IPDN 10-K & 10-Q changes, risk factors and insider trading

Our recent expansion into digital assets and intellectual property investments represents a shift from our historical business and may not be successful.

Beginning in 2025, we expanded beyond our historical professional networking, recruitment, and remote staffing operations to invest in musical works copyrights and digital assets and to explore certain Web3.0-related initiatives. These activities differ significantly from the businesses that have historically generated substantially all of our revenues.

This strategic expansion may not be successful. We have limited operating experience in these new areas, and these initiatives may not generate meaningful revenue or positive returns on investment. The markets for digital assets and intellectual property monetization are highly competitive, rapidly evolving, and subject to significant market volatility and regulatory uncertainty. If these new initiatives do not perform as expected, we may not recover our investments and could be required to recognize material impairment charges, which would adversely affect our financial condition and results of operations.

In addition, pursuing these initiatives requires significant management attention and financial resources that could otherwise be focused on our established operating segments. If the expansion of our business into these new areas is unsuccessful, our business, financial condition, and results of operations could be materially and adversely affected.

Investment in musical works copyrights may not generate expected returns and could result in impairment charges.

We have invested, and may continue to invest, significant capital in the acquisition of musical works copyrights. As of December 31, 2025, we had invested approximately $7.0 million in musical works copyrights and had committed to additional payments under certain copyright acquisition agreements.

On September 3, 2025, we entered into a copyright transfer agreement with High Wave Corp, a corporation incorporated in New York and a non-affiliated accredited investor, pursuant to which we agreed to acquire forty (40) original musical works for total consideration of $10,000,000, payable in four installments between October 15, 2025 and November 30, 2025, with ownership of each batch transferring upon payment. As of December 31, 2025, we had paid $3,700,000 under this agreement. On December 16, 2025, the Company entered into an amendment to the copyright transfer agreement (the “First Amendment to High Wave Copyright Transfer Agreement”), pursuant to which the Company retained the right, but not the obligation, to purchase the remaining twenty-five (25) musical works for total consideration of $6,300,000. If the Company elects to proceed with such purchase, the Company and High Wave will mutually agree on the delivery schedule and payment terms for the remaining works.

On September 12, 2025, we entered into the Copyright Agreement with Streams Ohio, a non-affiliated accredited investor. Pursuant to the Streams Ohio Copyright Agreement, the Company agreed to acquire eight (8) original musical works from the Streams Ohio. Under the terms of the Streams Ohio Copyright Agreement, consideration could be paid in cash, shares of the Company’s Common Stock, or a combination thereof. The Board approved payment of the consideration through the issuance of 556,000 shares of Common Stock (the “Copyright Shares”), with an aggregate value of approximately $1,629,080, based on the closing price of $2.93 per share on September 12, 2025, subject to the limitations of the Nasdaq Listing Rule 5635. The Copyright Shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act, and/or Regulation D promulgated thereunder. The Streams Ohio Copyright Agreement contains customary representations, warranties, and covenants.

On November 24, 2025, we entered into a copyright transfer agreement with Shohan Event Organizers Co., L.L.C. , a non-affiliated accredited investor. Pursuant to the Copyright Agreement, the Company agreed to acquire five (5) original musical works from the Copyright Seller. Under the terms of the Copyright Agreement, consideration could be paid in cash, shares of the Company’s Common Stock, par value $0.01 per share, or a combination thereof. The board of directors of the Company approved payment of the consideration through the issuance of 927,600 shares of Common Stock, with an aggregate value of approximately $1,604,748, based on the closing price of $1.73 per share on November 24, 2025, subject to the limitations of Listing Rule 5635 of The Nasdaq Stock Market LLC. The Copyright Shares will be issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

The value of these assets and the returns we expect to generate from them depend on the continued commercial success, licensing demand, and audience engagement of the underlying musical compositions. Royalty income derived from musical works is inherently uncertain and may fluctuate significantly due to factors outside of our control, including changes in consumer preferences, streaming and distribution economics, pricing models adopted by digital service providers, competitive content, technological developments, changes in intellectual property laws or regulations, and general economic conditions.

Royalty collections depend on third-party publishers, administrators, performing rights organizations, digital platforms, and other intermediaries, over which we have limited control. Any failure by such parties to accurately track usage, collect royalties, or remit payments in a timely manner could adversely affect our revenues and cash flows. Musical works copyrights are intangible assets subject to periodic impairment testing under applicable accounting standards. If the actual or projected cash flows generated by these assets decline, if discount rates increase, or if market conditions deteriorate, we may be required to recognize impairment charges. Any such impairment could be material and would adversely affect our financial condition and results of operations.

Accordingly, our investments in musical works copyrights may not generate the anticipated returns, and we may not recover the full amount of our investment.

Our investment in DTT Tokens is speculative and may result in material losses and stockholder dilution.

On December 17, 2025, we acquired 25,937,800 native utility digital tokens issued by DeeptradeX.ai, an Australian-based digital asset trading platform, for aggregate consideration of $2,593,780. The board of directors of the Company approved payment of the consideration through the issuance of 1,358,000 shares of Common Stock, subject to the limitations of Listing Rule 5635 of The Nasdaq Stock Market LLC and the shares were issued on January 2, 2026. The DTT Tokens are intended solely for use on the issuer’s Web3.0 platform and do not provide equity ownership, debt, governance, dividend, or profit-sharing rights. The value of the tokens depends on market adoption of the issuer’s platform, overall digital asset market conditions, regulatory developments, and technological factors, all of which are highly uncertain and subject to significant volatility. We do not control the issuer’s operations, and any failure of the platform to achieve adoption or comply with evolving regulations could materially reduce the value of the tokens. In addition, digital assets are subject to limited liquidity, cybersecurity risks, and evolving accounting treatment, and we may be required to record impairment charges if the value of the tokens declines. The issuance of shares as consideration for this transaction resulted in dilution to existing stockholders and may adversely affect the market price of our Common Stock.

We use artificial intelligence (“AI”) technologies in our platform and the use of AI technologies presents unique risks and uncertainties to our business, results of operations and financial condition.

We have incorporated AI technologies into our platform since 2024 to enhance functionality and increase engagement among employers and job seekers. The use of AI presents significant risks and uncertainties.

AI technologies are inherently complex and may produce inaccurate, unreliable, biased, or otherwise inappropriate outputs. If the AI-enabled features of our platform generate incorrect feedback, discriminatory responses, or other flawed results, user trust and confidence in our services could be diminished, which could harm our reputation and adversely affect our business. Because our platform relates to employment and career development, the use of AI in this context may subject us to heightened scrutiny from users, regulators, and other third parties, including with respect to fairness, transparency, and compliance with applicable employment laws.

The legal and regulatory framework governing AI technologies is rapidly evolving and remains uncertain. Existing and emerging federal, state, and international laws and regulations—including those relating to automated decision-making, employment practices, data protection, algorithmic accountability, and consumer protection—may impose new or additional obligations on the use of AI. Such requirements may increase our compliance costs and administrative burdens and may require us or our third-party partners to modify, limit, delay, or discontinue certain AI-enabled features or services.

Any failure, or perceived failure, to comply with applicable laws, regulations, or industry standards, or any negative public perception regarding our use of AI, could result in legal liability, regulatory enforcement actions, reputational harm, and loss of customers.

Any of the foregoing risks could materially and adversely affect our business, financial condition, results of operations, and reputation.

In September 2025, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Streeterville Capital, LLC, a Utah limited liability company, pursuant to which the Company agreed to issue and sell to Streeterville shares of its Common Stock, in one or more pre-paid advance purchases (each, a “Pre-Paid Purchase” and collectively, the “Pre-Paid Purchases”) for an aggregate purchase price of up to $20,000,000. See the discussion in Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources”, for more information about our shares sold to Streeterville Capital, LLC to date. To the extent we utilize this Securities Purchase Agreement in the future by selling additional shares of Common Stock, the market price of our Common Stock may be adversely affected.

In April 2023, the Board of Directors adopted the Professional Diversity Network, Inc. 2023 Equity Compensation Plan (the “2023 Equity Compensation Plan”), initially reserving 750,000 shares of Common Stock for issuance to directors, officers, employees, and eligible consultants of the Company and its affiliates. Following the Company’s 10-for-1 reverse stock split in March 2025, the reserved shares were adjusted to 75,000. In December 2025, the Board approved and adopted an amendment to the 2023 Equity Compensation Plan, increasing the number of shares reserved for issuance from 75,000 to 750,000.

In 2025, we began evaluating and pursuing certain initiatives relating to Web3.0 technologies, digital assets, and RWA tokenization. These activities represent an expansion beyond our historical professional networking and recruitment platform operations. These initiatives include significant investments in musical works copyrights and native utility digital tokens. As of December 31, 2025, these initiatives remain in early stages of development, and we have not generated material revenue from such activities.

Licensing Service. The Company’s licensing service initiatives are in the early stages of development. Since September 2025, the Company has acquired the copyrights to 28 original musical works. As of December 31, 2025, the copyright assets have not generated revenue. The Company is in the process of developing and implementing commercialization strategies, including licensing and promotional activities, for these copyright assets. While management intends to pursue revenue-generating opportunities related to these assets, there can be no assurance as to the timing or extent of any revenue that may be generated.

Total revenues decreased by approximately $184,000, or 2.7%, from approximately $6,731,000 for the year ended December 31, 2024, to approximately $6,547,000 for the year ended December 31, 2025. The decrease was primarily attributable to an approximately $995,000 decline in recruitment services and consumer advertising revenues related to TalentAlly operations and an approximately $86,000 decline in membership fees and related services revenues associated with NAPW operations, compared to the same period in the prior year. Partially offsetting these decreases was an approximately $897,000 increase in RemoteMore’s contracted software development revenues compared to the same period in the prior year. The decline in TA and NAPW revenues was a result of weaker hiring demand, reduced employer spending, and lower membership activity, while the revenue from RemoteMore grew due to increased demand for remote software development and outsourced technical services. As of December 31, 2025, the copyright assets have not generated revenue.

During the year ended December 31, 2025, RemoteMore revenue was approximately $2,727,000, compared to revenues of approximately $1,830,000 during the same period in the prior year, an increase of approximately $897,000. The increase was primarily driven by higher demand for remote software development services and outsourced technical solutions, reflecting broader industry trends toward distributed workforces and increased adoption of AI-related technologies. Despite the revenue growth, cost of revenues increased during the period, primarily due to higher costs associated with sourcing and retaining qualified remote developers, including increased compensation and related expenses. As a result, the gross margin for RemoteMore remained relatively consistent with the prior year.

Costs and expenses related to our TalentAlly Network decreased approximately $824,000 or 18.3%, during the year ended December 31, 2025, as compared to the prior year. The decrease was primarily attributable to reductions in sales and marketing expenses (approximately $741,000), driven by lower revenue levels and improved operational efficiency, which resulted in decreased spending on payroll, marketing, consulting, and other related services. General and administrative expenses decreased by approximately $139,000, primarily due to lower payroll-related costs and reduced office-related expenses. These decreases were partially offset by an increase in cost of revenues of approximately $49,000, primarily due to higher labor capitalization expenses for website development and incremental contractor expenses supporting operations, and an increase in depreciation and amortization expenses of approximately $7,000, reflecting the addition of new capitalized assets during the period.

Costs and expenses related to the NAPW Network decreased approximately $98,000, or 17.1%, during the year ended December 31, 2025, as compared to the prior year. The decrease was primarily attributable to reductions in sales and marketing expenses of approximately $17,000, mainly due to lower membership promotion activities and reduced marketing-related consulting costs. General and administrative expenses decreased by approximately $36,000, primarily driven by lower payroll-related costs and reduced office and administrative expenses. Depreciation and amortization expenses decreased by approximately $56,000, reflecting the fully depreciated status of certain assets from prior periods. These decreases were partially offset by an increase in cost of revenues of approximately $11,000, primarily due to higher operational costs required to support NAPW membership services over the long term.

Corporate licensing service expenses increased approximately $3,413,000 or 100% during the year ended December 31, 2025, as compared to the prior year. The increase was primarily attributable to professional consultancy services of approximately $3,316,000, incurred in connection with the Company’s planned expansion into copyright, Web3.0, digital asset, and real-world asset platforms, and $97,000 legal costs. These consultancy services included strategic planning, market research, platform design, and technical advisory services necessary to support the Company’s entry into these new business areas.

Corporate overhead expenses increased approximately $466,000 or 24.5% during the year ended December 31, 2025, as compared to the prior year. The contributors to the increase included legal costs (approximately $263,000), filing fees (approximately $136,000), investor relations expenses (approximately $47,000), and accounting expenses (approximately $20,000), primarily related to legal support, regulatory filings, investor communications, and accounting support required to implement the Company’s business expansion initiatives.

In February 2025, the Company received a Written Notice from a single institutional 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 institutional 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 was 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 increased to approximately 82.625% of the Target Company’s outstanding shares.

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 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 its amended and restated certificate of incorporation in order to implement a 10-for-1 reverse stock split, through which each ten shares of Common Stock issued and outstanding were combined and changed into one share of Common Stock. All share amounts and share prices in this annual report on Form 10-K have been adjusted to give effect to the reverse stock split.

In July 2025, the 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 purchase one share of 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 purchase one share of Common Stock of the Company at an exercise price of $6.80 per share. The Warrants were issued on November 20, 2024 to 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.

In August 2025, the Company secured approximately $320,000 of short-term debt, which is interest-free and non-material in amount. The proceeds from this financing are classified as a cash inflow from financing activities in the accompanying consolidated statements of cash flows. The debt was obtained to provide additional liquidity to support the Company’s operations and strategic initiatives and does not impose any significant financial obligations.

In September 2025, the Company entered into a copyright transfer agreement (the “High Wave Copyright Transfer Agreement”) with High Wave Corp (“High Wave”), under which High Wave agreed to assign to the Company the copyrights and related rights of forty (40) original musical works, including all copyrights and related rights such as reproduction, performance, broadcasting, and adaptation. The total purchase consideration is $10,000,000, payable in four installments between October 15 and November 30, 2025, with ownership of each batch of works transferring upon payment. High Wave warranted full ownership and non-infringement of the works, waived all moral rights, and agreed not to resell or license them. As of December 31, 2025, the Company had paid $3,700,000 under the High Wave Agreement to purchase 15 original musical works. On December 16, 2025, the Company entered into an amendment to the copyright transfer agreement (the “First Amendment to High Wave Copyright Transfer Agreement”), pursuant to which the Company retained the right, but not the obligation, to purchase the remaining twenty-five (25) musical works for total consideration of $6,300,000. If the Company elects to proceed with such purchase, the Company and High Wave will mutually agree on the delivery schedule and payment terms for the remaining works.

In September 2025, Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Streeterville Capital, LLC, a Utah limited liability company, pursuant to which the Company agreed to issue and sell to Streeterville shares of its Common Stock, in one or more pre-paid advance purchases (each, a “Pre-Paid Purchase” and collectively, the “Pre-Paid Purchases”) for an aggregate purchase price of up to $20,000,000. The Company also agreed to issue to Streeterville 22,197 shares of Common Stock (the “Commitment Shares”) as consideration for Streeterville’s commitment, after Shareholder Approval (as defined below) is obtained, and 227,500 shares of Common Stock for $2,275 as pre-delivery shares (the “Pre-Delivery Shares”), which Pre-Delivery Shares were issued at the closing of the transactions contemplated by the Securities Purchase Agreement. The transactions closed on September 5, 2025 (the “Closing Date”). The proceeds from the Pre-Paid Purchases were expected to be used for working capital and other corporate purposes, including repayment of debt, strategic and other general corporate purposes. The Securities Purchase Agreement provides for an initial Pre-Paid Purchase in the principal amount of up to $8,655,000 (the “Initial Pre-Paid Purchase”), an original issue discount of up to $640,000 and transaction expenses of $15,000, the terms of which are set forth on secured prepaid purchase #1 (“Pre-Paid Purchase #1”). The Company received $3,397,725 in cash proceeds under the Initial Pre-Paid Purchase and $2,275 for the Pre-Delivery Shares on the Closing Date. The Initial Pre-Paid Purchase accrues interest at the rate of 8% per annum. Within thirty (30) days after closing, Streeterville would fund the remaining $4,602,275.00 under the Initial Pre-Paid Purchase into a deposit account (the “Deposit Account”) of the Company’s wholly-owned subsidiary, IPDN Holdings, LLC, a Utah limited liability company (“IPDN Holdings”), secured by a deposit account control agreement (the “DACA”), a guaranty (the “Guaranty”) by IPDN Holdings, and a pledge agreement (the “Pledge Agreement”) by the Company pledging 100% of the equity interests in IPDN Holdings, subject to certain conditions: (i) the DACA, the Guaranty and the Pledge Agreement are each executed and delivered to Streeterville, (ii) the Deposit Account has been opened, (iii) no Event of Default (as defined in the Initial Pre-Paid Purchase) under the Initial Pre-Paid Purchase has occurred, and (iv) trading in the Common Stock is not suspended, halted, chilled, frozen, reached zero bid or otherwise ceased trading on the Nasdaq Capital Market. On October 7, 2025, Streeterville funded the remaining $4,602,275.00 to the Deposit Account. In the fourth quarter of 2025, the Company issued 1,005,986 shares of its Common Stock to Streeterville Capital, LLC, at a price range of $1.31 to $2.70 per share, resulting in aggregate gross proceeds of $2,250,000.

In September 2025, the Company entered into the Copyright Agreement with Streams Ohio, a non-affiliated accredited investor. Pursuant to the Streams Ohio Copyright Agreement, the Company agreed to acquire eight (8) original musical works from the Streams Ohio. Under the terms of the Streams Ohio Copyright Agreement, consideration could be paid in cash, shares of the Company’s Common Stock, or a combination thereof. The Board approved payment of the consideration through the issuance of 556,000 shares of Common Stock (the “Copyright Shares”), with an aggregate value of approximately $1,629,080, based on the closing price of $2.93 per share on September 12, 2025, subject to the limitations of the Nasdaq Listing Rule 5635. The Copyright Shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act, and/or Regulation D promulgated thereunder. The Streams Ohio Copyright Agreement contains customary representations, warranties, and covenants.

In September 2025, the Company entered into the B&W Capital Consulting Agreement with B&W Capital, a non-affiliated accredited investor. Under the B&W Capital Consulting Agreement, the Company engaged the Consultant to provide strategic, business development, investor relations and capital markets advisory services for a period of 12 months, unless terminated earlier pursuant to the terms therein. As consideration for such services, the Board approved the issuance of 550,000 shares of Common Stock (the “Consulting Shares”), also subject to the limitations of the Nasdaq Listing Rule 5635. The Consulting Shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder. The B&W Capital Consulting Agreement contains customary representations, warranties and covenants.

In November 2025, the Company entered into a copyright transfer agreement with Shohan Event Organizers Co., L.L.C. , a non-affiliated accredited investor. Pursuant to the Copyright Agreement, the Company agreed to acquire five (5) original musical works from the Copyright Seller. Under the terms of the Copyright Agreement, consideration could be paid in cash, shares of the Company’s Common Stock, par value $0.01 per share, or a combination thereof. The board of directors of the Company approved payment of the consideration through the issuance of 927,600 shares of Common Stock, with an aggregate value of approximately $1,604,748, based on the closing price of $1.73 per share on November 24, 2025, subject to the limitations of Listing Rule 5635 of The Nasdaq Stock Market LLC. The Copyright Shares will be issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

In November 2025, the Company entered into a consultancy agreement with Deeptrade PTY LTD , a non-affiliated accredited investor. Pursuant to the Consultancy Agreement, the Consultant agreed to provide the Company with professional consultancy services relating to the Company’s intended expansion into Web3.0, digital asset, and real-world-asset platform for a total consideration of $1,616,000. Under the terms of the Consultancy Agreement, consideration could be paid in cash, shares of the Company’s Common Stock, par value $0.01 per share, or a combination thereof. The board of directors of the Company approved payment of the consideration through the issuance of 898,000 shares of Common Stock, subject to the limitations of Listing Rule 5635 of The Nasdaq Stock Market LLC (the “Consultancy Shares”). The Consultancy Shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder. The Consultancy Agreement contains customary representations, warranties and covenants.

In December 2025, in connection with the closing of the Company’s equity financing, the outstanding $150,000 convertible note issued in July 2025, together with accrued interest, was converted into 101,351 shares of the Company’s common stock at a conversion price of $1.48 per share. Upon conversion, the carrying amount of the convertible note, including accrued interest, was reclassified to Common Stock and additional paid-in capital. No gain or loss was recognized upon conversion.

In December 2025, the Company entered into a purchase agreement with DeeptradeX.ai, an Australian-based digital asset trading platform, pursuant to which the Company agreed to acquire an aggregate of 25,937,800 native utility digital tokens issued by the Seller (the “DTT Tokens”). The DTT Tokens are intended to function as a medium of exchange for services on the Seller’s Web3.0 digital asset platform and do not represent equity, debt, dividends, governance rights or profit-sharing interests. The total consideration for the DTT Tokens is $2,593,780, payable, at the Company’s election, in cash, shares of Common Stock, or a combination thereof. The board of directors of the Company approved payment of the consideration through the issuance of 1,358,000 shares of Common Stock, subject to the limitations of Listing Rule 5635 of The Nasdaq Stock Market LLC and the shares were issued on January 2, 2026. The Consideration Shares was be issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act, and/or Regulation D promulgated thereunder. The DTT Tokens will be delivered to a wallet address designated by the Company and will be subject to a 12-month lock-up period followed by a 24-month linear vesting period, with releases occurring automatically pursuant to an immutable smart contract. The Purchase Agreement contains customary representations, warranties and covenants, including representations regarding regulatory compliance, token functionality and indemnification for certain regulatory matters.

Restricted Cash

Restricted cash represents proceeds from the Company’s stock issuances held in a designated holding account and subject to contractual and administrative restrictions on use. These restrictions limit the Company’s ability to access the funds until specified conditions are satisfied. As of December 31, 2025, the Company had $1,250,000 of restricted cash, which is presented separately from cash and cash equivalents on the consolidated balance sheets. The timing of the release of such funds is dependent upon the satisfaction of the applicable conditions, and there can be no assurance as to when such restrictions will be lifted. Upon release, the amounts will be reclassified to cash and cash equivalents and may be used for general corporate purposes.

Net cash used in operating activities from continuing operations during the year ended December 31, 2025 was $2,087,000. We had a net loss from continuing operations of $6,511,000 during the year ended December 31, 2025, which included share-based compensation expense of approximately $3,596,000, depreciation and amortization expense of approximately $158,000, the provision for losses on accounts receivable of approximately $143,000, noncash lease expense of approximately $91,000, and unrealized loss on investment of $44,000. Changes in operating assets and liabilities provided approximately $392,000 of cash increase during the year ended December 31, 2025, consisting primarily of an approximate $582,000 increase in accounts payable, an approximate $470,000 increase in accrued expenses, an approximate $268,000 decrease in accounts receivable, and an approximate $25,000 increase in other current liabilities, which was partially offset by an approximate $649,000 decrease in deferred revenues, an approximate $196,000 increase in prepaid expenses and other assets, and an approximate $108,000 decrease in lease liability.

Net cash used in investing activities from continuing operations during the year ended December 31, 2025 was approximately $5,004,000, which is primary related to the $1,300,000 investment in 13% of AI Geometric Ltd’s outstanding shares, the $3,700,000 purchase of intangible assets, and approximately $4,000 in purchases of property and equipment.

The Company’s critical accounting estimates include the valuation of intangible assets acquired, the determination of the useful lives of finite-lived intangible assets, the assessment of impairment of long-lived assets, and the timing of when such assets are placed into service and begin amortization. These estimates require significant management judgment and are based on assumptions regarding future cash flows, market conditions, and the timing of commercialization. Due to the inherent uncertainty associated with these estimates, actual results may differ from those estimates, and such differences could have a material impact on the Company’s financial condition and results of operations.

The Company determines the fair value of intangible assets using valuation techniques appropriate for the nature of the asset, including the income approach, market approach, or cost approach. These valuation techniques require the use of significant estimates and assumptions, including projected future cash flows, discount rates, market multiples, and other relevant factors. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Changes in the underlying assumptions could materially affect the estimated fair value of intangible assets and any related impairment charges.

Copyright assets are classified as finite-lived intangible assets and are amortized over their estimated useful lives, which are based on the pattern in which the economic benefits are expected to be consumed. Amortization commences when the assets are placed into service and are ready for their intended use. The Company evaluates these assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Crypto assets are recorded at fair market value and classified as intangible assets on the consolidated balance sheet. These assets are initially recognized at cost and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations. Fair value is determined using quoted market prices in active markets for identical assets. Gains and losses resulting from changes in fair value are recognized in earnings in the period in which they occur.

Risks Related to the Ownership of our Securities

We have been notified by Nasdaq of our failure to comply with certain continued listing requirements and, if we are unable to regain or maintain compliance with all applicable continued listing requirements and standards of Nasdaq, our common stock could be delisted from the Nasdaq Capital Market.

Our common stock, par value $0.0001 per share (“Common Stock”) is currently listed on The Nasdaq Stock Market LLC (“Nasdaq”). In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements.

On June 5, 2026, we received a written notification from Nasdaq notifying us that we were not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), because the closing bid price of our shares of Common Stock was below $1.00 per share for the previous thirty (30) consecutive business days. We were granted 180 calendar days, or until December 2, 2026, to regain compliance with the Minimum Bid Price Requirement. In the event we do not regain compliance with the Minimum Bid Price Requirement by December 2, 2026, we may be eligible for an additional 180-calendar day grace period. To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other listing standards for Nasdaq, with the exception of the Minimum Bid Price Requirement, and will need to provide written notice to Nasdaq of our intent to regain compliance with such requirement during such second compliance period. If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted, Nasdaq will provide notice that our Common Stock will be subject to delisting from Nasdaq. At that time, we may appeal Nasdaq’s determination to a hearings panel.

The Company intends to continuously monitor the closing bid price for its Common Stock, and is in the process of considering various measures to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement. On July 13, 2026, the Company held a Special Meeting of Stockholders at which the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of the Company’s outstanding shares of Common Stock at a ratio ranging from one‑for‑two (1‑for‑2) to one‑for‑two thousand (1‑for‑2000), with the exact ratio to be determined by the Company’s Board of Directors in its sole discretion. The Board may effect the reverse stock split at any time within one year following stockholder approval. However, there can be no assurance that we will be able to regain or maintain compliance with the Minimum Bid Price Requirement or any other Nasdaq listing standards, that Nasdaq will grant the Company any extension of time to regain compliance with the Minimum Bid Price Requirement or any other Nasdaq listing requirements, or that any such appeal to the Nasdaq hearings panel will be successful, as applicable. If we are unable to maintain compliance with these Nasdaq requirements, our Common Stock will be delisted from Nasdaq.

In addition, on July 22, 2026, the SEC approved a Nasdaq rule change requiring the immediate suspension and delisting of any listed company whose market value of listed securities (“MVLS”) falls below $5 million for 30 consecutive business days, subject to limited review by a Nasdaq Hearings Panel. Under the approved rule, a timely request for a hearing will not stay the suspension of trading, and our securities would generally trade on the over-the-counter market during any appeal process. The Nasdaq Hearings Panel may grant a limited exception period (not to exceed 180 days) to demonstrate compliance with initial listing requirements, but there can be no assurance that such relief would be granted.

Our ability to maintain compliance with the $5 million MVLS requirement depends on a number of factors, including the market price of our Common Stock and the number of our issued and outstanding shares. The market price of our Common Stock may be volatile and could decline for reasons beyond our control, including:

● general market conditions or downturns in the broader equity markets;

● sector-specific or industry-wide volatility;

● changes in interest rates or macroeconomic conditions;

● geopolitical events;

● actual or perceived short selling activity or other trading dynamics;

● reduced liquidity or limited public float; and

● investor perceptions regarding our business, prospects, or financial condition.

If our MVLS were to fall below $5 million for 30 consecutive business days, Nasdaq would issue a staff delisting determination and immediately suspend trading of our Common Stock on Nasdaq. Any suspension or delisting of our Common Stock from Nasdaq could materially and adversely affect our business, financial condition, results of operations, and the value of our Common Stock.

In the event that our Common Stock is delisted from Nasdaq, as a result of our failure to comply with the Minimum Bid Price Requirement, or due to our failure to continue to comply with any other requirement for continued listing on Nasdaq, and is not eligible for listing on another exchange, trading in the shares of our Common Stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Common Stock, and it would likely be more difficult to obtain coverage by securities analysts and the news media, which could cause the price of our Common Stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange.

In the event that our Common Stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.

The U.S. Securities and Exchange Commission (the “SEC”) has adopted a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of Common Stock have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares of Common Stock and impede their sale in the secondary market.

A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.

Stockholders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

Future sales or issuances of our Common Stock, including shares issuable upon exercise of the warrants issued in our August 2026 public offering, may result in substantial dilution and could adversely affect the market price of our Common Stock.

On August 13, 2026, we completed a best-efforts public offering in which we sold 1,620,000 units at a public offering price of $0.28 per unit and 5,524,000 pre-funded units at a public offering price of $0.2799 per pre-funded unit. Each unit consisted of one share of our Common Stock and one common stock purchase warrant, and each pre-funded unit consisted of one pre-funded common stock purchase warrant and one common stock purchase warrant. We received gross proceeds of approximately $2.0 million before deducting placement agent fees and other offering expenses.

The offering resulted in the issuance of 1,620,000 shares of Common Stock and warrants to purchase an aggregate of up to 12,668,000 additional shares of Common Stock, consisting of pre-funded warrants to purchase up to 5,524,000 shares and Common Stock purchase warrants to purchase up to 7,144,000 shares. The exercise of these warrants would increase the number of shares of our Common Stock outstanding and dilute the ownership interests and voting power of our existing stockholders.

The issuance of a substantial number of shares upon exercise of these warrants, or the perception that such issuances may occur, could adversely affect the market price of our Common Stock. The outstanding warrants may also create an overhang on the market for our Common Stock and may make it more difficult for us to raise additional capital on favorable terms. Warrant holders may exercise their warrants at times when we could otherwise obtain more favorable terms in a new equity financing, and the availability of shares for issuance upon exercise may discourage potential investors from purchasing our Common Stock.

We may need to raise additional capital to support our operations and strategic initiatives. We may do so through additional issuances of Common Stock, preferred stock, convertible securities, warrants or other equity-linked securities. Any such future issuance could result in additional and potentially substantial dilution to our existing stockholders, may include rights or preferences senior to those of our Common Stock, and could further adversely affect the market price of our Common Stock.

Total revenues for the three months ended June 30, 2026, decreased approximately $460,000, or 28.0%, to approximately $1,181,000 from approximately $1,641,000 during the same period in the prior year. The decrease was primarily attributable to an approximate $300,000 decline in recruitment services revenue, an approximate $142,000 decline in contracted software development revenue, and an approximate $18,000 decline in membership fees and related services revenue. Recruitment services revenue decreased primarily due to lower customer hiring activity and reduced spending on recruitment solutions. In addition, continued changes in corporate priorities surrounding diversity, equity, and inclusion (“DEI”) initiatives, together with evolving legal and regulatory developments, caused certain customers to reduce or delay spending on diversity-focused recruitment programs, negatively impacting demand for our diversity recruiting solutions. Contracted software development revenue decreased primarily due to reduced customer demand for outsourced software development and technical staffing services. Customers continued to exercise greater caution in technology spending, while advancements in AI-driven development tools have enabled some organizations to perform certain development functions with fewer external resources, resulting in lower demand for traditional outsourced development services. Membership fees and related services revenue decreased primarily due to lower membership activity. The Company continues to evaluate opportunities for its licensing business and has not yet commenced commercial licensing activities. Accordingly, no licensing revenue was recognized during the three months ended June 30, 2026.

Total revenues for the six months ended June 30, 2026, decreased approximately $416,000, or 13.2%, to approximately $2,730,000 from approximately $3,146,000 during the same period in the prior year. The decrease was primarily attributable to an approximate $584,000 decline in recruitment services revenue and an approximate $39,000 decline in membership fees and related services revenue, partially offset by an approximate $206,000 increase in contracted software development revenue. Recruitment services revenue decreased primarily due to lower customer hiring activity and reduced spending on recruitment solutions. In addition, continued changes in corporate priorities surrounding diversity, equity, and inclusion (“DEI”) initiatives, together with evolving legal and regulatory developments, caused certain customers to reduce or delay spending on diversity-focused recruitment programs, negatively impacting demand for our diversity recruiting solutions. Contracted software development revenue increased primarily due to strong revenue generated from several significant customer engagements and expanded work with existing customers during the first quarter of 2026. The increase was partially offset by lower revenue during the second quarter of 2026 as certain large customer projects were completed or substantially scaled back, resulting in lower demand for outsourced software development and technical staffing services compared to the prior-year period. Membership fees and related services revenue decreased primarily due to lower membership activity. The Company continues to evaluate opportunities for its licensing business and has not yet commenced commercial licensing activities. Accordingly, no licensing revenue was recognized during the six months ended June 30, 2026.

During the six months ended June 30, 2026, our TalentAlly Network generated approximately $1,225,000 in revenues compared to approximately $1,808,000 in revenues during the six months ended June 30, 2025, a decrease of approximately $583,000, or 32.2%. The decrease in the TalentAlly Network segment was due to reduced demand for online recruitment and hiring solutions, consistent with broader market conditions affecting the talent acquisition industry. In addition, certain employers moderated or deferred spending on diversity, equity, and inclusion focused initiatives, which contributed to the decrease in demand for certain of our offerings. The Company continues to monitor these trends and adjust its operating strategy accordingly.

During the six months ended June 30, 2026, NAPW Network revenues generated approximately $143,000 compared to revenues of approximately $182,000 during the same period in the prior year, a decrease of approximately $39,000 or 21.4%. The decrease in the NAPW Network segment was primarily driven by reduced demand for membership-based professional networking organizations, reflecting broader shifts in market preferences. In addition, reduced access to funding and capital for certain segments of entrepreneurs, including women entrepreneurs, had impacted their ability and willingness to participate in fee-based membership programs and related events, which contributed to lower membership acquisition and renewal activity during the period.

During the six months ended June 30, 2026, RemoteMore revenue was approximately $1,362,000 compared to revenues of approximately $1,156,000 during the same period in the prior year, an increase of approximately $206,000, or 17.8%. The significant growth in the RemoteMore segment was due to strong revenue generated from several significant customer engagements and expanded work with existing customers during the first quarter of 2026. The increase was partially offset by lower revenue during the second quarter of 2026 as certain large customer projects were completed or substantially scaled back, resulting in lower demand for outsourced software development and technical staffing services compared to the prior-year period.

Cost of revenues: Cost of revenues during the six months ended June 30, 2026 was approximately $1,733,000, an increase of approximately $85,000, or 5.2%, from approximately $1,648,000 during the same period of the prior year. The decrease was predominantly due to an approximate $243,000 increase in RemoteMore’s contract costs, which were the fees paid to external developers and were directly correlated with the segment’s significant revenue growth. Partially offsetting the increases was a decrease of approximately $87,000 in payroll-related costs and approximately $71,000 in event-related and other costs due to labor restructuring and system automation.

Sales and marketing expense: Sales and marketing expense during the six months ended June 30, 2026 was approximately $759,000, a decrease of approximately $306,000, or 28.7%, from $1,065,000 during the same period in the prior year. The decrease was predominantly attributed to approximately $82,000 of reduced payroll and commission related costs, $127,000 reduction in marketing and $97,000 related to consulting and software costs. The overall reduction in sales and marketing expenses was driven by lower revenue levels and improved operational efficiency, which collectively resulted in decreased spending across payroll, marketing, consulting, and other related services.

General and administrative expense: General and administrative expenses decreased by approximately $109,000, or 7.0%, to approximately $1,444,000 during the six months ended June 30, 2026, as compared to approximately $1,553,000 during the same period in the prior year. The decrease was primarily attributable to an approximate $41,000 reduction in computer service expenses resulting from workforce reductions and lower software subscription and information technology service costs, an approximate $44,000 reduction in bad debt expense due to improved collections, and an approximate $24,000 reduction in filing fees due to fewer regulatory filings.

Depreciation and amortization expense: Depreciation and amortization expense during the six months ended June 30, 2026 was approximately $2,388,000, an increase of approximately $2,306,000 or 2,812.2% compared to approximately $82,000 during the same period in the prior year. The increase was primarily attributable to the amortization of musical works copyrights acquired by the Company, which are being amortized over an estimated 18-month useful life based on the expected peak streaming period.

For the three months ended June 30, 2026, costs and expenses related to the NAPW Network decreased by approximately $27,000, or 22.5%, as compared to the same period in the prior year. The decrease was primarily attributable to an approximate $19,000 reduction in sales and marketing expenses due to reduced marketing and promotional activities and an approximate $8,000 reduction in costs of sales and services due to lower levels of membership-related service activities.

For the six months ended June 30, 2026, costs and expenses related to the NAPW Network decreased by approximately $26,000, or 10.8%, as compared to the same period in the prior year. The decrease was primarily attributable to an approximate $19,000 reduction in sales and marketing expenses due to reduced marketing and promotional activities and an approximate $8,000 reduction in costs of sales and services due to lower levels of membership-related service activities, partially offset by an approximate $1,000 increase in general and administrative expenses resulting from slightly higher operating and administrative support costs.

For the three months ended June 30, 2026, costs and expenses related to RemoteMore decreased by approximately $202,000, or 26.4%, as compared to the same period in the prior year, predominantly due to a decrease of approximately $202,000 in costs of sales. The decrease in costs of sales was primarily attributable to the expiration or completion of certain customer service engagements, which resulted in fewer active projects and lower related personnel and service delivery costs.

For the six months ended June 30, 2026, costs and expenses related to RemoteMore increased by approximately $71,000, or 5.3%, as compared to the same period in the prior year, predominantly due to an increase of approximately $71,000 in costs of sales. The increase was primarily attributable to higher contractor costs and consulting service expenses incurred during the first quarter of 2026, driven by increased revenue-generating activities and the need for additional technical and project support to meet client demand.

For the three months ended June 30, 2026, costs and expenses related to Licensing Service increased by approximately $1,156,000, or 100%, as compared to the same period in the prior year. The increase was predominantly attributable to the amortization of musical works copyrights acquired by the Company, which are being amortized over an estimated 18-month useful life based on the expected peak streaming period.

For the six months ended June 30, 2026, costs and expenses related to Licensing Service increased by approximately $2,311,000, or 100%, as compared to the same period in the prior year. The increase was predominantly attributable to the amortization of musical works copyrights acquired by the Company, which are being amortized over an estimated 18-month useful life based on the expected peak streaming period.

For the three months ended June 30, 2026, costs and expenses related to Corporate Overhead increased by approximately $104,000, or 31.1%, as compared to the same period in the prior year. The increase was predominantly due to approximately $113,000 share-based compensation expenses, and approximately $5,000 in financial expenses. Partially offsetting the increases was the decreases of approximately $14,000 in payroll related costs.

For the six months ended June 30, 2026, costs and expenses related to Corporate Overhead increased by approximately $13,000, or 1.5%, as compared to the same period in the prior year. The increase was predominantly due to approximately $5,000 in financial expenses and $8,000 miscellaneous expenses.

During the six months ended June 30, 2026 and 2025, we recorded an income tax expense of approximately $0 and $0, respectively.