Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis are intended to help investors understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled "Cautionary Statement Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management's good faith belief as of that time with respect to future events and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

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our expectations regarding consumer trends in residential real estate transactions;

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our expectations regarding overall economic and demographic trends, including the continued growth of the U.S. residential real estate market;

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our ability to grow our business organically in the various local markets that we serve;

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our ability to attract and retain additional qualified agents and other personnel;

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our ability to expand our franchises in both new and existing markets;

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our ability to increase the number of closed transactions sides and sides per agent;

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our ability to cross-sell our services among our subsidiaries;

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our ability to maintain compliance with the law and regulations of federal, state, foreign, county and local governmental authorities, or private associations and governing boards;

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our ability to expand, maintain and improve the information technologies and systems that we rely upon to operate;

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our ability to prevent security breaches, cybersecurity incidents and interruptions, delays and failures of our technology infrastructure;

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our ability to retain our founder and current executive officers and other key employees;

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our ability to identify quality potential acquisition candidates in order to accelerate our growth;

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our ability to manage our future growth and dependence on our agents;

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our ability to maintain the strength of our brands;

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our ability to maintain and increase our financial performance;

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the market price for our common stock may be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and minimal profits, which could lead to wide fluctuations in our share price;

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there have recently been instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated to company performance following a number of recent initial public offerings, particularly among companies, like ours, that have had relatively smaller public floats;

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sales of our common stock by us or our stockholders, which may result in increased volatility in our stock price; and

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other factors, including the risks contained in the section entitled "Risk Factors" of our annual report on Form 10-K for the fiscal year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission ("SEC" or "Commission") on June 4, 2026, relating to our industry, our operations, and results of operations.

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements.

Moreover, new risks regularly emerge, and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us on the date of this Quarterly Report on Form 10-Q. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Quarterly Report on Form 10-Q.

Business Overview

We are the holding company for six agent-centric, technology-integrated, cloud-based, multi-service real estate segments.

Our business was founded by Mr. Joseph La Rosa, a successful real estate developer, business and life coach, author, podcaster, and public speaker. Mr. La Rosa's self-help book "Do It Now" is a roadmap to personal success and well-being based on his transformative theories of family, passion and growth. His philosophy, seminars and educational forums have attracted numerous successful realtors that have spurred the growth of our business.

In addition to providing person-to-person residential and commercial real estate brokerage services to the public, we cross-sell ancillary technology-based products and services primarily to our sales agents and the sales agents associated with our franchisees. Our business is organized based on the services we provide internally to our agents and to the public, which are residential and commercial real estate brokerage, franchising, real estate brokerage education and coaching, property management, and title services. Our real estate brokerage business operates primarily under the trade name La Rosa Realty. We operate 24 corporate-owned brokerage offices across Florida, California, Texas, Georgia and Puerto Rico and have begun our expansion into Europe, beginning with Spain. The Company also has five franchised offices and branches and three affiliated brokerage locations in the United States and Puerto Rico that pay us fees. We also have LR Realty Spain, which is a full-service brokerage office located primarily in Malaga, Spain. Additionally, the Company operates a full-service escrow settlement and title company in Florida.

Our real estate brokerage offices, both corporate and franchised, are staffed with 2,807 licensed real estate brokers and sales associates as of June 30, 2026.

Our franchised offices are currently:

Name		Location
La Rosa Realty Internacional, LLC		Celebration, Florida
La Rosa Realty Central Florida, LLC		Davenport, Florida
La Rosa Realty Jacksonville, LLC		Jacksonville, Florida
La Rosa Realty Kendall, LLC		Miami, Florida
The Realty Experience Powered By LRR LLC		St. Cloud, Florida

We have built our business by providing the home-buying public with well-trained, knowledgeable realtors who have access to our proprietary and third-party in-house technology tools and quality education and training, and valuable marketing that attracts some of the best local realtors who provide value-added services to our home buyers and sellers that are attracted to our brands. We give our real estate brokers and sales agents who are seeking financial independence a turnkey solution and support them in growing their brokerages while they fund their own businesses.

Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. They can then use these additional commissions to reinvest in their businesses or as take-home profit. We believe that this is a strong incentive for them to compete against the discount, flat fee and internet brokerages that have sprung up in the past several years. Instead of us taking a greater share of their income, our agents pay what we believe to be reduced rates for training and mentorship and our proprietary technology. Our franchise model has a similar pricing methodology, permitting the franchise owner the freedom to operate their business with minimal control and lower expense than other franchise offerings.

Moreover, we believe that our proprietary technology, training, and the support that we provide to our agents at a minimal cost to them is one of the best offered in the industry.

Our business stands on three pillars: Family, Passion, and Growth. We believe that our support and philosophy have attracted and will continue to attract and retain the highest producing realtors in our local markets. We believe that our focus on the interaction between our human agents and their clients is a strong weapon against internet-only commodity websites and the low touch discount brokerages. Our agent count continues to grow organically and through acquisition, we attribute our organic growth to the positive culture created in our Company and the competitive plans that we offer our agents. By creating a custom solution and a unique experience, we believe that our agents are able to guide their clients seamlessly through what may be their most expensive lifetime purchase.

Since completing our initial public offering in October 2023, we have expanded our corporate brokerage operations through a combination of acquisitions, strategic investments, and geographic expansion. These initiatives have increased our operational footprint, expanded our agent network, and enhanced our ability to provide complementary real estate-related services throughout the markets we serve.

As of the first quarter of 2026, our business includes residential and commercial real estate brokerage services, franchising, title settlement and insurance services, property management, real estate education and coaching, and technology-driven support services. We continue to focus on developing additional revenue streams that complement our core brokerage business while increasing value for our agents and clients.

During 2025, we expanded our service offerings through the launch of LR Agent Advance LLC, a wholly owned subsidiary that provides commission advancement services exclusively to La Rosa agents. We believe this program improves agent financial flexibility, supports agent retention, and creates an additional revenue opportunity for the Company.

Management remains focused on integrating acquired operations, enhancing operating efficiencies, increasing agent productivity, and expanding our market presence. We continue to evaluate opportunities to grow through organic recruiting initiatives, strategic acquisitions, and the development of complementary service offerings that strengthen our overall ecosystem. While we regularly review potential acquisition opportunities, there can be no assurance that discussions with prospective acquisition targets will result in completed transactions or that any future transactions will be completed on favorable terms.

Recent Developments

Acquisition of Remaining Interest in Orlando

On April 3, 2026, the Company, La Rosa Realty Orlando LLC, a majority owned subsidiary of the Company (the "Orlando"), and two selling members of Orlando (collectively, the "Sellers"), entered into a settlement agreement ("Settlement Agreement"), pursuant to which, each of the Sellers sold their 24.5% membership interests (collectively, the "Interests") in Orlando to the Company, and the Company agreed to (i) forgive the amount of $106,447 allegedly owed by one of the Sellers to Orlando, (ii) forgive the alleged $152,295 franchise fee obligation under one of the Seller's personal guaranty, (iii) pay one of the Sellers the amount of $10,000, and (iv) dismiss without prejudice the civil suit of La Rosa Realty Corp., La Rosa Realty Orlando LLC v. Reinaldo Zapata, Viviana Figueroa, pending in the Circuit Court of Orange County, Florida. As a result of this transaction, Orlando became a wholly-owned subsidiary of the Company.

Nasdaq Notices Regarding Filing Deficiencies

On April 16, 2026, the Company received a notice (the "10-K Notice") from the Nasdaq Listing Qualifications Department (the "Staff") that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Initial Delinquent Filing") with the SEC. The Staff informed the Company that, under Nasdaq rules, the Company has 60 calendar days, or until June 15, 2026, to submit a plan to regain compliance, and if the Staff accepts such plan, they can grant an exception of up to 180 calendar days from the Initial Delinquent Filing's due date (or until October 12, 2026) to regain compliance.

On May 21, 2026, the Company also received a notice (the "10-Q Notice," and together with the 10-K Notice, the "Notices") from the Staff indicating that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to its failure to timely file its Quarterly Report on Form 10-Q for the period ended March 31, 2026, and noting that the Company also remains delinquent in filing its Initial Delinquent Filing. The 10-Q Notice further states that, in accordance with Nasdaq rules and as previously communicated in the 10-K Notice, the Company has until June 15, 2026, to submit a plan to regain compliance, and if the Staff accepts such plan, any exception granted will be limited to a maximum of 180 calendar days from the due date of the Initial Delinquent Filing, or until October 12, 2026, to regain compliance.

On June 4, 2026, the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 with the SEC. On June 10, 2026, the Company received a letter from the Staff indicating that based on the June 4, 2026 filing of the Form 10-K, the Staff has determined that the Company complies with Nasdaq Listing Rule 5250(c)(1) with regard to the Form 10-K filing. On July 31, 2026, the Company filed its Quarterly Report on Form 10-Q for the period ended March 31, 2026 with the SEC. On August 4, 2026, the Company received a letter from the Staff indicating that based on the July 31, 2026 filing of the Quarterly Report on Form 10-Q, the Staff has determined that the Company complies with Nasdaq Listing Rule 5250(c)(1) and this matter is now closed.

On August 21, 2026, the Company received a notice from the Staff that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the period ended June 30, 2026 with the SEC. The Staff informed the Company that, under Nasdaq rules, the Company has 60 calendar days, or until October 20, 2026, to submit a plan to regain compliance, and if the Staff accepts such plan, it may grant an exception of up to 180 calendar days from the filing due date, or until February 16, 2027, to regain compliance.

April 2026 Reverse Stock Split

Following the Stockholders Approval described above, the Company effected a 1-for-10 reverse stock split of the Common Stock, issued and outstanding, effective as of 12:01 a.m. (New York time) on April 20, 2026 ("April 2026 Reverse Stock Split"). As a result of the April 2026 Reverse Stock Split, every ten (10) shares of issued and outstanding Common Stock were automatically combined into one (1) issued and outstanding share of Common Stock. Unless noted otherwise, all share and the price per share information for all periods presented in this report have been retroactively adjusted for April 2026 Reverse Stock Split.

Series D Preferred Stock Financing

On May 27, 2026, the Company and the Investor entered into a securities purchase agreement pursuant to which the Company issued the Investor 250 shares of the Company's Series D Convertible Preferred Stock, par value $0.0001 per share ("Series D Preferred Stock"), for a purchase price of $1,000 per share. On the same date, the Company filed respective Certificate of Designation of Rights and Preferences of the Series D Preferred Stock with the Secretary of State of the State of Nevada. The rights, preferences and limitations of the Series D Preferred Stock are set forth in the Certificate of Designation, including conversion rights into shares of the Company's common stock, subject to certain limitations and adjustment provisions. Pursuant to the agreement, the remaining 250 shares of Series D Preferred Stock were issuable by the Company to the Investor at its sole option upon the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. On June 4, 2026, the Company filed its Annual Report on Form 10-K with the SEC. On June 10, 2026, in accordance with the terms of the securities purchase agreement, the Company issued the Investor remaining 250 Series D Preferred Stock for aggregate gross proceeds of $250,000.

Nasdaq Notice Regarding Stockholders' Equity

On June 10, 2026, the Company received a letter from the Staff indicating that, because the Company's stockholders' equity as reported in its Form 10-K for the fiscal year ended December 31, 2025, was $(1,848,252), the Company is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders' equity for continued listing. The letter from Nasdaq has no immediate effect on the listing of the Company's common stock and its common stock continues to be listed on The Nasdaq Capital Market under the symbol "LRHC". On July 27, 2026, the Company submitted to Nasdaq a plan of compliance addressing how the Company intends to regain compliance with Nasdaq's listing rules with respect to the Nasdaq Listing Rule 5550(b)(1). If the plan is accepted, the Company can be granted up to 180 calendar days from the date of the letter (or until December 7, 2026) to evidence compliance.

Cancelled Transactions

In February 2026, the Company entered into a contract to acquire a parcel of land in Osceola County, Central Florida, which was cancelled by the parties on May 15, 2026 upon mutual agreement.

In March 2026, the Company entered into a non-binding letter of intent to acquire 100% of the issued and outstanding equity interests of Consensus Core Technologies, Inc. ("Consensus"), along with certain of its affiliates and subsidiaries. In August 2026 the Company decided to discontinue pursuing the transaction with Consensus.

Series E Preferred Stock Financings

On July 9, 2026, the Company filed respective Certificate of Designation of Rights and Preferences of the Series E Convertible Preferred Stock, par value $0.0001 per share ("Series E Preferred Stock"), with the Secretary of State of the State of Nevada.

On July 10, 2026, the Company and the Investor entered into a securities purchase agreement pursuant to which the Company issued the Investor 250 shares of the Company's Series E Preferred Stock, for a purchase price of $1,000 per share.

On July 31, 2026, the Company and the Investor entered into a securities purchase agreement pursuant to which the Company issued the Investor 150 shares of the Series E Preferred Stock, for a purchase price of $1,000 per share.

On August 18, 2026, the Company and the Investor entered into a securities purchase agreement pursuant to which the Company issued the Investor 210 shares of the Series E Preferred Stock, for a purchase price of $1,000 per share.

Description of Our Revenues

Our financial results are primarily driven by the total number of sales agents in our Company, the number of sales agents closing residential real estate transactions, the number of sales agents utilizing our coaching services, the number of agents who work with our franchisees, and the number of properties under management. Our agent count decreased 6.5 %, from 3,001 at June 30, 2025 to 2,807 at June 30, 2026.

The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisees' agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees, and our franchisees' agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, (vii) fees generated from title services revenue and insurance and (viii) fees from our events and forums.

The majority of our revenue is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest, taxes, depreciation and amortization ("EBITDA"). Historically, the number of agents in the residential real estate industry has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue comes from fees tied to the number and size of real estate transactions closed by our agents. While the Company was not named as a defendant in any of the recent class action lawsuits alleging antitrust violations, it is possible that it could be a litigant at some point in the future. Several of these lawsuits have been settled (see our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on June 4, 2026) "Risk Factors - Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results). These settlements will result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition and results of operations for the foreseeable future.

Key factors affecting our performance

As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.

Seasonality

Our business is affected by the seasons and weather. The spring and summer seasons, when school is out, have typically resulted in higher sales volumes compared to fall and winter seasons. With the slowdown in the later months, we have experienced slower listing activity, fewer transaction closings and lower revenues and have seen more agent turnover as well. Bad weather or natural disasters also negatively impact listings and sales which reduces our operating income, net income, operating margins and cash flow. While this pattern is fairly predictable, there can be no assurance that it will continue. Moreover, with the impact of climate change, we expect more business disruptions in the coming years, many of which could be unpredictable and extreme.

Our revenues and operating margins will fluctuate in successive quarters due to a wide variety of factors, including seasonality, weather, health exigencies, holidays, national or international emergencies, the school year calendar's impact on timing of family relocations, and changes in mortgage interest rates. This fluctuation may make it difficult to compare or analyze our financial performance effectively across successive quarters.

Inflation and Market Interest Rates

The benchmark 30-year fixed conforming mortgage rate rose to a peak of about 8% during the second half of 2023, according to Freddie Mac data. That interest rate then retreated to between 6.08% and 7.22% during 2024 and between 6.15% to 7.04% during 2025. Consequently, housing demand remained soft, prices are rising, consumer sentiment has weakened, and home sales are declining. The U.S. Federal Reserve continues to take action intended to address inflation. The Federal Reserve Board maintained the federal funds rate at 533 basis points from August of 2023 through mid-September 2024, when it was reduced to 483 basis points. In June 2026, the federal funds rate was 363 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments.

In June 2026, the existing home sales market declined 2.4% from May and increased 2.8% from the prior year reaching a seasonally adjusted annual rate (SAAR) of 4.09 million units, and a record median price of $440,600, according to the NAR. The fluctuations in monthly home sales activity are driven by mild fluctuations in mortgage rates. This indicates that home buyers are sensitive to affordability conditions. Job gains will continue to provide support for the housing market. The $440.6 thousand median home price is an all-time high. Affordability is better than a year ago because wage growth is outpacing home price growth, However, progress on long-term housing affordability could be hampered if inventory growth continues to stall. Without consistent gains in inventory, home prices can accelerate. It is critical to introduce more supply to the market to widen the opportunity for homeownership.

Recent Legal Challenges to Sales Agents' Commission Structure

Recent developments in the real estate industry have seen increased scrutiny and legal challenges related to the structure of real estate agent commissions. Legal actions and regulatory inquiries have been initiated to examine the fairness, transparency, and potential anticompetitive practices associated with the traditional commission model. Courts and regulatory bodies may be increasingly focused on ensuring transparency in commission structures, potentially leading to reforms that impact the earnings and business models of real estate professionals. Changes in legislation or legal precedents could impact the standard practices of commission-sharing between listing agents and buyer's agents and may adversely affect our business model and revenues. On October 31, 2023, a federal jury in Missouri found that NAR and certain companies conspired to artificially inflate brokerage commissions, which violates federal antitrust law. The judgment was appealed on October 31, 2023, while these and other plaintiffs have filed similar lawsuits against a number of other large real estate brokerage companies. We have not, as of the date hereof, been named as a defendant in any antitrust litigation. On or about March 15, 2024, NAR agreed to settle these lawsuits, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions. This settlement resolves claims against NAR and nearly every NAR member; all state, territorial and local REALTOR® associations; all association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below and is subject to court approval. Due to this litigation, there will be rule changes for the NAR. In the settlement, effective mid-July 2024, NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS, as well as adopt new rules requiring written agreements between buyers and buyers' agents. However, the direct and indirect effects, if any, of the judgment upon the real estate industry are not yet entirely clear.

There could also be further changes in real estate industry practices. All of this has prompted discussion of changes to rules established by local or state real estate boards or multiple listing services. All of this may require changes to many brokers' business models, including changes in agent and broker compensation. For example, we will likely have to develop mechanisms and a plan that enable buyers and sellers to negotiate commissions. The Company will continue to monitor ongoing and similar antitrust litigation against our competitors. However, the litigation and its ramifications could cause unforeseen turmoil in our industry, the impacts of which could have a negative effect on us as an industry participant.

Cybersecurity

Our business faces cybersecurity risks that could have a material adverse effect on our business operations, financial condition, and reputation. Key factors contributing to cybersecurity risks include, but are not limited to:

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Constantly Evolving Threat Landscape: The landscape of cybersecurity threats is constantly evolving, with new attack vectors, malware, and vulnerabilities emerging regularly. We may not be able to anticipate or mitigate all potential threats effectively.

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Data Vulnerability: We collect, store, and process sensitive customer and corporate data, making us a target for cybercriminals seeking to steal or exploit this information. A data breach could lead to financial and legal liabilities, including regulatory fines and customer trust erosion.

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Third-Party Risks: Our reliance on third-party service providers exposes us to risks associated with their cybersecurity practices. A breach or security failure in a third-party system could impact our operations and data.

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Phishing and Social Engineering: Employees and individuals connected to our organization may be susceptible to phishing attacks or social engineering tactics that compromise security. Human error or manipulation can lead to breaches.

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Regulatory Compliance: We are subject to various data protection and privacy regulations, and non-compliance could result in legal and financial penalties. Adhering to these regulations requires ongoing efforts and resources.

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Business Interruption: A cyberattack or system breach may disrupt our operations, affecting our ability to serve customers, fulfill orders, and maintain revenue, resulting in financial losses.

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Reputation Damage: A publicized cybersecurity incident can significantly damage our brand and reputation, leading to customer churn and reduced market confidence.

The recently adopted SEC cybersecurity disclosure rules for public companies require disclosure regarding cybersecurity risk management (including the corporate board's role in overseeing cybersecurity risks, management's role and expertise in assessing and managing cybersecurity risks, and processes for assessing, identifying and managing cybersecurity risks) in annual reports. These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K, generally within four days of determining an incident is material. We have included respective disclosures in our Annual Report on Form 10-K for fiscal year ended December 31, 2025 filed with the Commission on June 4, 2026.

We may at times fail (or be perceived to have failed) in our efforts to comply with our privacy and data security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely on may fail to comply with such obligations, which could negatively impact our business operations.

Any failure or perceived failure by us or third parties upon whom we rely to comply with obligations, relating to privacy and data security may result in significant consequences including but not limited to governmental investigations and enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar), litigation, additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal information.

Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to loss of customers; interruptions or stoppages in our business operations; inability to process personal information; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.

Critical Accounting Estimates

A critical accounting estimate is one that is both important to the portrayal of a company's financial condition and results of operations and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no material changes to the Company's critical accounting estimates as compared to the estimates described in the Annual Report on Form 10-K for the year ended December 31, 2025 which we believe are the most critical to our business and understanding of our results of operations and affect the more significant judgments and estimates that we use in preparation of our condensed consolidated financial statements.

Results of Operations

Revenue

Three Months Ending June 30

Real Estate Brokerage Services (Residential)

Residential real estate services sales revenue decreased by approximately $5.1 million, or 26%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease was driven primarily by the sale of its interest in LR Kissimmee.

Franchising Services

Franchising services revenue decreased by approximately $9.6 thousand, or 31%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease is attributable the ending of certain franchise agreements.

Coaching Services

Coaching services revenue decreased by approximately $122.4 thousand, or 100%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a strategic shift from Coaching services to aid in onboarding of new Agents.

Property Management

Property management revenue decreased by approximately $6.8 thousand, or 7%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, as a result of a decrease in the number of properties under management.

Real Estate Brokerage Services (Commercial)

Real estate brokerage services (commercial) revenue increased by approximately $17.3 thousand, or 9%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, as a result of new leadership in the department and the condensing lead time it generally takes to generate a commercial real estate transaction.

Title Settlement and Insurance

Title settlement and insurance revenue decreased by approximately $4.9 thousand, or 6%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to loss of key management during the second quarter of 2026.

Six Months Ending June 30

		Six Months Ended June 30,								Change
		2026				2025				$				%
Real Estate Brokerage Services (Residential)		$	27,701,164			$	33,980,226			$	(6,279,062	)			-18	%
Franchising Services			56,699				70,000				(13,301	)			-19	%
Coaching Services			22,257				217,226				(194,969	)			-90	%
Property Management			195,498				199,555				(4,057	)			-2	%
Real Estate Brokerage Services (Commercial)			478,879				245,086				233,793				95	%
Title Settlement and Insurance			172,825				155,778				17,047				11	%
Total Revenue		$	28,627,322			$	34,867,871			$	(6,240,549	)			-18	%

Real Estate Brokerage Services (Residential)

Residential real estate services sales revenue decreased by approximately $6.3 million, or 18%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decrease was driven primarily by the sale of its interest in LR Kissimmee.

Franchising Services

Franchising services revenue decreased by approximately $13.3 thousand, or 19%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decrease is attributable to reduction in franchising activities.

Coaching Services

Coaching services revenue decreased by approximately $195.0 thousand, or 90%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a strategic shift from Coaching services to aid in onboarding of new Agents.

Property Management

Property management revenue decreased by approximately $4.1 thousand, or 2%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, as a result of less properties under management.

Real Estate Brokerage Services (Commercial)

Real estate brokerage services (commercial) revenue increased by approximately $233.8 thousand, or 95%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, as a result of new leadership in the department and the condensing lead time it generally takes to generate a commercial real estate transaction.

Title Settlement and Insurance

Title settlement and insurance revenue increased by approximately $17.0 thousand, or 11%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to company advertising of this service to its agents.

Gross Profit and Gross Margin

Three Months Ending June 30

		Three Months Ended June 30,								Change
		2026				2025				$						%
Real Estate Brokerage Services (Residential)		$	1,488,943			$	1,681,805			$	(192,862	)			-11	%
Gross Margin			10.2	%			8.5	%				​				​
Franchising Services		$	21,575			$	(82,146	)		$	103,721				-126	%
Gross Margin			100.0	%			-263.1	%				​				​
Coaching Services		$	44			$	39,689			$	(39,645	)			-100	%
Gross Margin			14.7	%			32.3	%				​				​
Property Management		$	94,829			$	100,912			$	(6,083	)			-6	%
Gross Margin			100.0	%			99.3	%				​				​
Real Estate Brokerage Services (Commercial)		$	53,817			$	33,394			$	20,423				61	%
Gross Margin			26.2	%			17.8	%				​				​
Title Settlement and Insurance		$	72,234			$	78,574			$	(6,340	)			-8	%
Gross Margin			98.1	%			100.0	%				​				​
Total Gross Profit		$	1,731,442			$	1,852,228			$	(120,786	)			-7	%
Total Gross Margin			11.5	%			9.2	%				​				​

Real Estate Brokerage Services (Residential)

Gross margin related to residential real estate brokerage services decreased by approximately $0.2 million, or 11%%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease was driven by the disposition of LR Kissimmee offset by fee increases enacted on January 1, 2026, which improved gross margins.

Franchising Services

Gross margin for franchising services increased by approximately $103.7 thousand, or 126%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, related to the reduction of active franchises.

Coaching Services

Gross margin related to coaching services decreased by approximately $39.6 thousand, or 100%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease is related to a strategic shift from requiring agents to utilize coaching services from the coaching program.

Property Management

Gross margin related to property management services decreased by approximately $6.1 thousand, or 6%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase in property management costs was primarily related to cost reduction strategies.

Real Estate Brokerage Services (Commercial)

Real estate brokerage services (commercial) revenue increased by approximately $20.4 thousand, or 61%, in the six months ended June 30, 2026 as compared to the three months ended June 30, 2025, as a result of new leadership in the department and the condensing lead time it generally takes to generate a commercial real estate transaction.

Title Settlement and Insurance

Gross margin related to title and settlement services decreased by approximately $6.3 thousand, or 8%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Primarily due to loss of key management during the second quarter of 2026.

Six Months Ending June 30

		Six Months Ended June 30,								Change
		2026				2025				$						%
Real Estate Brokerage Services (Residential)		$	3,174,380			$	3,056,199			$	118,181				4	%
Gross Margin		11.5		%			9.0	%				​				​
Franchising Services		$	56,441			$	(155,159	)		$	211,600				-136	%
Gross Margin		99.5		%			-221.7	%				​				​
Coaching Services		$	14,802			$	78,343			$	(63,541	)			-81	%
Gross Margin		66.5		%			36.1	%				​				​
Property Management		$	195,498			$	198,305			$	(2,807	)			-1	%
Gross Margin		100.0		%			99.4	%				​				​
Real Estate Brokerage Services (Commercial)		$	112,359			$	56,430			$	55,929				99	%
Gross Margin		23.5		%			23.0	%				​				​
Title Settlement and Insurance		$	171,389			$	155,778			$	15,611				10	%
Gross Margin		99.2		%			100.0	%				​				​
Total Gross Profit		$	3,724,869			$	3,389,896			$	334,973				10	%
Total Gross Margin		13.0		%			9.7	%				​				​

Real Estate Brokerage Services (Residential)

Gross margin related to residential real estate brokerage services increased by approximately $0.1 million, or 4%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The increase was driven by fee increases enacted on January 1, 2026, which improved gross margins.

Franchising Services

Gross margin for franchising services increased by approximately $211.6 thousand, or 136%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, related to prior year adjustments in this category.

Coaching Services

Gross margin related to coaching services decreased by approximately $63.5 thousand, or 81%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decrease is related to a strategic shift from requiring agents to utilize coaching services from the coaching program.

Property Management

Gross margin related to property management services decreased by approximately $2.8 thousand, or 1%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decrease in property management costs was primarily related to cost reduction strategies.

Real Estate Brokerage Services (Commercial)

Real estate brokerage services (commercial) revenue increased by approximately $55.9 thousand, or 99%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, as a result of new leadership in the department and the condensing lead time it generally takes to generate a commercial real estate transaction.

Title Settlement and Insurance

Gross margin related to title and settlement services increased by approximately $15.6 thousand, or 10%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. related to new management who is working to reduce related cost of sales.

Selling, General and Administrative Expense

Three Months Ending June 30

Selling, general and administrative costs decreased by approximately $478.9 thousand , or 13%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Of this decrease $440 thousand is related to payroll due to reduction in salaries for executives and reduction in benefits for the quarter, $418 thousand for sales and marketing, partially offset by a $246 thousand increase in rent and a $177 increase in professional fees, in general due to cost cutting strategies implemented by management.

Six Months Ending June 30

		Six Months Ended June 30,								Change
		2026				2025				$				%
Sales and Marketing		$	597,224			$	1,169,447			$	(572,223	)			-49	%
Payroll and benefits			2,301,704				3,017,518				(715,814	)			-24	%
Rent and other			1,069,590				764,624				304,966				40	%
Professional fees			2,393,414				1,650,421				742,993				45	%
Office			146,514				180,683				(34,169	)			-19	%
Technology			307,325				277,779				29,546				11	%
Insurance, training and other			351,901				298,786				53,115				18	%
Public company costs			331,942				320,755				11,187				3	%
Amortization and deprecation			209,758				418,012				(208,254	)			-50	%
Total SG&A Expenses		$	7,709,372			$	8,098,025			$	(388,653	)			-5	%

Selling, general and administrative costs decreased by approximately $388.7 thousand, or 5%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Of this decrease, $716 thousand is related to payroll costs related to executive salary and benefit reductions, $572 thousand to sales and marketing expenses partially offset by $743 increase in professional fees related to issuance cost for the Convertible Note 2026 and $305 thousand increase in rent and other which includes the increase in the allowance for credit losses due to aged receivables.

Stock-based compensation

Stock-based compensation decreased by approximately $435 thousand in the three months ended June 30, 2026, primarily due to no new options or grants of restricted stock units in the current year.

Stock-based compensation decreased by approximately $2.2 million in the six months ended June 30, 2026, primarily due to to no new options or grants of restricted stock units in the current year.

Other Income (Expense), Net

Other expense, net for the three months ended June 30, 2026, decreased approximately $81.4 million compared to other expense, net, for the three months ended June 30, 2025. The decrease in expense in 2026 was primarily due to reduction in loss of on issuance of senior secured convertible notes and change on fair value of convertible notes and warrants.

Other expense, net for the six months ended June 30, 2026, decreased approximately $1.3 million compared to other expense, net, for the six months ended June 30, 2025. The decrease in expense in 2026 was primarily due to reduction in loss of on issuance of senior secured convertible notes and offset by change on fair value of convertible notes and warrants and gain on settlement of incremental warrants.

Liquidity and Capital Resources - Going Concern and Management' s Plans

On June 30, 2026, the Company had a cash balance of $2.3 million and working capital of $4.3 million.

On November 12, 2025, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional investors (the "Investors"), pursuant to which the Company agreed to issue and sell, and the Investors agreed to purchase, in multiple closings, a new series of senior secured convertible notes of the Company in an aggregate original principal amount of up to $250,000,000 (the "Notes"), subject to the satisfaction or waiver of certain closing conditions. The Company issued an initial Note in an aggregate principal amount of $11,000,000 at the initial closing on January 8, 2026 (the "Initial Closing") after the satisfaction or waiver of certain closing conditions.

Subject to certain conditions described in the Purchase Agreement, the Company has the option to request that the Investor purchase additional Notes (the "Company's Option Closing"), and the Investor has the option to cause the Company to sell additional Notes (the "Investor's Option Closing" and together with the Company's Option Closing, (the "Additional Closings") and together with the Initial Closing, each a "Closing"), provided that the aggregate original principal amount of any Notes issued in each Additional Closing shall not exceed $5,000,000 individually, and not more than $239,000,000 in the aggregate for all Additional Closings. The purchase price for each Note will be $900 for each $1,000 of principal amount of Note.

In addition, the Company has financing arrangements through its equity line of credit which allows the Company to sell shares of which 40% of the proceeds are available to the Company. The Company also, has secured financings through preferred share issuances which in general are funded for $1,000 per share and are subject to certain conversion rights into common stock. As of June 30, 2026, the Company received $580,000 in proceeds from the issuance of Series C and D financings net of issuance cost.

The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, the Company will require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Until such time that the Company fully implements its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to cost related to financing and the corporate overhead costs of being a public company. As such, the Company anticipates that its existing working capital, including cash on hand, and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the consolidated financial statements. The Company will be required to raise additional capital to fund ongoing operations.

The Company has incurred recurring net losses, and the Company's operations have not provided net positive cash flows. In view of these matters, there is substantial doubt about the Company's ability to continue as a going concern. The Company plans on continuing to expand via organic growth, which will help achieve future profitability, and the Company will continue to raise capital from outside investors, as it has done in the past, to fund operating losses. There can be no assurance the Company can successfully raise the capital needed.

Summary of Cash Flows

Cash Flows from Operating Activities

During the six months ended June 30, 2026, operating activities consumed 2.7 million of our cash on hand, which was primarily attributable to loss from continuing operations of $3.1 million, excluding stock-based compensation, loss on issuance of senior secured convertible notes, fair market value adjustments, and amortization and depreciation. Changes in operating assets and liabilities provided $475 thousand, mostly due to increases in accounts receivable, notes receivable offset by increases in accounts payable and changes in security deposit and escrow payables.

During the six months ended June 30, 2025, operating activities consumed $4.8 million of our cash on hand, which was primarily attributable to the net loss of $4.0 million, excluding stock-based compensation, gains and losses on issuance of senior secured convertible notes and warrants, fair market value adjustments, amortization, depreciation and other changes, changes in operating assets and liabilities consumed a further $859 thousand, mostly due to an increase in accounts receivable and an decrease in operating lease liabilities.

Cash Flows from Investing Activities

During the six months ended June 30, 2026 there was 10.7 million used in investing activities as a result of the purchase $10.3 million in digital assets and $411 thousand of cash sold in connection with the disposal of LR Kissimmee.

During the six months ended June 30, 2025 there were no investing activities.

Cash Flows from Financing Activities

During the six months ended June 30, 2026, we received net cash provided by financing activities of 13.2 million, which primarily included net proceeds from notes payable of $9.9 million and proceeds from issuance of common stock of $4.8 million, offset by $1.9 million in redemption of our Series X Super Voting Convertible Preferred Stock.

During the six months ended June 30, 2025, we received net cash provided by financing activities of $8.4 million, which primarily included net proceeds from our S-3 of $6.7 million and from our debt issuance in February 2025 of $3.4 million, offset by $1.7 million in payments to notes payable, post-acquisition consideration, and advances on future receipts.