Quarterly Report for Quarter Ending March 31, 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:

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 2,979 licensed real estate brokers and sales associates as of March 31, 2026.

Our franchised offices are currently:

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

Departure and Appointment of the Board Members

On February 5, 2026, Michael La Rosa resigned from the Board, and upon recommendation of the Nominating Committee, on February 10, 2026, the Board appointed Mr. Jaime Cosculluela as a member of the Board.

Convertible Note Facility, Redemption Agreement, and Series X Amendment to the Articles of Incorporation

On November 12, 2025, the Company and the certain institutional investors ("Investors") entered into the Securities Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company agreed to, among other things, 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, subject to the satisfaction or waiver of certain closing conditions. Pursuant to the Purchase Agreement, on November 12, 2025, the Company issued a Token Right (the "Token Right") to certain Investors, pursuant to which upon exercise of the Token Right and for no further consideration the holder will be entitled to receive an aggregate number of Right Tokens (as defined therein) equal to the sum of (i) fifty percent (50%) of any and all Tokens (as defined in the Token Right) purchased by the Company using the net proceeds of each closing of the Purchase Agreement and (ii) twenty-five percent (25%) of any and all Tokens purchased by the Company using the net proceeds of any Other Financing (as defined therein).

In connection with the Purchase Agreement, on November 12, 2025, the Company and Mr. La Rosa entered into a redemption agreement ("Redemption Agreement"), pursuant to which, on the initial closing date of the Purchase Agreement, the Company agreed to redeem and immediately cancel and return to the status of "blank check" preferred stock of the Company, certain number of Mr. La Rosa's shares of Series X Super Voting Preferred Stock ("Series X Preferred Stock") such that, immediately after such redemption, he will own shares of Series X Preferred Stock representing not less than 80% of the total voting power of the Company for a redemption price of $2,000,000 payable upon such redemption, and $500,000 contingently payable upon the satisfaction of certain conditions. Mr. La Rosa's remaining shares of Series X Preferred Stock will be redeemable by the Company at a subsequent time determined by the Board or otherwise as set forth in the Redemption Agreement for no additional consideration. These redemptions of the Series X Preferred Stock were conditioned upon stockholders' approval and effectiveness of the Certificate of Amendment to the Articles of Incorporation (the "Series X Certificate of Amendment") to provide that the shares of the Series X Preferred Stock may be redeemed from time to time and at any time in whole or in part upon such terms and conditions as may be approved by the Board and agreed to by the holder(s) thereof. Upon effectiveness of respective stockholders' approval on December 25, 2025, such Series X Certificate of Amendment was effective as of December 26, 2025.

On January 8, 2026, the Company consummated the initial closing (the "Initial Closing") under the Purchase Agreement, pursuant to which it issued the Investors a senior secured convertible note in the principal amount of $11,000,000 (the "Initial Note"), together with a previously issued Token Right, for an aggregate purchase price of $9,900,000. The Initial Note is convertible into shares of Common Stock, at an initial conversion price equal to $8.347, subject to adjustment as provided in the Initial Note, provided that in no event may the conversion price be less than the floor price of $7.78, which will be lowered pursuant to the terms of the Initial Note for the Initial Note and all other notes (together, the "Notes") upon the effectiveness of the stockholders' approval of such reduction (the "Floor Price"). The Initial Note bears interest at a rate of ten percent (10%) per annum that is payable monthly in arrears commencing on February 1, 2026, matures twenty-four (24) months from the date of issuance and contains customary covenants and events of default (upon which the interest rate will increase to a rate of nineteen percent (19%) per annum) as described in the Initial Note.

In connection with the Initial Closing on January 8, 2026, as contemplated under the Purchase Agreement: (i) the Company and each of its subsidiaries (each, a "Grantor"), and a collateral agent (the "Collateral Agent") for the benefit of the holders of Obligations (as defined in the Security Agreement), entered into a Security and Pledge Agreement (the "Security Agreement") with respect to the Notes, pursuant to which each Grantor granted the Collateral Agent, for the benefit of the Secured Parties (as defined in the Security Agreement), a security interest in such Grantor's right, title and interest in and to all or substantially all of its properties and assets, or in which or to which such Grantor has any rights, whether then owned or thereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the "Collateral"); (ii) each subsidiary of the Company also entered into a guarantee agreement (the "Subsidiary Guaranty") whereby each Subsidiary of the Company guaranteed to the Investors the prompt and full payment and performance of the obligations of the Company and each Subsidiary under the Purchase Agreement and other Transaction Documents; and (iii) the Company and the Collateral Agent entered into an Intellectual Property Security Agreement ("Intellectual Property Security Agreement"), pursuant to which the Company granted to the Collateral Agent a lien and security interest in certain intellectual property of the Company. As a condition to the Initial Closing as provided in the Securities Purchase Agreement on January 5, 2026, the Company and the Collateral Agent also entered into that certain Account Control Agreement.

The Company received $9,635,000 in net proceeds from the Initial Closing, that were used as follows: (i) $7,000,000 of net proceeds to acquire Note Purchased Crypto (as defined in the Notes) as a digital asset for the Company's balance sheet, (ii) $2,000,000 of the net proceeds to redeem a portion of the outstanding shares of the Series X Preferred Stock pursuant to the Redemption Agreement, (iii) $500,000 of the net proceeds to be kept in a controlled account to fund the redemption of remaining shares of the Series X Preferred Stock in accordance with the terms of the Redemption Agreement, and (iv) any remaining proceeds, for general corporate purposes, working capital, acquisitions and other strategic transactions. Curvature Securities LLC served as placement agent in connection with the offering.

On the Initial Closing, pursuant to the terms of the Redemption Agreement, the Company redeemed 200 shares of the Series X Preferred Stock held by Mr. Joseph La Rosa, and the Company and Mr. La Rosa agreed that the Company will pay Mr. La Rosa a portion of the Fixed Redemption Price (as defined in the Redemption Agreement) equal to $1,700,000 immediately after the Initial Closing and the remaining $300,000 of the Fixed Redemption Price will be paid to Mr. La Rosa at a later date to be agreed by the Company and Mr. La Rosa.

On March 24, 2026, the Company and Investors entered into an Amendment to the Purchase Agreement to provide that the net proceeds to the Company from any further equity line of credit, equity purchase facility, or at-the-market offering shall be allocated as follows: (i) until such time as the Company has paid to its placement agent and financial advisor (together, the "Advisors") an aggregate of $751,221 in deferred fees, (1) 20% to pay any outstanding deferred fees due to the Advisors, (2) 40% to acquire Note Purchased Crypto (as defined in the Purchase Agreement) as a digital asset for the Company's balance sheet, and (3) the remaining 40% for general corporate purposes, working capital, acquisitions and other strategic transactions (including, but not limited to, developing next-generation data center infrastructure for AI computing), and (ii) thereafter (1) 50% of the net proceeds shall be used to acquire Note Purchased Crypto as a digital asset for the Company's balance sheet and (2) the remaining 50% of the net proceeds shall be used for general corporate purposes, working capital, acquisitions and other strategic transactions (including, but not limited to, developing next-generation data center infrastructure for AI computing), including payment of an additional $77,000 in deferred fees to the Advisors due and payable not earlier than December 31, 2026.

In addition, on March 24, 2026, the Company and Investors entered into Amendment No. 1 to the Token Right (the "Token Right Amendment"), under which the Investor will be entitled to receive upon an aggregate number of Right Tokens equal to the sum of (i) fifty percent (50%) of any and all Tokens purchased by the Company on and after the Issuance Date using the net proceeds of each closing under the Purchase Agreement and (ii) fifty- six and one quarter percent (56.25%) of any and all Tokens purchased by the Company on and after the Issuance Date using the net proceeds of any Other Financing (as defined in the Token Right).

The Company entered into the Purchase Agreement and transactions contemplated thereby to secure immediate and committed access to capital at a time when alternative financing sources were either unavailable or significantly more dilutive and restrictive. The facility was intended to provide critical liquidity to support ongoing operations, address going concern considerations, and preserve enterprise value. In addition, the Company sought to strengthen its balance sheet and position itself to deploy capital into strategic initiatives, including investments in stablecoins, A.I. infrastructure, and data center opportunities, which management believes have the potential to enhance long-term shareholder value. Unlike traditional financing, the structure allows the Company to draw capital incrementally, providing flexibility to align funding with operational needs and market conditions. While the transaction includes costs such as potential dilution and derivative liabilities, management determined that these were justified given the significant risk to the business if capital was not secured. The transaction was negotiated at arm's length and, in management's view, represents a reasonable and necessary financing solution under the circumstances.

Investments in Digital Assets

As described above, on January 8, 2026, we consummated the Initial Closing pursuant to the Purchase Agreement. We agreed to use majority of net proceeds from the closings under the Purchase Agreement and any equity line of credit, equity purchase facility or at-the-market offering to acquire cryptocurrency in the form that the Investors and Company have mutually agreed to in writing as a digital asset for the Company's balance sheet. We have further agreed with the Investors that we will acquire stablecoins as these digital assets. Since January 1, 2026, we used net $6.7 million from the Initial Closing and $3.6 million from our equity line of credit to acquire stablecoins. As of May 31, 2026, we held $10.3 million primarily in the following types of digital assets: FRXUSD and USDC. Our current strategy is to hold stablecoins to preserve the value of the initial investment. During which time we will perform counterparty due diligence potentially using our digital assets for our strategic efforts towards expansion into AI data centers ecosystem. There can be no assurance as to the timing, size, form, or success of this initiative, and it involves significant risks, evolving regulation, financing dilution, and custody or cybersecurity concerns.

January 2026 Reverse Stock Split

On November 10, 2025, the Company's stockholders holding a majority of the voting power of the Company by a written consent approved the amendment to the Company's Amended and Restated Articles of Incorporation, as amended, to effect one or more reverse stock splits of the Company's Common Stock in each case at a ratio in the range of 1-for-5 to 1-for-100, with such ratio to be determined by the Board ("Stockholders Approval"). Such resolution became effective on December 25, 2025, or twenty (20) days after the Company filed with the SEC and mailed to its stockholders respective Information Statement on Schedule 14C on or approximately December 4, 2025. Following such stockholders' approval, 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 January 26, 2026 ("January 2026 Reverse Stock Split"). As a result of the January 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.

Disposition of LR Kissimmee

On February 4, 2026, the Company sold its 51% membership interest (the "Interest") in Horeb Kissimmee Realty LLC, a Florida limited liability company ("LR Kissimmee") to LR Kissimmee's pre-Transaction 49% owner (the "Buyer") pursuant to a Membership Interest Purchase Agreement (the "Sale Agreement") by and among the Company, the Buyer and LR Kissimmee. Under the Sale Agreement, the Company will receive from the Buyer aggregate cash consideration for the Interest of $500,000, payable in twelve (12) equal monthly installments of $41,667, commencing February 28, 2026. In addition, the Buyer agreed to pay the Company $61,200, representing the Company's pro rata share of an outstanding loan previously made by LR Kissimmee to the Buyer, payable in four (4) equal quarterly installments of $15,300 commencing on the same date. As a result of the transaction, the Company has fully withdrawn as a member of LR Kissimmee and has no continuing ownership interest therein. In connection with the Transaction, the Company also entered into a Trademark & Brand Licensing Agreement (the "Licensing Agreement") with LR Kissimmee, pursuant to which the Company granted to LR Kissimmee a non-exclusive, non-transferable license to use certain trademarks and branding of the Company in connection with LR Kissimmee's real estate brokerage business. The Licensing Agreement provides for a flat monthly licensing fee payable to the Company of $4,500 and has an initial term of one (1) year.

Acquisition of Remaining Interest in Lakeland

On February 11, 2026, the Company acquired from the selling member (the "Seller") all of his 49% membership interest in La Rosa Realty Lakeland LLC, a Florida limited liability company ("Lakeland"), pursuant to a Membership Interest Purchase Agreement and a Settlement Agreement by and among the Company, Joseph La Rosa, the Chief Executive Officer of the Company, the Seller, and Lakeland, for aggregate cash consideration of $350,000 (the "Purchase Price"), consisting of (i) an initial payment of $150,000 payable within ten (10) days following the closing, and (ii) installment payments totaling $200,000, payable in twelve (12) equal monthly installments of $16,667 commencing on March 1, 2026. As a result of the transaction, Lakeland became a wholly owned subsidiary of the Company. As part of the transaction, on February 11, 2026, the Company and the Seller also entered into a Pledge Agreement, pursuant to which, as a security for the unpaid portion of the Purchase Price, the Company granted the Seller a perfected, first-priority security interest in a non-voting 28% economic membership interest in Lakeland.

Amendments to Officers Employment Agreements

On February 19, 2026, with the approval of its Board, the Company entered into (i) an Amendment (the "CEO Amendment") to the Amended and Restated Employment Agreement, dated November 12, 2025, with Joseph La Rosa, the Company's Chief Executive Officer (the "CEO"), and (ii) an Amendment (the "COO Amendment") to the Employment Agreement, dated January 31, 2024 (the "COO Employment Agreement"), with Deana La Rosa, the Company's Chief Operating Officer ("COO").

Under the CEO Amendment, Mr. La Rosa agreed to a reduction in his base salary from $500,000 to $200,000 per annum, in consideration of which the Company agreed to revise certain provisions of the Confidential Information and Invention Assignment Agreement dated April 12, 2022 (the "CIA Agreement"), between Mr. La Rosa and the Company so that Mr. La Rosa's non-competition restrictions were effective only during the term of his employment with the Company. In addition, the period of non-solicitation restrictions under the CIA Agreement was reduced from twenty-four (24) to twelve (12) months post-employment. These changes became effective on March 15, 2026.

Under the COO Amendment, Mrs. La Rosa agreed to a reduction in her base salary from $250,000 to $100,000 per annum, in consideration of which the Company agreed to revise certain restrictive covenants of the COO Employment Agreement so that Mrs. La Rosa's non-competition restrictions were effective only during the term of her employment with the Company, and the period of non-solicitation restriction was reduced from twenty-four (24) to twelve (12) post-employment. These changes became effective on March 15, 2026.

Land Purchase Agreement

In February 2026, the Company entered into a contract to acquire a strategically located parcel of land in Osceola County, one of the fastest-growing regions in Central Florida. Upon completion, this acquisition is expected to represent a key milestone in the Company's expansion strategy and support the development of a Tier III Artificial Intelligence ("AI") data center designed to address increasing demand for high-performance computing infrastructure. The planned facility is expected to span up to 10,000 square feet and support an estimated IT load of approximately 1,500 kW, positioning it to serve enterprise, cloud, and AI-driven workloads.

Series C Preferred Stock Financing

On March 4, 2026, the Company and an institutional investor (the "Investor") entered into a securities purchase agreement pursuant to which the Company issued the Investor 100 shares of the Company's Series C Convertible Preferred Stock, par value $0.0001 per share ("Series C 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 C Preferred Stock with the Secretary of State of the State of Nevada.

Potential Acquisition of Consensus Core Technologies, Inc

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. Consensus is a provider of critical infrastructure solutions for AI and high-performance computing. The proposed acquisition is intended to position the Company at the forefront of the AI infrastructure ecosystem and provide a scalable platform to capitalize on the growing demand for AI compute capacity. The consummation of this transaction is subject to, and contingent upon, the execution of a definitive agreement and other related transaction documents by the parties, corporate approval and customary closing conditions. There can be no assurances that such transaction will be consummated.

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 ("Comprehensive 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.

The Notices have no immediate effect on the listing or trading of the Common Stock, which will continue to trade on The Nasdaq Capital Market under the symbol "LRHC."

On June 4, 2026, the Company filed Comprehensive Form 10-K 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. However, since it has not received the Company's Form 10-Q, the Company remains noncompliant Nasdaq Listing Rule 5250(c)(1). On June 11, 2026, the Company submitted to Nasdaq a plan of compliance (the "Plan") addressing how the Company intends to regain compliance with Nasdaq's listing rules with respect to the delinquent reports, and Nasdaq has the discretion to grant the Company up to 180 calendar days from the due date of the Form 10-K, or October 12, 2026, 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.

Series E Preferred Stock Financing

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 Convertible Preferred Stock, par value $0.0001 per share ("Series E Preferred Stock"), for a purchase price of $1,000 per share. On July 9, 2026, the Company filed respective Certificate of Designation of Rights and Preferences of the Series E Preferred Stock with the Secretary of State of the State of Nevada.

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. We increased our agent count by 7.6 %, from 2,769 at March 31, 2025 to 2,979 at March 31, 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 May 2026, the federal funds rate was 363 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. In May 2026, the existing home sales market rose 3.2% compared to both April 2026 and May 2025, reaching a seasonally adjusted annual rate (SAAR) of 4.17 million units, according to the NAR. This increase had a positive impact on consumer demand for our services, as consumers weighed the financial implications of selling or purchasing a home. Continuing improved housing market conditions would positively affect our operating performance and results of operations.

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:

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

Real Estate Brokerage Services (Residential)

Residential real estate services sales revenue decreased by approximately $1.2 million, or 9%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was driven primarily by the sale of its interest in LR Kissimmee.

Franchising Services

Franchising services revenue decreased by approximately $4 thousand, or 9%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease is attributable to reduction in franchising activities.

Coaching Services

Coaching services revenue decreased by approximately $73 thousand, or 77%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a strategic shift from Coaching services to aid in onboarding of new Agents.

Property Management

Property management revenue increased by approximately $3 thousand, or 3%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, overall this is consistent with the prior year revenues.

Real Estate Brokerage Services (Commercial)

Real estate brokerage services (commercial) revenue increased by approximately $216 thousand, or 379%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 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 $22 thousand, or 28%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to company advertising of this service to its agents.

Gross Profit and Gross Margin

NM: Not Meaningful

Real Estate Brokerage Services (Residential)

Gross margin related to residential real estate brokerage services increased by approximately $0.3 million, or 23%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was driven by fee increases enacted on January 1, 2026, which improved gross margins.

Franchising Services

Gross margin for franchising services decreased by approximately $108 thousand, or 148%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, related to reduction of the number of franchises due to previous acquisitions and performance of the franchisees.

Coaching Services

Gross margin related to coaching services decreased by approximately $24 thousand, or 62%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 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 increased by approximately $3.3 thousand, or 3%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase in property management costs was primarily related to cost reduction strategies.

Title Settlement and Insurance

Gross margin related to title and settlement services increased by approximately $22 thousand, or 28%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. We have initiated new management which is focusing on the growth of this segment.

Selling, General and Administrative Expense

NM: Not Meaningful

Selling, general and administrative costs increased by approximately $90 thousand , or 2%, in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. Of this increase $570 thousand is related to cost incurred for the financing agreements for the quarter and $58 thousand increase in rent, partially offset by $275 thousand reduction in payroll costs, $123 thousand reduction in amortization and depreciation and $154 thousand reduction in sales and marketing expenses.

Stock-based compensation

We incurred stock-based compensation of approximately $110 thousand in the three months ended March 31, 2026, primarily due to vesting of options and restricted stock units and a marketing agreement entered into during the quarter.

Other Income (Expense), Net

Other expense, net for the three months ended March 31, 2026, decreased approximately $85 million compared to other expense, net, for the three months ended March 31, 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.

Liquidity and Capital Resources

On March 31, 2026, the Company had a cash balance of $1.7 million and working capital of $4.1 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.

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 three months ended March 31, 2026, operating activities consumed $1.7 million of our cash on hand, which was primarily attributable to loss from continuing operations of $2.1 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 $325 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 three months ended March 31, 2025, operating activities consumed $3.5 million of our cash on hand, which was primarily attributable to the net loss of $2.3 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 consumed a further $1.2 million, mostly due to an increase in accounts payable and an increase in contract liabilities.

Cash Flows from Investing Activities

During the three months ended March 31, 2026 there was $8.1 million used to purchase digital assets and $411 thousand of cash sold in connection with the disposal of LR Kissimmee.

During the three months ended March 31, 2025 there were no activities that consumed cash for the quarter.

Cash Flows from Financing Activities

During the three months ended March 31, 2026, we received net cash provided by financing activities of $11.5 million, which included net proceeds from notes payable of $9.9 million and proceeds from issuance of common stock of $3.5 million, offset by $1.7 million in redemption of our Series X preferred stock.

During the three months ended March 31, 2025, we received net cash provided by financing activities of $4.8 million, which included net proceeds from our sale of our common stock pursuant to the "at-the-market" (ATM) financing of $2.9 million and from our debt issuance in February 2025 of $2.9 million, offset by $1.8 million in payments to notes payable, post-acquisition consideration, and advances on future receipts.