La Rosa Holdings Corp.

La Rosa Holdings Corp. operates in the United States residential real estate market, which totaled $55.1 trillion ¹ at June 30, 2025 versus $49.7 trillion ² at the end of 2024, reflecting a half year gain of $5.4 trillion ³ due to sufficient number of buyers competing over a relatively small number of listings, according to Redfin Corp. The Company is the holding company for six agent-centric, technology-integrated, cloud-based, multi-service real estate segments, and its business was founded by Mr. Joseph La Rosa. The residential real estate industry is cyclical, and the Company can be negatively impacted by downturns in this market and by general economic conditions, including higher mortgage interest rates and generally increasing home prices.

The Company's largest national franchise competitors in the U.S. include RE/MAX, Realogy Holdings Corp. (which operates several brands including Century 21 and Coldwell Banker), Fathom Holdings Inc., and eXp World Holdings Inc. In the corporate-owned space, the largest competitors include Compass Holdings, Inc. and Fathom Holdings, Inc. The Company believes its agent-centric commission model, proprietary technology, training, and support provided to agents at a minimal cost is one of the best offered in the industry. The Company's agent count continues to grow organically and through acquisition, and it attributes its organic growth to the positive culture created in the Company and the competitive plans offered to agents. The Company's founder, Mr. Joseph La Rosa, as of June 3, 2026, controls 91.81% ⁴ of the total voting power of the Company's Common Stock based on his ownership of Common Stock and the 18,000 votes provided by his Series X Preferred Stock.

The Company generates revenue primarily by providing person-to-person residential and commercial real estate brokerage services to the public, and cross-sells ancillary technology-based products and services primarily to its sales agents and the sales agents associated with its franchisees. The majority of revenue is derived from a stable set of fees paid by brokers, franchisees, and consumers, with the majority derived from commissions paid by consumers who transact business with the Company's and its franchisees' agents, royalties paid by franchisees, and dues and technology fees paid by sales agents. The Company's business is organized based on the services provided internally to agents and to the public, which are residential and commercial real estate brokerages, franchising services, real estate brokerage education and coaching, property management, and title services. The Company's agent-centric commission model enables sales agents to obtain higher net commissions than they would otherwise receive from many competitors in local markets.

The Company's revenue streams include residential real estate brokerage revenue, which constituted 97% ⁵ of total 2025 revenue and 97% ⁶ of total 2024 revenue. Property management revenue, franchise sales and other franchise revenues, coaching/training/assistance revenue, commercial real estate revenue, and title settlement and insurance revenue each constituted less than 1% of total revenue in either or both years, except coaching/training/assistance revenue which was 1% ⁷ of total 2024 revenue. The Company has 23 ⁸ La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, and Puerto Rico, and also has 5 ⁹ La Rosa Realty franchised real estate brokerage offices and branches and 3 ¹⁰ affiliated real estate brokerage offices that pay fees in 7 ¹¹ states in the United States and Puerto Rico. The Company also has LR Realty Spain, a full-service brokerage office located primarily in Malaga, Spain, a full-service escrow settlement and title company in Florida, and a company offering a commission advancement program exclusively for La Rosa agents. The Company's real estate brokerage offices, both corporate and franchised, are staffed with 2,842 ¹² licensed real estate brokers and sales associates as of May 31, 2026.

In July 2025, the Company entered into a strategic agreement with The Agency Dominican Republic, securing rights for its agents to act as co-brokers to market and sell units of the IBIS Romana Bayahibe project in Dominican Republic, and exclusive rights for any sales of IBIS in Puerto Rico. In July 2025, the Company announced the launch of My Agent Account Version 4.0, a major enhancement to the Company's proprietary agent platform featuring a fully integrated Transaction Management module. In the last quarter of 2025, the Company initiated a strategic repositioning toward expansion into the AI ecosystem, through strategic acquisitions, partnerships, and development of next-generation data center infrastructure for AI computing. On November 22, 2024, the Company entered into an ATM Agreement with A.G.P./Alliance Global Partners, and during the year ended December 31, 2025, the Company issued an aggregate of 3,871 ¹³ shares of Common Stock pursuant to such ATM Agreement for net proceeds of $7,496,361 ¹⁴. On February 4, 2025, the Company entered into a securities purchase agreement with an institutional investor, issuing a Senior Secured Convertible Note in the original principal amount of $5,500,000 ¹⁵ and sixteen Incremental Warrants, receiving gross proceeds of $4,963,750 ¹⁶. On June 18, 2025, the Company and the investor entered into an Exchange Agreement, exchanging all Incremental Warrants for 6,000 ¹⁷ shares of Series B Convertible Preferred Stock. On August 4, 2025, the Company entered into an Equity Purchase Facility Agreement with an institutional investor, committing to purchase up to $150 million ¹⁸ in newly issued shares of Common Stock, which was amended on September 18, 2025 to increase the Commitment Amount to $1.0 billion ¹⁹. During the 2025 fiscal year, the Company received $111,902 ²⁰ in net proceeds from the sale of an aggregate of 501 ²¹ shares of Common Stock pursuant to the Facility. On November 12, 2025, the Company entered into a Securities Purchase Agreement with certain institutional investors to issue and sell senior secured convertible notes in an aggregate original principal amount of up to $250,000,000 ²². On January 8, 2026, the Company consummated the initial closing under the Purchase Agreement, issuing a senior secured convertible note in the principal amount of $11,000,000 ²³ for an aggregate purchase price of $9,900,000 ²⁴, receiving $9,635,000 ²⁵ in net proceeds. On April 23, 2025, the Board approved a Share Repurchase Program authorizing the Company to purchase up to an aggregate of $500,000 ²⁶ of the Company's outstanding shares of Common Stock, which expired on December 31, 2025 without being used.

Total revenue for the year ended December 31, 2025 was $68,507,806 ²⁷, compared to $58,682,139 ²⁸ for the year ended December 31, 2024, an increase of 17% ²⁹. Gross profit was $6,968,389 ³⁰ for 2025 versus $5,953,279 ³¹ for 2024, with total gross margin improving to 10.2% ³² from 8.6% ³³. The Company incurred a net loss of $30,410,422 ³⁴ for the year ended December 31, 2025, compared to a net loss of $14,349,996 ³⁵ for the year ended December 31, 2024. Net loss attributable to common stockholders was $32,819,828 ³⁶ for 2025 versus $15,923,607 ³⁷ for 2024. Basic and diluted loss per share was $3,531 ³⁸ for 2025 compared to $7,844 ³⁹ for 2024. Cash and cash equivalents were $3,086,770 ⁴⁰ as of December 31, 2025, compared to $1,442,901 ⁴¹ as of December 31, 2024.

The Company expects the housing-market slowdown to persist throughout 2025 because home-buying affordability is near its lowest level in decades. The Company believes that the recent settlements of litigation based on alleged violations of federal and state antitrust laws may result in a significant adverse effect on its financial condition and results of operations for the foreseeable future. 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, and the Company will be required to raise additional capital to service its promissory notes, to repay the principal balance of each of the notes, and to fund ongoing operations.

The Company intends to continue growing its business organically and through acquisition, and it is management's intention to consider additional acquisition and/or merger targets through the remainder of 2026. The Company anticipates acquiring other complementary businesses, such as, for example, insurance agencies and a mortgage brokerage, in the future to enhance its gross revenues and profit margins. In the last quarter of 2025, the Company initiated a strategic repositioning toward expansion into the AI ecosystem, through strategic acquisitions, partnerships, and development of next-generation data center infrastructure for AI computing. 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, to support the development of a Tier III AI data center designed to address increasing demand for high-performance computing infrastructure, with the planned facility expected to span up to 10,000 square feet ⁴² and support an estimated IT load of approximately 1,500 kW ⁴³. 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., a provider of critical infrastructure solutions for AI and high-performance computing. The Company also intends to leverage its real estate platform to identify, develop, and manage high-quality data center assets in key markets where demand for AI infrastructure is rapidly increasing.

The Company's total gross margin improved to 10.2% ⁴⁴ for the year ended December 31, 2025 from 8.6% ⁴⁵ for the prior year. The Company is currently in the process of developing and deploying its own proprietary technology which will further decrease its overall expenses as it eliminates the need for outside technology services. The Company's agent centric methodology, advanced technology, and ancillary services, such as property management, will enable it to organically grow its agent base with virtually no incremental cost. In environments with increasing mortgage rates and declining sales transactions, the Company believes its model is more attractive to real estate agents, who retain more of their commission proceeds compared to traditional brokerage models.

The Company's business does not require significant property space, and it supports its agents primarily via mobile technology and video conferencing. The Company leases all its space, with subsidiaries having space that ranges from 360 square feet to 4,700 square feet, with relatively short terms. The Company believes its office space is adequate for at least the next 12 months. As of May 31, 2026, the Company had 43 ⁴⁶ full-time employees and 2,842 ⁴⁷ real estate agents that are independent contractors. The Company intends to expand its current management to retain skilled employees with experience relevant to its business.

The Company's equity and cash incentive plans are designed to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards. The Company has an equity incentive plan to offer stock incentives to its employees and agents that it believes is competitive with plans offered by other publicly traded real estate brokerage companies. The Company did not use the Share Repurchase Program authorized on April 23, 2025 for up to $500,000 ⁴⁸ of the Company's outstanding shares of Common Stock, and it expired on December 31, 2025. The Company has never paid any cash dividends on its publicly traded Common Stock and does not expect to pay cash dividends in the foreseeable future.

The combination of high mortgage rates, continuing high home prices and limited inventory slowed the housing market substantially in 2025. The average rate for a 30-year fixed mortgage was 6.38% ⁴⁹ as of March 26, 2026, down from 6.65% ⁵⁰ during the most recent 52-week period, according to Freddie Mac. Total housing inventory at the end of February 2026 was 1.29 million ⁵¹ units, up 3.1% from January and up 7.9% from one year ago. The existing home sales market decreased 1.2% ⁵² compared to February 2025 according to the NAR. The Company expects these trends to continue to adversely affect its revenues in 2026. Any further increase in the Fed funds rate could push the U.S. economy into a recession which is likely to have a further negative effect on the Company's operations, income and financial condition.

The Company faces risks related to the recent settlements of antitrust litigation against the NAR and other real estate brokerage companies, which may result in changes in the way real estate brokers are compensated for their services, most notably that home sellers may no longer be required to pay buyer agent commissions which would result in lower buyer agent compensation. The Company cannot predict the full breadth of the outcome of these lawsuits but believes that they may result in a significant adverse effect on its financial condition and results of operations for the foreseeable future. The Company also faces risks related to the cyclicality of the residential real estate market, the lack of financing for homebuyers at favorable rates, and the potential for a continued rise in inflation, a period of slow economic growth or recessionary conditions, and a continued increase in mortgage interest rates.

The Company's independent registered public accounting firm's report contains an explanatory paragraph that expresses substantial doubt about the Company's ability to continue as a going concern, as the Company has incurred recurring net losses, including a net loss of $30,410,422 ⁵³ for the year ended December 31, 2025, and its operations have not provided net positive cash flows. The Company has a limited operating history and its revenue growth rate is likely to slow down as its business matures and may slow down due to the recent antitrust litigation. The Company recorded an impairment of $6,911,770 ⁵⁴ related to goodwill and intangible assets for the year ended December 31, 2025. The Company may fail to successfully execute its strategies to grow its business, including increasing its agent count, expanding the number of its franchisees and agents, or may fail to manage its growth effectively. The Company depends substantially on its Founder, Joseph La Rosa, who as of June 3, 2026 controls 91.81% ⁵⁵ of the total voting power of the Company's capital stock, which will prevent new investors from influencing significant corporate decisions. The Company has concluded that certain of its previously issued financial statements should not be relied upon and has restated them, which was time-consuming and expensive and could expose the Company to additional risks, including potential stockholder litigation.

Management's message emphasizes the Company's agent-centric commission model, proprietary technology, training, and support as key competitive advantages. The Company believes that its focus on the interaction between human agents and their clients is a strong weapon against internet-only commodity websites and low touch discount brokerages. Management intends to continue growing the business organically and through acquisition, and it is management's intention to consider additional acquisition and/or merger targets through the remainder of 2026. The Company has initiated a strategic repositioning toward expansion into the AI ecosystem, through strategic acquisitions, partnerships, and development of next-generation data center infrastructure for AI computing. Management has determined that the transaction with the Investors under the Securities Purchase Agreement was a reasonable and necessary financing solution under the circumstances, intended to provide critical liquidity to support ongoing operations, address going concern considerations, and preserve enterprise value. The Company's mission statement is that 'we are here to support, empower and elevate those who we serve with integrity.'