Professional Diversity Network, Inc. Commitments Disclosure

11. 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 84 months, commencing on October 1, 2020. The Company made approximately $108,000 and $106,000 of cash payments for lease expenses related to the office space for the years ended December 31, 2025, and 2024. The weighted average remaining lease term for the years ended December 31, 2025, and 2024, are 1.75 years and 2.75 years.  The weighted average discount rate for operating leases for the years ended December 31, 2025, and 2024, is 6.0%

 

As of December 31, 2025, the aggregate future lease payments under all operating leases are as follows:

 

		Operating
2026		$	110,908
2027			84,560
Total lease payments			195,468
Less: present value discount			10,403
Present value of lease liabilities		$	185,065

 

As of December 31, 2025, and 2024, right of use assets were $149,525 and $226,704, and related lease obligations remaining, related to the Company's office lease, were $185,065 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, 2012 through October 15, 2021 by 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 of 164 putative class members and 60 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 the first quarter of 2020, we recorded a $450,000 litigation settlement reserve in the event of an unfavorable outcome in this proceeding. In the fourth quarter of 2025, we recorded an additional $250,000 litigation settlement reserve. NAPW and PDN currently anticipate settling this matter with the plaintiffs by the third quarter of 2026.

 

General Legal Matters

 

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