no comparable revenue in the same period of the prior year.

		Six Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	2,766			$	2,421			$	345				14.3	%
NAPW Network			357				524				(167	)			(31.9	)%
RemoteMore			1,125				-				1,125				100.0	%
Total revenues		$	4,248			$	2,945			$	1,303				44.2	%

During the six months ended June 30, 2022, our PDN Network generated approximately $2,766,000 in revenues compared to approximately $2,421,000 in revenues during the six months ended June 30, 2021, an increase of approximately $345,000 or 14.3 percent. The increase in revenues was primarily driven by job placement commissions of approximately $161,000, event revenues of $120,000, and continued diversity recruitment initiatives by our clients of $65,000.

During the six months ended June 30, 2022, NAPW Network revenues were approximately $357,000, compared to revenues of approximately $524,000 during the same period in the prior year, a decrease of approximately $167,000 or 31.9 percent. The decrease in revenues was primarily due to an approximate $130,000 decrease in legacy membership retention rates as compared to the same period in the prior year, and the continued effects of COVID-19 causing new membership enrollment to decline throughout 2021 and the second quarter of 2022. Retention rates for new members that have enrolled in 2021 have continued to increase as compared to the same period in prior year. We believe that the membership services that we provide to our customers continues to represent a discretionary spending item and the services that we provide were postponed by the consumer as a result of the financial and economic impact of COVID-19 and the current economy.

During the six months ended June 30, 2022, RemoteMore revenue was approximately $1,125,000, for which there was no comparable revenue in the same period of the prior year.

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 June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Cost and expenses:
Cost of revenues		$	932			$	260			$	672				258.5	%
Sales and marketing			700				600				100				16.7	%
General and administrative			359				1,112				(753	)			(67.7	)%
Depreciation and amortization			232				29				203				700.0	%
Total cost and expenses:		$	2,223			$	2,001			$	222				11.1	%

		Six Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Cost and expenses:
Cost of revenues		$	1,794			$	521			$	1,273				244.3	%
Sales and marketing			1,419				1,300				119				9.2	%
General and administrative			1,466				2,430				(964	)			(39.7	)%
Depreciation and amortization			513				59				454				769.5	%
Total cost and expenses:		$	5,192			$	4,310			$	882				20.5	%

Cost of revenues: Cost of revenues during the three months ended June 30, 2022 was approximately $932,000, an increase of approximately $672,000, or 258.5 percent, from approximately $260,000 during the same period of the prior year. The increase was predominately attributed to approximately $543,000 of contracted software development costs related to RemoteMore, for which there was no comparable activity in the same period of the prior year. Also contributing to the increase was approximately $130,000 of costs as a direct result of increased revenues.

Cost of revenues during the six months ended June 30, 2022 was approximately $1,794,000, an increase of approximately $1,273,000, or 244.3 percent, from approximately $521,000 during the same period of the prior year. The increase was predominately attributed to approximately $1,010,000 of contracted software development costs related to RemoteMore, for which there was no comparable activity in the same period of the prior year. Also contributing to the increase was approximately $263,000 of costs as a direct result of increased revenues.

Sales and marketing expense: Sales and marketing expense during the three months ended June 30, 2022 was approximately $700,000, an increase of approximately $100,000, or 16.7 percent, from $600,000 during the same period in the prior year.

Sales and marketing expense during the six months ended June 30, 2022 was approximately $1,419,000, an increase of approximately $119,000, or 9.2 percent, from $1,300,000 during the same period in the prior year.

General and administrative expense: General and administrative expenses decreased by approximately $753,000, or 67.7 percent, to approximately $359,000 during the three months ended June 30, 2022, as compared to the same period in the prior year. The decrease was predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000, a reduction in other legal expenses and litigation charges of $174,000 and comparable payroll related costs of approximately $53,000, offset by an increase of $23,000 related to discretionary incentive payments made as compared to the same period in the prior year. Offsetting the decrease were increases in expenses related to RemoteMore of approximately $175,000, for which there were no comparable charges in the same period in the prior year, share based compensation of $78,000, and purchased services of $52,000. In addition, the three month period ended June 30, 2021 included $60,000 in mergers and acquisition expenses, for which there was no comparable expense in the current period.

General and administrative expenses decreased by approximately $964,000, or 39.7 percent, to approximately $1,466,000 during the six months ended June 30, 2022, as compared to the same period in the prior year. The decrease was predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000, a result of reductions of comparable payroll related costs of approximately $250,000, of which approximately $52,000 related to discretionary incentive payments made in the prior year as compared to the current period. Also contributing to the decrease were reductions in other legal expenses and litigation charges of $152,000, and various other general and administrative expenses of $105,000. Offsetting the reduction in expenses were increases in charges related to RemoteMore of approximately $308,000, for which there were no comparable charges in the same period in the prior year, other purchased services of approximately $120,000, share-based compensation of $96,000, and accounting expenses of $72,000.

Depreciation and amortization expense: Depreciation and amortization expense during the three months ended June 30, 2022 was approximately $232,000, an increase of approximately $203,000, compared to approximately $29,000 during the same period in the prior year. The increase was primarily attributable to approximately $206,000 of amortization expense related to RemoteMore's intangible assets, for which there were no comparable charges in the same period of the prior year, partially offset by assets and intangible assets reaching the end of their useful lives.

Depreciation and amortization expense during the six months ended June 30, 2022 was approximately $513,000, an increase of approximately $454,000, compared to approximately $59,000 during the same period in the prior year. The increase was primarily attributable to approximately $461,000 of amortization expense related to RemoteMore's intangible assets, for which there were no comparable charges in the same period of the prior year, partially offset by assets and intangible assets reaching the end of their useful lives.

Costs and Expenses by Segment

The following table sets forth each operating segment's costs and expenses for the periods presented. The period-to-period comparison is not necessarily indicative of future results.

		Three Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	1,208				906				302				33.3	%
NAPW Network			(565	)			431				(996	)			(231.1	)%
RemoteMore			923				-				923				100.0	%
Corporate Overhead			656				664				(8	)			(1.2	)%
Total costs and expenses:		$	2,222			$	2,001			$	221				11.0	%

		Six Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	2,316				1,815				501				27.6	%
NAPW Network			(161	)			942				(1,103	)			(117.1	)%
RemoteMore			1,779				-				1,779				100.0	%
Corporate Overhead			1,258				1,553				(295	)			(19.0	)%
Total costs and expenses:		$	5,192			$	4,310			$	882				20.5	%

For the three months ended June 30, 2022, costs and expenses related to our PDN Network segment increased by approximately $302,000, or 33.3%, as compared to the same period in the prior year. The increase is primarily as a result of increases in general and administrative and other costs of approximately $105,000, approximately $76,000 related to costs of revenues and $122,000 of sales and marketing costs driving the aforementioned increased revenues, as compared to the same period in the prior year.

For the six months ended June 30, 2022, costs and expenses related to our PDN Network segment increased by approximately $501,000, or 27.6%, as compared to the same period in the prior year. The increase is primarily as a result of general and administrative and other costs of approximately $258,000, approximately $104,000 related to costs of revenues and $173,000 of sales and marketing costs driving the aforementioned increased revenues, as compared to the same period in the prior year.

For the three months ended June 30, 2022, costs and expenses related to the NAPW Network decreased by approximately $996,000, or 231.1 percent. The decrease in the period is predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000, and reductions of approximately $977,000 of other legal expenses and litigation costs, $18,000 related to credit card fees due to a switch in credit card processors, and $8,000 in direct costs of revenues. Partially offsetting the decrease was approximately $9,000 in additional marketing costs compared to the same period in the prior year.

For the six months ended June 30, 2022, costs and expenses related to the NAPW Network decreased by approximately $1,103,000, or 117.1 percent. The decrease in the period is predominately due to settlement of litigation resulting in a one-time, non-cash gain of approximately $909,000, and reductions of approximately $180,000 of payroll related costs, predominately as a result of cost containment initiatives implemented in the prior year, $41,000 related to other legal expenses and litigation costs and $16,000 related to sales and marketing costs, partially offset by an increase of approximately $75,000 in costs of revenues due to increased conference expenses and member benefits in an effort to increase future revenues.

For the three months ended June 30, 2022, cost and expenses related to RemoteMore was approximately $923,000 predominately consisting of contractor costs of approximately $543,000, amortization of intangibles of approximately $206,000, and other operating costs of approximately $175,000. There were no comparable costs in the same period of the prior year.

For the six months ended June 30, 2022, cost and expenses related to RemoteMore was approximately $1,779,000 predominately consisting of contractor costs of approximately $1,009,000, amortization of intangibles of approximately $461,000, and other operating costs of approximately $308,000. There were no comparable costs in the same period of the prior year.

For the three months ended June 30, 2022, costs and expenses related to Corporate Overhead decreased by approximately $8,000, or 1.2 percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in legal costs of approximately $61,000, payroll related costs by $43,000, and other miscellaneous state taxes and filing fees by approximately $59,000. Partially offsetting the reductions were increased stock-based compensation costs of approximately $78,000, and mergers and acquisitions costs of $60,000 in the prior year for which there was no comparable costs in the current period.

For the six months ended June 30, 2022, costs and expenses related to Corporate Overhead decreased by approximately $295,000, or 19.0 percent, as compared to the same period in the prior year. The reduction is primarily as a result of decreases in legal expenses of approximately $135,000, payroll related costs by approximately $133,000, of which $58,000 related to discretionary incentive payments made in the prior year for which there were no comparable charges in the current period, mergers and acquisition costs by approximately $50,000 and other miscellaneous state taxes and filing fees by approximately $146,000. Partially offsetting the reductions were increased stock-based compensation costs of approximately $96,000, and professional and other services by approximately $59,000 as compared to the same period in the prior year.

Income Tax Benefit

		Three Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Income tax expense (benefit)		$	16			$	50			$	(34	)			(68.0	)%

		Six Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
Income tax expense (benefit)		$	(10	)		$	(17	)		$	7				41.2	%

During the three months ended June 30, 2022 and 2021, we recorded income tax expense of approximately $16,000 and $50,000. The slight decrease in income tax expense during the current period was primarily due to changes in discrete tax items and in the Company's net operating losses.

During the six months ended June 30, 2022 and 2021, we recorded an income tax benefit of approximately $10,000 and $17,000. The slight 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 June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	170				239				(69	)			(28.9	)%
NAPW Network			708				(186	)			894				480.6	%
RemoteMore			(287	)			-				(287	)			(100.0	)%
Corporate Overhead			(643	)			(643	)			0				0.0	%
Consolidated net loss from continuing operations		$	(52	)		$	(590	)		$	538				91.2	%

		Six Months Ended June 30,			Change			Change
		2022			2021			(Dollars)			(Percent)
		(in thousands)
PDN Network		$	436				599				(163	)			(27.2	)%
NAPW Network			513				(412	)			925				224.5	%
RemoteMore			(668	)			-				(668	)			(100.0	)%
Corporate Overhead			(1,224	)			(1,532	)			308				20.1	%
Consolidated net loss from continuing operations		$	(943	)		$	(1,345	)		$	402				29.9	%

Consolidated Net Loss from Continuing Operations. As the result of the factors discussed above, during the three months ended June 30, 2022, we incurred a net loss of approximately $52,000 from continuing operations, an increase of approximately $538,000 or 91.2 percent, compared to a net loss of approximately $590,000 during the three months ended June 30, 2021. During the six months ended June 30, 2022, we incurred a net loss of approximately $943,000 from continuing operations, an increase of approximately $402,000 or 29.9 percent, compared to a net loss of approximately $1,345,000 during the same period in the prior year.

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 and six months ended June 30, 2022 and 2021:

		Three Months Ended June 30,			Six Months Ended June 30,
		2022			2021			2022			2021
		(in thousands)			(in thousands)
Revenues		$	-			$	-				-				-
Cost of Sales			3				18				14				21
Depreciation and amortization			-				-				-				-
Sales and marketing			-				-				-				-
General and administrative			8				21				15				30
Non-operating expense			0				10				0				10
Loss from discontinued operations before income tax			(11	)			(49	)			(29	)			(61	)
Income tax expense (benefit)			-				-				-				-
Net loss from discontinued operations		$	(11	)		$	(49	)			(29	)			(61	)

Liquidity and Capital Resources

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

		June 30, 2022			December 31, 2021
		(in thousands)
Cash and cash equivalents		$	2,439			$	3,403
Working capital (deficiency)		$	553			$	418

Our principal sources of liquidity are our cash and cash equivalents, including net proceeds from the issuances of common stock, if any. As of June 30, 2022, we had cash and cash equivalents of $2,439,386 compared to cash and cash equivalents of $3,402,697 at December 31, 2021. We had an accumulated deficit of $($96,392,020) at June 30, 2022. During the six months ended June 30, 2022, we generated a net loss from continuing operations of $($942,461). During the six months ended June 30, 2022, the Company used cash in continuing operations of $569,545.

We continue to focus on our overall profitability by reducing operating and overhead expenses. We have continued to generate negative cash flows from operations, and we expect to incur net losses for the foreseeable future, especially considering the negative impact COVID-19 has had and may continue on our liquidity and financial position. These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to further implement our business plan, raise capital, and generate revenues. The condensed consolidated financial statements do not include any adjustments that might be necessary if we 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 our other assets or discontinue business lines.

While we believe that our cash and cash equivalents at June 30, 2022 and cash flow from operations should be sufficient to meet our working capital requirements for the fiscal year ending December 31, 2022, 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 similar to COVID-19 will not require additional funding sources in the future or require an acceleration of plans to conserve liquidity. Future efforts to raise additional funds may not be successful or they may not be available on acceptable terms, if at all.

Our PDN Network sells recruitment services to employers, generally on a 30-to-60-day period or a one-year contract basis. This revenue is also deferred and recognized over the period of the contract. Our payment terms for PDN Network customers range from 30 to 60 days. We consider the difference between the payment terms and payment receipts a result of transit time for invoice and payment processing and to date have not experienced any liquidity issues as a result of the payments extending past the specified terms. Our NAPW Network collects membership fees generally at the commencement of the membership term or at renewal periods thereafter. The memberships we sell are for one year and we defer recognition of the revenue from membership sales and renewals and recognize it ratably over the twelve-month period. We also offer monthly membership for IAW USA for which we collect a fee on a monthly basis. RemoteMore generates revenue by providing contracted programmers to assist customers with their software solutions through customized software development. Customers are charged for the period the work is performed and payment terms are typically net 10 days.

		Six Months Ended June 30,
		2022			2021
Cash provided by (used in) continued operations		(in thousands)
Operating activities		$	(570	)		$	(663	)
Investing activities			(7	)			(81	)
Financing activities			(387	)			1,167
Effect of exchange rate fluctuations on cash and cash equivalents			1				(33	)
Cash provided by (used in) discontinued operations			-				-
Net increase (decrease) in cash and cash equivalents		$	(963	)		$	390

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 June 30, 2022 and December 31, 2021, 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 six months ended June 30, 2022, was approximately $570,000. We had a net loss from continuing operations of approximately $942,000 during the six months ended June 30, 2022, which included a non-cash litigation settlement reserve of approximately $909,000, stock-based compensation expense of approximately $405,000, depreciation and amortization expense of approximately $513,000, which was partially offset by deferred tax benefit of approximately $16,000 and amortization of right-of-use assets of approximately $5,000. We received $190,000 in cash resulting in a decrease of our Merchant Reserve. Changes in operating assets and liabilities provided approximately $193,000 of cash during the six months ended June 30, 2022, consisting primarily of decreases in accounts receivable, partially offset by increases in prepaid expenses, accounts payable, accrued expenses, and deferred revenues.

Net cash used in operating activities from continuing operations during the six months ended June 30, 2021, was approximately $663,000. We had a net loss of approximately $1,345,227 during the six months ended June 30, 2021, which included a stock-based compensation expense of approximately $309,000, depreciation of amortization expense of $52,000 and amortization of right-of-use assets of $46,000, which was partially offset by deferred tax benefit of approximately $17,000. Changes in operating assets and liabilities used approximately $162,462 of cash during the six months ended June 30, 2021, consisting primarily of increases in accounts receivable, accounts payable, 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 six months ended June 30, 2022, was approximately $7,000, which consisted of investments in developed technology and computer equipment purchases.

Net cash used in investing activities from continuing operations during the six months ended June 30, 2021, was $81,000, which consisted of payments for investment deposits of $60,000 and $21,000 related to computer equipment purchases.

Net Cash Provided by Financing Activities

Net cash used in financing activities from continuing operations during the six months ended June 30, 2022, was approximately $387,000 which consisted of the reacquisition of previously issued common stock as a result of the stock buyback plan.

Net cash provided by financing activities from continuing operations during the six months ended June 30, 2021 was $1,167,000, which reflected proceeds from the sale of common stock.

Non-GAAP Financial Measure

Adjusted EBITDA

We believe Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other companies.

The following non-GAAP financial information in the tables that follow are reconciled to comparable information presented using GAAP, derived by adjusting amounts determined in accordance with GAAP for certain items presented in the accompanying selected operating statement data.

The adjustments for the three and six months ended June 30, 2021 relate to stock-based compensation, litigation settlement reserves, depreciation and amortization, interest and other income and income tax expense (benefit).

The adjustments for the three and six months ended June 30, 2022 relate to stock-based compensation, litigation settlement reserves, loss attributable to noncontrolling interest, depreciation and amortization, interest and other income and income tax expense (benefit).

		Three Months Ended June 30,
		2022			2021
		(in thousands)
Loss from Continuing Operations		$	(53	)		$	(590	)
Stock-based compensation			281				203
Litigation settlement reserve			(925	)			75
Loss attributable to noncontrolling interest			155				-
Depreciation and amortization			232				29
Interest and other income			(1	)			(2	)
Income tax expense (benefit)			16				50
Adjusted EBITDA		$	(295	)		$	(235	)

		Six Months Ended June 30,
		2022			2021
		(in thousands)
Loss from Continuing Operations		$	(943	)		$	(1,345	)
Stock-based compensation			405				309
Litigation settlement reserve			(909	)			75
Loss attributable to noncontrolling interest			359				-
Depreciation and amortization			513				59
Interest and other income			(4	)			(3	)
Income tax expense (benefit)			(10	)			(17	)
Adjusted EBITDA		$	(589	)		$	(922	)

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Our management's discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements.

We base our estimates on our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

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

Accounts Receivable

Our policy is to reserve for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Goodwill and Intangible Assets

The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other ("ASC 350"). ASC 350 requires that goodwill and other intangibles with indefinite lives should be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.

Goodwill is tested for impairment at the reporting unit level on an annual basis (December 31 for the Company) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test.

When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then compares the fair value of the Company's reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of a reporting unit exceeds its fair value, the Company will measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Capitalized Technology Costs

We account for capitalized technology costs in accordance with ASC 350-40, Internal-Use Software ("ASC 350-40"). In accordance with ASC 350-40, we capitalize certain external and internal computer software costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are amortized over the estimated useful lives of the software assets on a straight-line basis, generally not exceeding three years.

Business Combinations

ASC 805, Business Combinations ("ASC 805"), applies the acquisition method of accounting for business combinations to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. ASC 805 establishes principles and requirements for how the acquirer a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Accounting for acquisitions requires the Company to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition-date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition-date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the condensed consolidated statements of comprehensive loss.

Revenue Recognition

Our principal sources of revenue are recruitment revenue, consumer marketing and consumer advertising revenue, membership subscription fees, and contracted software development. Recruitment revenue includes revenue recognized from direct sales to customers for recruitment services and events, as well as revenue from our direct ecommerce sales. Revenues from recruitment services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed or determinable and collectability is probable. Our recruitment revenue is derived from agreements through single and multiple job postings, recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and advertising, e-newsletter marketing and research and outreach services.

Consumer marketing and consumer advertising revenue is recognized either based upon a fixed fee for revenue sharing agreements in which payment is required at the time of posting, or billed based upon the number of impressions (the number of times an advertisement is displayed) recorded on the websites as specified in the customer agreement.

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. Starting January 2, 2018, we began offering a monthly membership for which we collect fees on a monthly basis and we recognize revenue in the same month as the fees are collected. Revenue from related membership services is derived from fees for development and set-up of a member's personal on-line profile and/or press release announcements. Fees related to these services are recognized as revenue at the time the on-line profile is complete and press release is distributed.

Revenues generated from RemoteMore consist of contracts entered into to provide customers with software solutions and are recognized in the month work is performed.

Revenue Concentration

We are in an alliance with another company to build, host, and manage our job boards and website. This alliance member also sells two of our recruitment services products and bills customers, collects fees, and provides customer services. For the six months ended June 30, 2022 and 2021, we recorded approximately 11.2% and 11.0% of our recruitment services revenue from this alliance sales relationship.

Recent Accounting Pronouncements

See Note 3 to our financial statements.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

As of June 30, 2022, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective on June 30, 2022, and during the period prior to and including the date of this report.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter of fiscal 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1 - LEGAL PROCEEDINGS

On June 7, 2022, we settled a lawsuit whereby NAPW Inc., a wholly-owned subsidiary of ours, was named as a defendant in a Nassau County (NY) Supreme Court case [NAPW Case index No. LT 000421/2018; NAPW's former Garden City, NY, office], and whereby TL Franklin Avenue Plaza LLC had sued and obtained a judgment against NAPW in the amount of $855,002, plus accrued interest through the settlement date. The settlement was for a cash payment of $70,000 to be made to the plaintiff, resulting in the reduction of our reserve and a one-time, non-cash gain for $908,564 reflected in our consolidated financial statements. A stipulation for settlement was filed with the court on June 7, 2022, and the lawsuit was effectively terminated with prejudice upon such filing.

We and our wholly-owned subsidiary, NAPW, Inc., are parties to a proceeding captioned Deborah Bayne, et al. vs. NAPW, Inc. and Professional Diversity Network, Inc., No. 18-cv-3591 (E.D.N.Y.), filed on June 20, 2018 and alleging violations of the Fair Labor Standards Act and certain provisions of the New York Labor Law. Plaintiffs are seeking monetary damages and equitable relief. We dispute that we or our subsidiary violated the applicable laws or that either entity has any liability and intend to vigorously defend against these claims. The matter is in the final stages of discovery, and we have completed depositions of relevant witnesses. During the first quarter of 2020, we recorded a $450,000 litigation settlement reserve in the event of an unfavorable outcome in this proceeding. In November 2020, both parties entered into mediation proceedings, but a settlement was not reached. While the COVID-19 pandemic has caused delays to the litigation, it is expected that these delays will decrease as the disruption caused by the pandemic subsides.

General Legal Matters

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

ITEM 1A - RISK FACTORS

In addition to other information set forth in this report, you should carefully consider the risk factors described in Part I, Item 1A, "Risk Factors" in our 2021 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

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

		Total number of shares purchased			Average price paid per share			Total number of shares purchased as part of publicly announced plans or programs			Maximum number of shares (or approximate dollar value of shares) that may yet be purchased under the plans or programs (in thousands)
January 1, 2022 - March 31, 2022
Stock buyback program (1)			141,987			$	0.98				141,987			$	1,860
April 1, 2022- April 30, 2022
Stock buyback program (1)			115,890			$	0.98				115,890			$	1,746
May 1, 2022 - May 31, 2022
Stock buyback program (1)			72,549			$	0.86				72,549			$	1,687
June 1, 2022 - June 30, 2022
Stock buyback program (1)			87,569			$	0.80				87,569			$	1,617
			417,995								417,995

(1)

We have a share repurchase program ("Stock Buyback Plan") under which we are authorized to purchase up to $2.0 million of our outstanding common shares. The timing and amount of any shares repurchased under the Stock Buyback Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Buyback Plan may be suspended or discontinued at any time without prior notice. No shares have been or will be knowingly purchased from Company insiders or their affiliates.

We purchased 417,995 shares of our common stock during the six-month period ended June 30, 2022, at an average cost of approximately $0.92 per share (excluding commissions), for a total of approximately $387,000. These transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At June 30, 2022, we had approximately $1,617,000 repurchase authority remaining under the current Stock Buyback Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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

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: August 15, 2022	By:	/s/ Larry Aichler
	Name:	Larry Aichler
	Title:	Chief Financial Officer