La Rosa Holdings Corp.

Previous wording

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 have 26 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, North Carolina and Puerto Rico. The Company also has 6 La Rosa Realty franchised real estate brokerage offices and branches and 3 affiliated real estate brokerage offices, that pay us fees in 7 states in the United States and Puerto Rico. Additionally, the Company has a full-service escrow settlement and title company in Florida.

Current wording

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 have 26 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, North Carolina and Puerto Rico. The Company also has 6 La Rosa Realty franchised real estate brokerage offices and branches and 3 affiliated real estate brokerage offices, that pay us fees in 7 states in the United States and Puerto Rico. We also have recently opened LR Realty Spain, which is a full-service brokerage office located primarily in Malaga, Spain. Additionally, the Company has a full-service escrow settlement and title company in Florida.

Previous wording

Our real estate brokerage offices, both corporate and franchised, are staffed with 2,769 licensed real estate brokers and sales associates as of March 31, 2025.

Current wording

Our real estate brokerage offices, both corporate and franchised, are staffed with 3,001 licensed real estate brokers and sales associates as of June 30, 2025.

Previous wording

In December 2024, the Company opened its first office and wholly owned subsidiary in North Carolina, La Rosa Realty NC LLC. In January 2025, the Company formed LR Luxury, LLC, engaged mostly in the residential real estate brokerage business. In April 2025, the Company also formed LR Agent Advance, LLC, offering a commission advancement program exclusively for La Rosa agents.

Current wording

In December 2024, the Company opened its first office and wholly owned subsidiary in North Carolina, La Rosa Realty NC LLC. In January 2025, the Company formed LR Luxury, LLC, engaged mostly in the residential real estate brokerage business. In April 2025, the Company formed LR Agent Advance, LLC, offering a commission advancement program exclusively for La Rosa agents. In 2025, we also formed LR Realty Spain, S.L., our wholly owned subsidiary in Spain.

Previous wording

It is management’s intention to acquire additional franchisees and other entities through the remainder of 2025. We continuously search for potential acquisition targets. Management is in discussions with several franchisees and other entities; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.

Current wording

We continuously search for potential acquisition targets. Management is in discussions with several franchisees and other entities; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.

Previous wording

On February 4, 2025, our Board of Directors, and the majority stockholders approved the Certificate of Amendment to the Company’s Amended and Restated Articles of Incorporation to increase the number of the Company’s authorized shares of common stock to two billion (2,000,000,000) shares of common stock, and to restate Sections 3.01 and 3.02 thereof to reflect such increase. As of the date hereof, the Certificate of Amendment was not effected by the Company.

Current wording

On February 4, 2025, our Board of Directors, and the stockholders holding a majority of the voting power of the Company approved the Certificate of Amendment to the Company’s Amended and Restated Articles of Incorporation to increase the number of the Company’s authorized shares of common stock to two billion (2,000,000,000) shares of common stock, and to restate Sections 3.01 and 3.02 thereof to reflect such increase. Such an increase became effective on June 2, 2025.

Previous wording

On October 10, 2024, we received a letter from the Nasdaq Listing Qualifications Department notifying us that, for the 30 consecutive business day period between August 28, 2024 through October 9, 2024, our common stock had not maintained a minimum closing bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until April 8, 2025 (the “Compliance Period”), to regain compliance with the Bid Price Rule. In order to regain compliance with the Bid Price Rule, our common stock was required to maintain a minimum closing bid price of $1.00 for a minimum of ten consecutive business days during the Compliance Period prior to April 9, 2025.

Current wording

On October 10, 2024, the Company received a letter from the Nasdaq Listing Qualifications Department notifying us that, for the 30 consecutive business day period between August 28, 2024 through October 9, 2024, our common stock had not maintained a minimum closing bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). On July 21, 2025, the Company received a letter from Nasdaq confirming that the Nasdaq Listing Qualifications Department has determined that for the last 10 consecutive business days, from July 7 through July 18, 2025, the closing bid price of the Company’s common stock has been at $1.00 per share or greater. Accordingly, the Company has regained compliance with the Bid Price Rule, and this matter is now closed.

Previous wording

The Notice informed the Company that, under Nasdaq rules, the Company has 60 calendar days 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 Filing’s due date (or until November 17, 2025) to regain compliance.

Current wording

The Notice informed the Company that, under Nasdaq rules, the Company has 60 calendar days 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 Filing’s due date (or until November 17, 2025) to regain compliance. The Company regained compliance with Nasdaq Listing Rule 5250(c)(1) as a result of filing of its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2025 on May 29, 2025.

Previous wording

On November 22, 2024, the Company entered into a sales agreement (“ATM Agreement”) with A.G.P./Alliance Global Partners, as sales agent (“AGP”), relating to the sale of common stock. During the first quarter ended March 31, 2025, the Company issued an aggregate of 7,446,442 shares of common stock pursuant to such ATM Agreement for net proceeds of $2,919,192. The Company paid the sales agent compensation with respect to sale of such shares in the amount of $104,371.

Current wording

On November 22, 2024, the Company entered into a sales agreement (“ATM Agreement”) with A.G.P./Alliance Global Partners, as sales agent, relating to the sale of common stock. During the three month ended June 30, 2025, the Company issued an aggregate of 218,918 shares of common stock pursuant to such ATM Agreement for net proceeds of $3,741,282. The Company paid the sales agent compensation with respect to sale of such shares in the amount of $151,947.

Previous wording

As of December 31, 2024, the Company qualified as a “controlled company” because more than 50% of the voting power for the election of directors was held by Joseph La Rosa, our Chief Executive Officer and Chairman. As a result of certain sales under the Company’s previously announced at-the-market offering, as of April 16, 2025 Mr. La Rosa no longer holds more than 50% of the voting power for the election of directors. As a result, the Company is no longer considered a “controlled company” for the purposes of the listing requirements of the Nasdaq Capital Market. Since the Company did not take availed itself of certain of the controlled company exemptions afforded by Nasdaq to controlled companies, such change in the Company’s status did not result in any corporate governance changes for the Company.

Current wording

As of December 31, 2024, the Company qualified as a “controlled company” because more than 50% of the voting power for the election of directors was held by Joseph La Rosa, our Chief Executive Officer and Chairman. As a result of certain sales under the Company’s previously announced at-the-market offering, as of April 16, 2025 Mr. La Rosa no longer held more than 50% of the voting power for the election of directors. As a result, the Company was no longer considered a “controlled company” for the purposes of the listing requirements of the Nasdaq Capital Market. Since the Company did not avail itself of certain of the controlled company exemptions afforded by Nasdaq to controlled companies, such change in the Company’s status did not result in any corporate governance changes for the Company. The Company regained a “controlled company” status on July 7, 2025 because as a result of Reverse Stock Split, Mr. Joseph La Rosa became a holder of more than 50% of the voting power of the Company.

Previous wording

On February 4, 2025, we entered into the SPA with an institutional investor (“2025 Investor”) pursuant to which we issued and sold to the 2025 Investor on such date: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on the two-year anniversary of the Closing Date (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (Incremental Notes and together with the Initial Note, the “Notes”). The purchase price paid by 2025 Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750, which was used by the Company to pay-off certain indebtedness, pay certain outstanding fees and expenses, acquisitions and general corporate purposes. The Company also granted 2025 Investor registration rights in the shares of common stock issuable upon conversion of the Notes. The Company Group also entered into a Security and Pledge Agreement with or in favor of the 2025 Investor pursuant to which the Company Group granted the 2025 Investor a security interest in substantially all of the property and assets of the Company Group to secure the Company’s obligations under the SPA, Notes, Incremental Warrants, Registration Rights Agreement and other Transaction Documents (as defined) and the Company’s subsidiaries guaranteed or obligations of the Company thereunder. The Company also agreed to obtain shareholder approval for the issuance of more than 19.99% of the issued and outstanding common stock in this financing.

Current wording

On February 4, 2025 (“Closing Date”), we entered into the SPA with an institutional investor (“2025 Investor”) pursuant to which we agreed to issued and sell to the 2025 Investor upon the terms and conditions set forth in the SPA on such date: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on the two-year anniversary of the Closing Date (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (Incremental Notes and together with the Initial Note, the “Notes”). The Incremental Warrants and Initial Note were issued to 2025 Investor on the Closing Date. The purchase price paid by 2025 Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750, which was used by the Company to pay-off certain indebtedness, pay certain outstanding fees and expenses, acquisitions and general corporate purposes. The Company also granted 2025 Investor registration rights in the shares of common stock issuable pursuant to the SPA and conversion of the Notes. The Company and its subsidiaries also entered into a security agreement with or in favor of the 2025 Investor pursuant to which the Company and its subsidiaries granted the 2025 Investor a security interest in certain property of the Company and its subsidiaries to secure the Company’s obligations under the Notes. The Company also agreed to obtain stockholder approval for the issuance of more than 19.99% of the issued and outstanding common stock in this financing.

Previous wording

On the Closing Date, as required by the SPA, Joseph La Rosa, as the majority stockholder of the Company, approved (i) the issuance of the Initial Note, the Incremental Warrants and Incremental Notes, all shares of common stock issuable as interest thereunder and all of the Conversion Shares and Incremental Conversion Shares in excess of 19.99% (without regard to any limitation on conversion or exercise thereof) of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq in accordance with Nasdaq Listing Rules 5635(b) and 5635(d); (ii) authorization to complete a reverse split of our common stock; and (iii) authorization to increase the number of authorized shares of our common stock to ensure that the Company has a sufficient number of authorized shares reserved for issuance to equal at least 200% of the maximum number of shares issuable upon conversion of the Notes, as determined under the Securities Purchase Agreement. Such approval was effective on March 27, 2025, or 20 days after the commencement of mailing of the definitive information statement regarding this approval to the stockholders of the Company.

Current wording

On the Closing Date, as required by the SPA, stockholders holding a majority of the voting power of the Company, approved (i) the issuance of the Initial Note, the Incremental Warrants and Incremental Notes, all Interest Shares and all of the Conversion Shares and Incremental Conversion Shares (each as defined in the SPA) in excess of 19.99% (without regard to any limitation on conversion or exercise thereof) of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq in accordance with Nasdaq Listing Rules 5635(b) and 5635(d); (ii) authorization to complete a reverse split of our common stock; and (iii) authorization to increase the number of authorized shares of our common stock to ensure that the Company has a sufficient number of authorized shares reserved for issuance to equal at least 200% of the maximum number of shares issuable upon conversion of the Notes, as determined under the Securities Purchase Agreement. Such approval was effective on March 27, 2025, or 20 days after commencement of mailing of the definitive information statement regarding this approval to the stockholders of the Company.

Previous wording

On April 23, 2025, the Company’s Board of Directors has approved a new Share Repurchase Program, which authorizes the Company to purchase up to an aggregate of $500,000 of the Company’s outstanding shares of common stock in the open market in accordance with all applicable securities laws and regulations. Repurchases under this program may be made at management’s discretion at the time and in the amounts determined by the Chief Executive Officer and Chief Operating Officer of the Company. The Share Repurchase Program has an expiration date of December 31, 2025.

Current wording

On April 23, 2025, the Company’s Board of Directors approved a new Share Repurchase Program, which authorized the Company to purchase up to an aggregate of $500,000 of the Company’s outstanding shares of common stock in the open market in accordance with all applicable securities laws and regulations. Repurchases under this program may be made at management’s discretion at the time and in the amounts determined by the Chief Executive Officer and Chief Operating Officer of the Company. The Share Repurchase Program has an expiration date of December 31, 2025.

Previous wording

On April 29, 2025, the Company was notified by Marcum LLP (“Marcum”) that Marcum resigned as the Company’s independent registered accounting firm effective immediately. On April 29, 2025, the Company, with the approval of the Audit Committee (the “Committee”) of the Board of Directors of the Company, accepted resignation of Marcum as the Company’s independent registered public accounting firm effective immediately. On November 1, 2024, CBIZ CPAs P.C. (“CBIZ CPAs”) acquired the attest business of Marcum. On April 29, 2025, the Company, with the approval of the Committee, engaged CBIZ CPAs to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025 to be effective immediately.

Current wording

On April 29, 2025, Marcum LLP (“Marcum”), the Company’s independent registered accounting firm, resigned effective immediately. On April 29, 2025, the Company, with the approval of the Audit Committee (the “Committee”) of the Board of Directors, accepted their resignation. On November 1, 2024, CBIZ CPAs P.C. (“CBIZ CPAs”) acquired the attest business of Marcum. On April 29, 2025, the Company, with the approval of the Committee, engaged CBIZ CPAs to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025 to be effective immediately.

Previous wording

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 12.8%, from 2,454 at March 31, 2024 to 2,769 at March 31, 2025.

Current wording

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 18.4%, from 2,535 at June 30, 2024 to 3,001 at June 30, 2025.

Previous wording

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 April 2025, the federal funds rate was 433 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and reached a peak of about 8% during the second half of 2023. That interest rate sat in between 6.62% and 6.85% during 2024 and was 6.65% by the end of March 2025. Consequently, housing demand remained soft, prices are rising, consumer sentiment has weakened, and home sales are declining. In March 2025, existing-home sales fell 5.9% month-over-month to a seasonally adjusted rate of 4.02 million. Year-over-year, sales drew back 2.4%. According to National Association of Realtors (“NAR”) Chief Economist Lawrence Yun, “Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates. Residential housing mobility, currently at historic lows, signals the troublesome possibility of less economic mobility for society.”

Current wording

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 2025, the federal funds rate was 433 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and reached a peak of about 8% during the second half of 2023. That interest rate sat in between 6.62% and 6.85% during 2024 and was 6.77% by the end of June 2025. Consequently, housing demand remained soft, prices are rising, consumer sentiment has weakened, and home sales are declining. In June 2025, existing-home sales fell 2.7% month-over-month to a seasonally adjusted rate of 3.93 million. Year-over-year, sales remained constant. According to National Association of Realtors Chief Economist Lawrence Yun, “Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market. More supply is needed to increase the share of first-time homebuyers in the coming years even though some markets appear to have a temporary oversupply at the moment.”

Previous wording

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. During the first quarter of 2025, the Company entered into a securities purchase agreement providing for the issuance of a convertible note and incremental warrants which required a fair value evaluation under ASC 825. This evaluation constituted an additional critical accounting estimate to the Company. SeeNote 4 Fair Value Measurements and Other LiabilitiesandNote 5 Borrowings to the accompanying condensed consolidated financial statements for more information. There have been no other material changes to the Company’s critical accounting estimates as compared to the estimates described in the Annual Report on Form 10-K as of December 31, 2024 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. Other than the fair value evaluation mentioned above, there have been no other material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K as of December 31, 2024.

Current wording

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. During the six-months ended June 30, 2025, the Company entered into a securities purchase agreement providing for the issuance of a convertible note and incremental warrants which required a fair value evaluation under ASC 825. This evaluation constituted an additional critical accounting estimate to the Company. SeeNote 4 Fair Value Measurements and Other LiabilitiesandNote 5 Borrowings to the accompanying condensed consolidated financial statements for more information. There have been no other material changes to the Company’s critical accounting estimates as compared to the estimates described in the Annual Report on Form 10-K as of December 31, 2024 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. Other than the fair value evaluation mentioned above, there have been no other material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K as of December 31, 2024.

Previous wording

Residential real estate services sales revenue increased by approximately $4.0 million, or 39%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was driven primarily by approximately $3.6 million of revenue from the six acquisitions completed in the 2 nd – 4 th quarter of fiscal year 2024 along with incremental additional revenue from the three acquisitions completed in the first quarter of fiscal year 2024. We increased our transaction fee, monthly agent fee, and annual fee effective September 1, 2023, which, if volume returns to 2023 levels, real estate brokerage services revenue, excluding incremental acquisition revenue, will increase in 2025.

Current wording

Residential real estate services sales revenue increased by approximately $3.9 million, or 24%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024. The increase was driven primarily by approximately $3.0 million of revenue from the four acquisitions completed in the 3 rd and 4 th quarter of fiscal year 2024 along with incremental additional revenue from the five acquisitions completed in the 1 st and 2 nd quarter of fiscal year 2024.

Previous wording

Coaching services revenue decreased by approximately $39 thousand, or 29%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a strategic shift to allow large teams to onboard without coaching in an effort to increase onboarding at the expense of Coaching.

Current wording

Coaching services revenue decreased by approximately $88 thousand, or 42%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024, primarily due to a strategic shift to allow large teams to onboard without coaching in an effort to increase onboarding at the expense of Coaching.

Previous wording

Property management revenue increased by approximately $432 thousand, or 172%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an increase in the number of properties under management along with a management fee price increase effective September 1, 2023.

Current wording

Property management revenue increased by approximately $326 thousand, or 11%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024, primarily due to an increase in the number of properties under management.

Previous wording

Franchising services revenue decreased by approximately $106 thousand, or 73%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease is attributable to the five of the six acquisitions completed in the 2 nd – 4 th quarter of fiscal year 2024 that were franchisees, which no longer contribute to franchising royalties fees. Our remaining franchisees did not see a significant changes in transaction revenues between the per.

Current wording

Franchising services revenue decreased by approximately $143 thousand, or 67%, in the six-months ended June 30, 2025 as compared to the six-months ended June 30, 2024. The decrease is attributable to the acquisitions completed in fiscal year 2024 that were franchisees, which no longer contribute to franchising royalties fees. Our remaining franchisees did not see a significant changes in transaction revenues between the per.

Previous wording

Costs related to residential real estate brokerage services increased by approximately $3.7 million, or 40%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was driven by approximately $6.9 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the three acquisitions completed in the first quarter of fiscal year 2024. The gross profit increased by approximately $341 thousand, or 33%, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily attributable to the gross profit from acquisitions.

Current wording

Costs related to residential real estate brokerage services increased by approximately $3.6 million, or 25%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024. The increase was driven by approximately $2.7 million of cost of revenue from the four acquisitions completed in the 3 rd and 4 th quarter of fiscal year 2024 and the five acquisitions completed in the 1 st and 2 nd quarter of fiscal year 2024. The gross profit increased by approximately $293 thousand, or 21%, for the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024 primarily attributable to the gross profit from acquisitions.

Previous wording

Costs of revenue for franchising services decreased by approximately $18 thousand, or 14%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, related to the acquisition of the five out of the six franchises acquired in the 2 nd - 4 th quarters of 2024. The gross profit of franchising services has decreased by $87 thousand, or about 611%, for the three-month period ending March 31, 2025 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the franchises in 2023 and 2024.

Current wording

Costs of revenue for franchising services decreased by approximately $10 thousand, or 8%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024, related to the acquisition of the franchises acquired in the 2024. The gross profit of franchising services has decreased by $27 thousand, or about 50%, for the three-month period ending June 30, 2025 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the franchises in 2024.

Previous wording

Costs of revenue related to coaching services decreased by approximately $17 thousand, or 23%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Costs related to coaching services is related to the augmentation of the coaching program. The gross profit of coaching services has decreased by $21 thousand, or about 36%, for the three-month period ending March 31, 2025 over the comparable prior year period due to a shift in priority to growth in onboarding without a coaching requirement.

Current wording

Costs of revenue related to coaching services decreased by approximately $29 thousand, or 26%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024. Costs related to coaching services is related to the augmentation of the coaching program to expedite agent onboarding. The gross profit of coaching services has decreased by $60 thousand, or about 60%, for the three-month period ending June 30, 2025 over the comparable prior year period due to a shift in priority to growth in onboarding without a coaching requirement.

Previous wording

Costs of revenue related to property management services increased by approximately $364 thousand, or 14%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase in property management costs was primarily related to an increase in properties under management. The gross profit of property management services has increased by $68 thousand, or about 229%, for the three-month period ending March 31, 2025 over the comparable prior year period related to increase in properties under management.

Current wording

Costs of revenue related to property management services increased by approximately $353 thousand, or 13%, in the three-months ended June 30, 2025 as compared to the three-months ended June 30, 2024. The increase in property management costs was primarily related to an increase in properties under management. The gross profit of property management services has declined by $26 thousand, or about 21%, for the three-month period ending June 30, 2025 over the comparable prior year period related to payroll increase in properties under management.

Previous wording

Selling, general and administrative costs increased by approximately $1.7 million, or 68%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Of this $695 thousand is related to professional service, $594 thousand is related to payroll and related cost $330 for sales and marketing.

Current wording

Selling, general and administrative costs increased by approximately $2.6 million, or 47%, in the six-months ended June 30, 2025 as compared to the six-months ended June 30, 2024. Of this $941 thousand is related to professional service, and $1.1 million is related to payroll and benefits which were added to support the acquisitions, administrative, sales and marketing activities.

Previous wording

We incurred stock-based compensation of approximately $1.9 million in the three months ended March 31, 2025, primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($1.3 million), and consultants who provided various services to the Company ($0.6 million).

Current wording

We incurred stock-based compensation of approximately $474 thousand and $3.7 million in the three and six months ended June 30, 2024, respectively. Yeat to date being primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($2.1 million), other employees ($0.9 million), and consultants who provided various services to the company ($0.7 million).

Previous wording

Other expense, net for the three months ended March 31, 2025, increased approximately $91.0 million compared to other expense, net, for the three months ended March 31, 2024. The increase in expense in 2025 was primarily due to the loss on issuance of senior secured convertible note for $128.8 million and loss on extinguishment of debt for $152 thousand, offset by a gain of $37.1 million on the change in fair value of convertible note and warrants and a $0.9 million gain on the change in fair value of a derivative liability.

Current wording

Other expense, net for the six-months ended June 30, 2025, increased approximately $9.6 million compared to other expense, net, for the six-months ended June 30, 2024. The increase in expense in 2025 was primarily due to the loss on issuance of senior secured convertible note for $128.8 million, offset by gain on extinguishment of incremental warrants $82.3 million, gain of $31.8 million on the change in fair value of convertible note and warrants and a $4 million gain on extinguishment of debt.

Previous wording

On March 31, 2025, the Company had a cash balance of $4.9 million and negative working capital of $94.0 million.

Current wording

On June 30, 2025, the Company had a cash balance of $7.1 million and working capital of $4.4 million.

Previous wording

The $4,963,750 in gross proceeds from the offering was used by the Company to pay-off certain indebtedness of the Company, pay certain outstanding fees and expenses (including expenses of the offering, and fees payable to the placement agent and advisors), acquisitions and general corporate purposes. Of the proceeds from the offering, $354,450 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreements with Cedar Advance, LLC, $340,421 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreement with Arin Funding, LLC and $910,250 was paid to satisfy, in full, the remaining balance of the senior secured promissory notes with an accredited investor.See Note 5 – Borrowings for further discussionto the accompanying condensed consolidated financial statements for further disclosure.

Current wording

The $4,963,750 in gross proceeds of which $910,250, $496,191 and $148,724 were used to assume or extinguish other debt for net proceeds of $3,408,585. Remaining funds from the offering was used by the Company to pay-off certain indebtedness of the Company, pay certain outstanding fees and expenses (including expenses of the offering, and fees payable to the placement agent and advisors), acquisitions and general corporate purposes. Of the proceeds from the offering, $354,450 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreements with Cedar Advance, LLC, $340,421 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreement with Arin Funding, LLC and $910,250 was paid to satisfy, in full, the remaining balance of the senior secured promissory notes with an accredited investor.See Note 5 – Borrowings for further discussionto the accompanying condensed consolidated financial statements for further disclosure.

Previous wording

In addition to the debt pay downs during the quarter, the Company eliminated all warrants tied to the investor senior secured promissory notes outstanding as of December 31,2024. Two of the three warrants were exercised on a cashless basis, with the third warrant being bought back by the Company in the amount of $379,083, fully eliminating these unfavorable ratchet warrants.

Current wording

In addition to the debt pay downs during the six months ended June 30, 2025, the Company eliminated all warrants tied to the investor senior secured promissory notes outstanding as of December 31,2024. Two of the three warrants were exercised on a cashless basis, with the third warrant being bought back by the Company in the amount of $379,083, fully eliminating these unfavorable ratchet warrants.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

During the six-months ended June 30, 2025 there were no activities that consumed cash for the quarter.

Previous wording

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 S-3 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.

Current wording

During the six-months ended June 30, 2025, we received net cash provided by financing activities of $8.4 million, which 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.