Professional Diversity Network, Inc.

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’** EQUITY (Unaudited)**

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Description of Business

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the SEC for interim financial information. Accordingly, they donot include all of the information and notes required by GAAP for complete financial statements. The accompanying consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods arenot necessarily indicative of results that* maybe expected for any other interim period or for the full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our2024* Form10-K.

Professional Diversity Network, Inc. (the “Company”, “PDN, Inc.”, “we,” “our,” or “us,”) is a dynamic operator of professional networks with a focus on talent acquisition and professional development. Our networks provide access to a robust audience across multiple demographics. We serve a variety of such communities, including Women, Hispanic Americans, African Americans, Asian Americans, persons with disabilities, Military Professionals, and Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ+). Our goal is (i) to assist our registered users and members in their efforts to connect with like-minded individuals and identify career opportunities within the network and (ii) connect members with prospective employers while helping the employers address their workforce needs. We believe that the combination of our solutions allows us to approach recruiting and professional networking uniquely and thus create enhanced value for our members and clients.

PDN is a holding company and operatesthree business units: TalentAlly, LLC, NAPW, Inc. and RemoteMore USA, Inc

TalentAlly, LLC ("TalentAlly" or "TalentAlly Network") consists of several online professional job seeker communities dedicated to serving professionals in the United States and employers seeking to hire talent from a wide range of sources with many demographics represented. We use the word “professional” to describe any person interested in TalentAlly's websites or career fairs presumably for the purpose of career advancement or related benefits offered by the Company, whether ornot such person is employed and regardless of the level of education or skills possessed by such person. Leveraging the power of our affinity job seeker groups, these professionals harness the relationships with employers and recruiters to help advance their careers. TalentAlly operate these recruitment affinity groups within the following sectors: Women, Hispanic-Americans, African-Americans, Asian-Americans, persons with disabilities, Military Professionals, and LGBTQ+. In addition, the Company also manages the job seeker websites and career fairs for prominent diverse membership-based organizations, including butnot limited to NAACP, National Urban League, and Kappa Alpha Psi. Employers and recruiters benefit from the Company’s relationship with these organizations, which allows them to access a large pool of qualified job seekers in a centralized manner. TalentAlly is 100% owned and operated by PDN, Inc.

NAPW Network Inc. ("NAPW" or "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. NAPW is 100% owned and operated by PDN, Inc.

RemoteMore USA (“RemoteMore USA” or “RemoteMore”) is an innovative, global entity that provides remote-hiring marketplace services for developers and companies. RemoteMore connects companies with reliable, cost-efficient, vetted developers, and empowers software developers to find meaningful jobs regardless of their location. As of* June 30, 2025*, PDN, Inc. owned 82.63% of RemoteMore USA, Inc. The Company consolidates RemoteMore USA’s operations into its consolidated financial statements.

2. Going Concern and Management’s Plans

At* June 30, 2025*, the Company’s principal sources of liquidity were its cash and cash equivalents, including cash from operations and net proceeds from the issuances of common stock, if any.

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The Company had an accumulated deficit of $103,612,710 at* June 30, 2025*. During thesix months ended* June 30, 2025*, the Company generated a loss from continuing operations, net of tax, of $1,233,147. During thesix months ended* June 30, 2025*, the Company used cash in continuing operations of $779,651. At* June 30, 2025*, the Company had a cash balance of $125,081. Total revenues were $3,146,076 and $3,417,302 for thesix months ended* June 30, 2025and2024*, respectively. The Company had a working capital deficit from continuing operations of $1,919,261 at* June 30, 2025* and a working capital from continuing operations of $270,695 at* December 31, 2024*. These conditions raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements donot include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Cash on hand and cash flow from operations* maynot* be sufficient to meet our working capital requirements through the fiscal period ending* December 31,2025. In order to accomplish our business plan objectives, the Company will need to increase revenues, raise capital through the issuance of common stock, continue its cost reduction efforts, or enter into a strategic merger or acquisition. There can beno assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances willnot 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 maynot* 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 (“U.S. GAAP”).

Use of Estimates – The preparation of consolidated financial statements in conformity with U.S. 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 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 consolidated financial statements, which management considered in formulating its estimate, could change in the near term due toone or more future intervening events. Accordingly, the actual results could differ significantly from estimates.

Significant estimates underlying the consolidated financial statements include the fair value of acquired assets and liabilities associated with acquisitions; assessment of goodwill impairment, other intangible assets and long-lived assets for impairment; allowances for credit losses 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 consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and those subsidiaries where less than50% is owned but consolidation is required. 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 ofthree months or less

Accounts Receivable and Allowance for Credit Losses - The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within30 to90 days of the period in which the corresponding sales occur and donot bear interest. They are recorded at net realizable value less an allowance for credit losses and are classified as account receivable, net on the consolidated balance sheets.

The Company considers both current conditions and reasonable and supportable forecasts of future conditions when evaluating expected credit losses for uncollectible receivable balances. In our determination of the allowance for credit losses, we pool receivables by days outstanding and apply an expected credit loss percentage to each pool. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due isnot collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.

The Company isnot party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

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Allowance for Credit Losses

The following table summarizes the activity related to the Company’s allowance for credit losses:

The numbers presented above relate solely to our portfolio of trade accounts receivable asno allowance for credit losses was recognized on other receivables as presented on our consolidated balance sheets.

Other Receivables – Other receivables represent amounts that are owed to the Company that arenot considered trade receivables. The Company periodically reviews its other receivables for credit risk to determine whether an allowance is necessary and other factors that* mayindicate that the realization of an account maybe 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, 2025* and* December 31, 2024*, the balance in other receivables as reported on the consolidated balance sheets was deemed collectible.

Property and Equipment - Property and equipment is stated at cost, including any cost to place the property into service, less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets which currently range from three tofive 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 thesix months ended* June 30, 2025and2024* was approximately $8,351 and $5,009 and is recorded in depreciation and amortization expense in the accompanying consolidated statements of operations.

Lease Obligations - The Company leases office space under a non-cancelable operating lease that expires in* September 2027.*The Company's facility lease provides for periodic rent increases and contains escalation clauses and renewal options. The Company's lease terms include options to extend.

The Company recognizes operating lease expense on a straight-line basis over the lease term and variable lease payments are expensed as incurred. Lease costs are primarily recorded within SG&A expenses in the Company's consolidated statements of loss and comprehensive loss.

The Company determines if a contract contains a lease at lease inception. If the borrowing rate implicit in the lease isnot determinable, the Company uses its incremental borrowing rate ("IBR") based on information available at lease commencement including prevailing financial market conditions to determine the present value of future lease payments. The Company has elected the option to combine lease and non-lease components as a single component for the Company's entire population of lease assets.

Operating lease assets and lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease paymentsnot yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, and lease incentives. The Company has electednot to apply the recognition requirements to short-term leases of12 months or less and instead recognizes lease payments as expense on a straight-line basis over the lease term. The Company’s lease agreements donot contain any material residual value guarantees or material restrictive covenants. Leased assets are presented net of accumulated amortization. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments based on changes in index rates or usage, arenot included in the ROU assets or liabilities; instead, these are expensed as incurred and recorded as variable lease expense.

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, generallynot exceedingthree years.

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Business Combinations - ASC805, Business Combinations (“ASC805”), 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. ASC805 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* maybe up toone* year from the acquisition date, the Company* may*record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the interim consolidated statements of operations.

Goodwill and Intangible Assets - The Company accounts for goodwill and intangible assets in accordance with ASC350, Intangibles – Goodwill and Other (“ASC350”). ASC350 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 31for the Company) and between annual tests if an event occurs or circumstances change that would more likely thannot* 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 thannot that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely thannot 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 isnot impaired and the Company isnot 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.

Contingent Liabilities– Our determination of the treatment of contingent liabilities in the consolidated financial statements is based on our view of the expected outcome of the applicable contingency. In the ordinary course of business, we consult with legal counsel on matters related to litigation and other experts both within and outside our Company. We accrue a liability if the likelihood of an adverse outcome is probable and the amount of loss is reasonably estimable. We disclose the matter, but donot accrue a liability if the likelihood of an adverse outcome is reasonably possible and an estimate of loss isnot determinable. Legal and other costs incurred in conjunction with loss contingencies are expensed as incurred.

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

Revenue Recognition – Revenue is recognized when all of the following conditions exist: (1) persuasive evidence of an arrangement exists, (2) services are performed, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. (See Note5 – Revenue Recognition.)

Deferred revenue includes customer payments which are received prior to performing services and revenues are recognized upon the completion of these services. Annual membership fees collected at the time of enrollment are recognized as revenue ratably over the membership period, which are typically for a12-month membership period.

Advertising and Marketing Expenses – Advertising and marketing expenses are expensed as incurred or thefirst time the advertising takes place. The production costs of advertising are expensed thefirst time the advertising takes place. For thethree andsix months ended* June 30, 2025,*the Company incurred advertising and marketing expenses of approximately $163,735 and $310,402. These amounts are included in sales and marketing expenses in the accompanying statements of operations.

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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* maybe in excess of the FDIC insurance limits. The Company hasnot* experienced any losses in such accounts and believes that it isnot exposed to any significant credit risk on the account.

Income Taxes - The Company accounts for income taxes in accordance with ASC740, Income Taxes (“ASC740”), 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 thannot that the benefit of such deferred tax asset willnot be realized in future periods. If it becomes more likely thannot that a tax asset will be used, the related valuation allowance on such assets would be reduced.

ASC740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with ASC740-20 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 wereno deferred tax liabilities, as of* June 30, 2025*, recorded in the accompanying consolidated balance sheets. The Company is currentlynot aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company* maybe subject to potential income tax examinations by federal or state authorities. These potential examinations mayinclude questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. Management doesnot* expect that the total amount of unrecognized tax benefits will materially change over the nexttwelve months. Tax years that remain open for assessment for federal and state tax purposes include the years ended* December 31, 2021through2023.*

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 wereno amounts accrued for penalties or interest as of* June 30, 2025*.

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 thethree andsix months ended* June 30, 2025and2024* excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive.

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Recent Accounting Pronouncements

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures, which enhances effective tax rate reconciliation disclosure requirements and provides clarity to the disclosures of income taxes paid, income before taxes and provision for income taxes. The amendments are effective for fiscal years beginning after* December 15, 2024.Early adoption is permitted for annual financial statements that havenot* yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In* November 2024,the Financial Accounting Standards Board (“FASB”) issued ASU2024*-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses. This ASU is effective for annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027,*with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

4. Business Combinations

RemoteMore

The Company acquired an initial 45.62% interest in RemoteMore, a software developer recruiting company in2021 for approximately $1.36 million. During2022 and2023, the Company acquired an additional 27% interest for approximately $352,000 for a total of 72.62% interest in RemoteMore. On* April 30, 2024,the Company and the minority group made an aggregate $300,000 capital injection while maintaining the same percentage of control of interest. On February 25, 2025,the Company acquired an additional 10.01% interest for approximately $300,000 for a total of 82.63% interest in RemoteMore as of June 30, 2025*. See stock transaction detail in Note11.

Expo Experts

In* January 2023,the Company purchased the assets and operations of Expo Experts, LLC (“Expo Experts”), an Ohio limited liability company, for a total consideration of $600,000 funded by the payment of $400,000 in cash and the issuance of restricted shares of PDN common stock valued at $200,000. Expo Experts specializes in producing premier face-to-face and virtual recruiting events for Engineering, Technology and Security Clearance positions, as well as being designed to attract diverse candidates who may*also have STEM-based backgrounds. The Company has integrated Expo Experts' business into our event sales operation sector.

Expo Experts’ accounts and operations have been reflected in the TalentAlly Network for segment reporting purposes (see Note14 - Segment Information**).**

5. Revenue Recognition

The Company recognizes revenue under the core principle of ASC606 – Revenue from Contracts with Customers (“ASC606”), 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 followingfive-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* mayprovide 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 arenot* 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 haveone performance obligation and all consideration is allocated to that performance obligation and recognized at a point in time contemporaneous when the service is performed or with the date of the event.

Payment is typically due in full, at net30, from the moment control of the goods or services have begun to transfer, unless both parties have negotiated an installment-based payment arrangement through the term of the contract. The Company* may*have contracts where there is an extended timing difference between payment and the time when control of the goods or services is transferred to the customer.

Nature of Goods and Services

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

Recruitment Services

The Company’s recruitment services revenue is derived from the Company’s agreements through single and multiple job postings, recruitment media, talent recruitment communities, basic and premier corporate memberships, hiring campaign marketing and advertising, e-newsletter marketing and 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 atwelve-month contract for services and as such the revenue for each contract is recognized ratably over itstwelve-month term. Event revenue is recognized in the period that the event takes place and e-commerce sales are forsixty toninety-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:

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Membership Fees and Related Services

Membership fees are typically month to month; however, members* mayprepay for a12*-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.

Monthly membership revenues are recognized in the same month 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.

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 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 some of the Company’s job boards and website. This alliance member also sellstwo of the Company’s recruitment services products and bills customers, collects fees, and provides customer services. For thesix months ended* June 30, 2025and2024*, the Company recorded approximately 2% and 6% of its recruitment services revenue from this alliance sales relationship. In2024, we transitioned the management of these job boards and website operations in-house.

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 Note14 - Segment Information.

Contract Balances

The Company’s rights to consideration for work completed, butnot 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 hasno recorded contract assets as of* June 30, 2025* or* December 31, 2024*

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Consideration received in advance from customers is recorded as a contract liability, if a contract exists under ASC606, 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 succeedingtwelve-month period are classified as current contract liabilities and the remaining amounts, if any, are classified as non-current contract liabilities. Contract liabilities of $1,571,480 and $1,842,036 are included in current deferred revenues, on the consolidated balance sheets as of* June 30, 2025* and* December 31, 2024*, respectively.

For thethree months ended* June 30, 2025and2024*, we recognized revenue as follows:

Revenue recognized associated with contract liabilities that were included at the beginning of this quarter was $737,502. 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 a12-month membership period.

Transaction Price Allocated to the Remaining Performance Obligations

The Company applies the optional exemptions and doesnot disclose: a) information about remaining performance obligations that have an original expected duration ofone 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 isone year or less and, as a result, the Company applies the optional exemptions and doesnot disclose information about remaining performance obligations that have an original expected duration ofone year or less.

6. Capitalized Technology

Capitalized Technology, net is as follows:

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Amortization expense related to capitalized technology was approximately $28,125 and $24,150 for thethree months ended* June 30, 2025and2024*, and was approximately $56,625 and $47,117 for thesix months ended* June 30, 2025and2024**,*respectively, and is recorded in depreciation and amortization expense in the accompanying statements of operations.

7. Intangible Assets

Intangible assets, net was as follows:

As of* June 30, 2025*, estimated amortization expense in future fiscal years is summarized as follows:

For thethree months ended* June 30, 2025and2024*, amortization expense related to intangible assets was approximately $8,333 and $27,594, and is recorded in depreciation and amortization expense in the accompanying consolidated statements of operations.

For thesix months ended* June 30, 2025and2024*, amortization expense related to intangible assets was approximately $16,667 and $55,188, and is recorded in depreciation and amortization expense in the accompanying consolidated statements of operations.

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8. Long-term Investments

On* September 27, 2022,the Company entered into a Stock Purchase Agreement (the “SPA”) with Koala Malta Limited, a private limited liability company registered under the laws of Malta (the “Seller”). Upon the execution of the SPA, the Company purchased 65,700 issued ordinary shares of Koala Crypto Limited (now renamed as QBSG Limited) from Seller, representing 9% of the total issued share capital of QBSG, and in exchange, the Company issued 86,339 shares of its common stock to Seller in a private placement (the “Consideration Shares”) valued at $1,350,000. As allowed under ASC321*-10-35, the Company has elected to measure the equity investment in QBSG Limited at cost as QBSG Limited is a private company and doesnot have a readily determinable fair value. The Company evaluates the investment for any impairment annually. The shares of QBSG are recorded in the consolidated balance sheet as ‘other assets’.

Upon execution of the SPA, the Company, the Seller and QBSG also entered into a Shareholders’ Agreement. The Shareholders’ Agreement imposes certain transfer restrictions on the Seller and the Company as shareholders of QBSG, provides for certain governance and approval rights among the parties, and gives the Company a put option with respect to its investment in QBSG in the event of a change of control of the Seller. At the same time, Alan Tak Wai Yau, an individual and the majority shareholder of Koala Capital Limited, which is the parent company of the Seller (“Koala Capital”), provided the Company with a share charge over15 percent of the issued share capital of Koala Capital (the “Share Charge”) and Koala Capital provided the Company with a guaranty and indemnity (the “Guarantee”), which Share Charge and Guarantee were granted as security for a number of the Seller’s obligations as set forth therein including obtaining the lifting of the voluntary suspension of QBSG’s virtual financial assets license by the Malta Financial Services Authority (“MFSA”). Koala Capital had submitted and responded to all queries raised by the MFSA, and the authorization/supervision unit has approved its application. To enhance the governance of QBSG's profits and dividends, QBSG has agreed to assignone board seat to the Company's CEO.

On* December 5, 2024,the Company entered into a Profit Participation Agreement (the “PPA”) with Koala Malta Limited, a private limited liability company registered under the laws of Malta (the “Seller”). Upon the execution of the PPA, the Company purchased a 6% right in QBSG Limited (the “Target”, previously Koala Crypto Limited) to receive all distributions and dividends which maybe declared and/or distributed by the Target on an annual basis in terms of applicable law, along with all rights, title, and interest from the Seller. The consideration of the Profit Participation is $1,200,000, including $700,000 cash and $500,000 value of the Company’s common stocks, or a total of 113,636 shares at a price of $4.40 per share. In addition to the 9% share purchase from the Seller in September 2022,*the Company now owns the right to receive 15% of all distributions and dividends by the Target.

As the Profit Participation investment doesnot include the ownership of equity of QBSG Limited, only the right to future distributions, the Profit Participation investment doesnot meet the criteria to be recorded under ASC321-10-35 and is subject to fair value accounting standards. As of* December 31, 2024,the Company holds a Level3* investment recorded at a cost of $1,200,000, representing 6% of all distributions and dividends from QBSG Limited.

The fair value of the investment is estimated using a combination of valuation methodologies, including Discounted Cash Flow (DCF) analysis, Relative Valuation, and Transaction Comparables, resulting in an average fair value estimate of $1,156,000. These methods incorporate significant unobservable inputs, such as a weighted average cost of capital of 15%, a long-term revenue growth rate of 10%, a long-term pre-tax operating margin of 15%, a 20% discount for lack of control, and a 40% discount for lack of marketability. The valuation also considers market data from publicly traded companies in the crypto infrastructure and digital asset services sectors, as well as data from recent merger and acquisition transactions within the industry. The inputs and estimates used* maybe subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. 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 toone* or more future confirming events, including regulation changes in Malta, inability of QBSG to meet revenue and income forecasts or QBSG's inability to pay dividends, all of which could significant decrease the value of the Company's investment. Accordingly, the actual results could differ significantly from those estimates

There wasno activity in Level3 investments other than the acquisition of the Profit Participation investment. Level3 investments balance was as follows:

On* January 26, 2025,the Company entered into a Stock Purchase Agreement (the “SPA”) with AI Geometric Ltd, a company organized under the laws of the United Kingdom of Great Britain and Northern Ireland (the “Seller”). Pursuant to the SPA, the Seller agreed to issue and sell 1,300 shares of the Seller to the Company, representing 13% of all issued and outstanding shares of the Seller, at a consideration of $1,300,000 (the “Transaction”). The board of directors of the Company approved the Transaction on January 17,2025.The closing of the Transaction took place on January 27, 2025.As allowed under ASC321*-10-35, the Company has elected to measure the equity investment in Al Geometric, Ltd. at cost as it is a private company and doesnot have a readily determinable fair value. The Company evaluates the investment for any impairment annually. The shares of AI Geometric Ltd. are recorded in the consolidated balance sheet as ‘other assets’.

9. Commitments and Contingencies

Lease Obligations - The Company leases its corporate headquarters. The office lease is for 4,902 square feet of office space and the lease term is for 7 years, commencing on* October 1, 2020.The Company made approximately $53,922 and $52,697 of cash lease payments related to the office space for thesix* months ended* June 30, 2025and2024*, respectively. The weighted average remaining lease terms as of thesix months ended* June 30, 2025and2024*, are 2.25 years and 3.25 years. The weighted average discount rate for operating leases for thesix months ended* June 30, 2025and2024*, is 6%.

The present value of the remaining lease liabilities as of* June 30, 2025* are as follow:

As of* June 30, 2025* and,* December 31, 2024*, right of use assets were $188,816 and $226,704, and related lease obligations remaining, related to the Company's office lease, were $233,197 and $279,312, as recorded on the Company’s consolidated balance sheets.

Legal Proceedings

The Company and its wholly owned subsidiary, NAPW, Inc., are parties to a proceeding captioned Deborah Bayne, et al. vs. NAPW, Inc. and Professional Diversity Network, Inc.,No. 18-cv-3591 (E.D.N.Y.), filed on* June 20, 2018,and alleging violations of the Fair Labor Standards Act and certain provisions of the New York Labor Law. The class is defined as “all individuals employed in New York from June 20, 2012through October 15, 2021by NAPW and PDN to sell memberships to the women’s networking organization known as the National Association of Professional Women and the International Association of Women,” excluding corporate officers, shareholders, directors and administrative employees. As it stands, the class currently consists of164* putative class members and60 opt-in plaintiffs.

The complaint alleges that NAPW (and PDN in its capacity as an alleged joint employer) violated similar provisions of the FLSA and the NYLL by (i) failing to pay overtime wages as required by both the FLSA and the NYLL, (ii) failing to provide accurate wage statements under the NYLL, and (iii) willfully violating both of those statutes. The Court, in an order issued on* March 25, 2024,granted summary judgment against NAPW on the claims related to willful failure to pay overtime wages. The Court dismissed, without prejudice, claims based on failure to provide accurate wage statements under the NYLL based on lack of subject matter jurisdiction. The Court found that questions of fact remain as to whether PDN was a joint employer with NAPW. Damages remain unsettled particularly in light of the Court’s dismissal of the Plaintiff’s claims related to failure to provide accurate wage statements. During thefirst* quarter of2020, the Company recorded a $450,000 litigation settlement reserve in the event of an unfavorable outcome in this proceeding. While the Plaintiff seeks damages substantially in excess of this reserve (including unpaid overtime, liquidated damages and penalties), NAPW and PDN continue to adamantly dispute the amount of damages claimed.

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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 currentlynot material, there can beno assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, willnot have a material adverse effect on its business, financial condition or results of operations.

10. CFL and Aurous Vertex Limited Transaction

In* August, 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 a number of shares of the Company’s common stock such that CFL would hold approximately 51% of the outstanding shares of common stock, determined on a fully-diluted basis.

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, 2025*, CFL beneficially holds shares of the Company’s outstanding common stock equal to approximately 12.4%. The decrease in CFL’s percentage of the Company’s total outstanding common stock is a result of dilution from other equity offerings.

In* December, 2024,*the Company entered into a stock purchase agreement with Aurous Vertex Limited (the “Investor”), a British Virgin Islands company, in connection with the purchase by the Investor of 250,000 shares of common stock at a price of $6.00 per share for aggregate gross proceeds of $1.5 million. In the agreement, Aurous Vertex Limited has an option to purchase an additional 100,000 shares of Common Stock at a subsequent closing. The purchase price per share of the additional 100,000 shares of Common Stock will be the lesser of (a) $6.00 per share and (b) the closing price of the Common Stock on the date that Investor delivers its written notice to the Company of its election to purchase the Second Closing Shares as described above.

In* February, 2025,Aurous Vertex Limited delivered a written notice to the Company exercising its option to purchase an additional 100,000 shares of common stock. The Company subsequently issued 100,000 shares at a purchase price of $3.385 per share, resulting in aggregate gross proceeds of $338,500. Following the closing of the transaction, Aurous Vertex Limited owns a total of 350,000 shares of common stock, representing approximately 16.16% of the Company’s total outstanding shares as of June 30, 2025*.

11. Stockholders’** Equity**

Preferred Stock – The Company hasno 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 1,000,000 shares of undesignated preferred stock.

Common Stock – The Company hasone class of common stock outstanding with a total number of shares authorized of 45,000,000. As of* June 30, 2025*, the Company had 2,166,350 shares of common stock outstanding.

In thefirst quarter of2024, the Company issued 4,022 shares of its common stock to Tumim Stone Capital in connection with its committed equity line program, at a price of approximately $23.60 per share, resulting in aggregate gross proceeds of $95,104. In thesecond quarter of2024, the Company issued 18,467 shares of its common stock to Tumim Stone Capital in connection with its committed equity line program, at a price range of approximately $12.70 to $15.60 per share, resulting in aggregate gross proceeds of $239,885. In thethird quarter of2024, there wasno common stock issuance to Tumim Stone Capital. In thefourth quarter of2024, the Company issued 5,643 shares of its common stock to Tumim Stone Capital in connection with its committed equity line program, at a price range of approximately $8.30 per share, resulting in aggregate gross proceeds of $46,728. On* February 25, 2025,the Company and Tumim Stone Capital both agreed to terminate the Purchase Agreement in accordance with Section7.1* thereof, effective on thefifth business day thereafter. Consequently,no further Purchase Shares will be sold under the Purchase Agreement.

In* February, 2025,the Company received a Written Notice from a single institutional investor (the “Investor”) to exercise 110,000 Pre-Funded Warrants originally purchased in November 2024*at a price of $7.90 per warrant. In connection with the exercise, the Investor paid an additional $0.10 per share—bringing the total purchase price to $8.00 per share—for the issuance of 110,000 shares of common stock, resulting in additional gross proceeds of $11,000 to the Company.

In* February, 2025,*the Company entered into a stock purchase agreement (the “SPA”) with Boris Krastev Ventures UG (the “Seller”), pursuant to which the Company shall acquire 1,000,000 shares of common stock (the “Acquisition”) of RemoteMore USA, Inc.‎, a Delaware corporation (“RemoteMore” or the “Target Company”) for a purchase price of $300,000, which will be paid to the Seller at the closing of the Acquisition through the issuance of 50,000 newly issued restricted shares of the Company’s common stock, at a price of $6.00 per share (the “Shares”). The closing of the Acquisition is subject to satisfaction of certain closing conditions set forth in the SPA.‎ Prior to the Acquisition, the Company held 8,262,500 shares of the Target Company, representing a majority interest in the Target Company. Upon the closing of the Acquisition, the Company’s ownership will increase to approximately 82.625% of the Target Company’s outstanding shares.

In* February, 2025,the Aurous Vertex Limited delivered a Written Notice to the Company exercising its option to purchase an additional 100,000 shares of Common Stock at a purchase price per share of $3.385, the closing price of the Company’s Common Stock on February 25, 2025.On March 24, 2025,*upon the satisfaction or waiver of the closing conditions, the Company issued an additional 100,000 shares of Common Stock to Aurous Vertex Limited.

In* March, 2025,the Company filed a certificate of amendment to our Amended and Restated Certificate of Incorporation in order to implement a 10-for-1 reverse stock split, through which eachten* shares of common stock issued and outstanding were combined and changed intoone share of common stock. All share amounts and share prices in this annual report on Form10-K have been adjusted to give effect to the reverse stock split.

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12. Stock-Based Compensation

Equity Incentive Plans – The Company’s2013 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 the2013 Plan, the total number of authorized shares available for issuance of common stock under the Plan was 75,000 shares.

On* April 11, 2023,the Board of Directors adopted a new equity incentive plan, the Professional Diversity Network, Inc.2023 Equity Compensation Plan (the“2023* Equity Compensation Plan”). The2023 Equity Compensation Plan was approved by the Company’s stockholders on* June 15, 2023.The2023* Equity Compensation Plan supersedes and replaces the2013 Plan, andno new awards will be granted under the2013 Plan. Any awards outstanding under the2013 Plan remain subject to and will be paid under the2013 Plan. The2023 Equity Compensation Plan reserves 75,000 shares of common stock for issuance of awards to directors, officers, employees and qualifying consultants of the Company and its affiliates.

Stock Options

The fair value of options is estimated on the date of grant using the Black-Scholes option pricing model. The valuation determined by the Black-Scholes pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but arenot 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.

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The following table summarizes the Company’s stock option activity for thesix months ended* June 30, 2025and2024*:

The Company recorded non-cash stock-based compensation expense of approximately $0 and $5,410 as a component of general and administrative expenses in the accompanying consolidated statements of operations for thesix months ended* June 30, 2025and2024*, respectively, pertaining to vesting of stock option awards.

There isno unrecognized stock-based compensation expense related to unvested stock options at* June 30, 2025*.

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Restricted Stock

For thesix months ended* June 30, 2025and2024*, the following is a summary of restricted stock activity:

The Company recorded non-cash stock-based compensation expense of $10,402 and $137,943 as a component of general and administrative expenses in the accompanying consolidated statements of operations for thesix months ended* June 30, 2025and2024*, respectively, pertaining to granting of restricted stock awards.

Total unrecognized stock-based compensation expense related to 78,409 unvested restricted stock units at* June 30, 2025* was approximately $134,863 and is expected to be fully recognized by thesecond quarter of2026.

13. Income Taxes

The Company’s quarterly income tax provision is based upon an estimated annual income tax rate. The Company’s quarterly provision for income taxes also includes the tax impact of discrete items, if any, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur.

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During thethree months ended* June 30, 2025and2024*, the Company recordedno income tax expense and an income tax expense of $3,781, respectively.

During thesix months ended* June 30, 2025and2024**,* the Company recordedno income tax expense and an income tax expense of $6,271, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely thannot that some portion or all of the deferred income tax assets willnot 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, 2025*. The valuation allowance at* June 30, 2025* was $11,573,104. The net change in the valuation allowance during thesix months ended* June 30, 2025* was an increase of $245,375.

14. Segment Information

The Company operates in the following segments: (i) TalentAlly Network, which maintains and operates job board software and hosts career fairs, (ii) NAPW Network, a professional networking organization that addresses personal and professional development opportunities for women, (iii) RemoteMore (beginning in fiscal2021) which provides companies with talented engineers to provide solutions to their software needs and (iv) Corporate Overhead.

The Company's CEO and CFO comprise the executive committee. The responsibility of the executive committee is to collectively assess performance and make resource allocation decisions related to the entity’s operating segments. The CEO operates more as a strategic decision maker for the organization as a whole. The executive committee is the CODM because the committee is the highest level of management that performs these functions.

The following tables present key financial information related of the Company’s reportable segments related to financial position as of* June 30, 2025* and* December 31, 2023and results of operations for thethree* andsix months ended* June 30, 2025and2024*:

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15. Subsequent Events

On* July 1, 2025,Company completed a warrant exchange transaction pursuant to a Warrant Exchange Agreement (the “Exchange Agreement”) with certain holder (the “Holder”) of 250,000 Series A warrants (the “Series A Warrants”) entered on June 30, 2025,each to purchaseone* share of common stock, par value $0.01 per share (the “Common Stock”) of the Company, and 250,000 Series B warrants (the “Series B Warrants”, and collectively with the Series A Warrants, the “Warrants”), each to purchaseone share of Common Stock of the Company at an exercise price of $6.80 per share. The Warrants were issued on* November 20, 2024to the Holder in connection with a registered direct offering and concurrent private placement of warrants which closed on November 20, 2024.*Pursuant to the Exchange Agreement, the Holder agreed to surrender 500,000 Warrants for cancellation and the Company agreed, in exchange, to issue an aggregate of 333,333 shares of Common Stock to the Holder.

On* July 7, 2025and July 9, 2025,Company entered intotwo* separate Convertible Note Purchase Agreements (each, a “Purchase Agreement” and together, the “Purchase Agreements”) withtwo non-affiliated accredited investors (the “Purchasers”). Pursuant to the Purchase Agreements, the Company issued and sold to the Purchasers unsecured convertible promissory notes on* July 7, 2025and July 9, 2025,in the principal amounts of $250,000 (the “First Note”) and $150,000 (the “Second Note”, and together with the First Note, the “Notes”), respectively, for aggregate gross proceeds of $400,000. The First Note is convertible, at the option of the Purchasers, into restricted shares of the Company’s Common Stock, at a conversion price equal to the greater of (i) a floor price of $0.47 (subject to adjustment for stock splits and similar events), and (ii)80% of the lowest of (A) the 15-day average closing price, (B) the 10-day volume-weighted average price (“VWAP”), or (C) the lowest 3-day VWAP during the 45 trading days immediately prior to the date of the applicable conversion notice. The Second Note is convertible, at the option of the Purchasers, into restricted shares of the Company’s Common Stock, at a conversion price equal to the greater of (i) a floor price of $0.47 (subject to adjustment for stock splits and similar events), and (ii)80% of the lowest of the 15-day average closing price preceding the date of the applicable conversion notice. The Notes bear interest at a rate of 12% per annum and mature 360 days after the applicable purchase price payment date. The Notes contain customary events of default, including non-payment and insolvency-related events. Upon an event of default, the interest rate increases to 18% per annum, and the Purchasers mayaccelerate the Notes and pursue additional remedies. These transactions were previously reported on Current Reports on Form8*-K filed on* July 1, 2025and July 11, 2025,*respectively.

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