{"url_path":"/sec/lrhc/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-04","source_url":"https://www.sec.gov/Archives/edgar/data/1879403/0001213900-26-065276-index.html","accession_number":"0001213900-26-065276","cik":"0001879403","ticker":"LRHC","issuer_name":"La Rosa Holdings Corp.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1879403/0001213900-26-065276-index.html","primary_entity_key":"0001879403","primary_entity_name":"La Rosa Holdings Corp."},"word_count":20076,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors.**\n\n \n\n*Our\nbusiness is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances\ndescribed below occur, our business and financial performance could be adversely affected, our actual results could differ materially\nfrom our expectations, and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we\nface. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that\nmay adversely affect our business and financial performance. You should carefully consider the risks described below, together with all\nother information included in this report including our financial statements and related notes, before making an investment decision.\nThe statements contained in this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties\nthat could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the\nfollowing risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading\nprice of our Common Stock could decline, and investors in our securities may lose all or part of their investment.*\n\n \n\n*Risks\nRelated to Our Business and Operations*\n\n \n\n**Our\nindependent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about\nour ability to continue as a “going concern.”*** *\n\n \n\nThe\nCompany has incurred recurring net losses, including a net loss of $30,410,422 for the year ended December 31, 2025, compared to $14,349,996\nfor the year ended December 31, 2024 and the Company’s operations have not provided net positive cash flows in the year ended December\n31, 2025. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The\nCompany’s continuation as a going concern is dependent upon its ability to generate positive cash flows from operations and to\nsecure additional sources of equity and/or debt financing. Despite the Company’s intent to fund operations through equity and debt\nfinancing arrangements, there is no assurance that such financing will be available on terms acceptable to the Company, if at all.\n\n \n\n21\n\n \n\n \n\nOur\nindependent auditors have included an explanatory paragraph in their audit report, included in this Comprehensive Form 10-K, regarding\nthe Company’s ability to continue as a going concern. This going concern risk may materially limit our ability to raise additional\nfunds through the issuance of new debt or equity or may adversely affect the terms upon which such capital may be available. The inability\nto obtain sufficient financing on acceptable terms could have a material adverse effect on the Company’s financial condition, results\nof operations, and business prospects.\n\n \n\nThe\nCompany is actively pursuing strategies to mitigate these risks, focusing on expansion through acquisitions, which can help achieve future\nprofitability and growing its customer base. However, there can be no assurance that these efforts will prove successful or that the\nCompany will achieve its intended financial stability. The failure to successfully address these going concern risks may materially and\nadversely affect the Company’s business, financial condition, and results of operations. Investors should consider the substantial\nrisks and uncertainties inherent in the Company’s business before investing in the Company’s securities.\n\n \n\n**We\nhave a limited operating history with financial results that may not be indicative of future performance, and our revenue growth rate\nis likely to slow down as our business matures and may slow down due to the recent antitrust litigation.**\n\n \n\nWe\nbegan operations in 2021. As a result of our limited operating history, we have limited financial data that can be used to evaluate our\ncurrent business, and such data may not be indicative of future performance. We have encountered, and expect to continue to encounter,\nrisks and difficulties frequently experienced by growing companies, including challenges in financial forecasting accuracy, hiring of\nexperienced personnel, hiring of technology employees, determining appropriate investments, developing new products and features, assessing\nlegal and regulatory risks, among others. Any evaluation of our business and prospects should be considered in light of our limited operating\nhistory, and the risks and uncertainties inherent in investing in early-stage companies. In addition, recent settlements of litigation\nbased on alleged violations of federal and state antitrust laws may have an adverse impact on our potential growth. See “Risk Factors\n- *Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry\ncould adversely impact our financial results,”*below.\n\n \n\n**Impairment\nof goodwill and intangible assets may adversely impact future results of operations.**\n\n** **\n\nAn\nimpairment in the carrying value of goodwill, trade names and other long-lived assets could negatively affect our consolidated results\nof operations and net worth.\n\n \n\nGoodwill\nand indefinite-lived intangible assets, such as trade names, are recorded at fair value at the time of acquisition and are not amortized,\nbut are reviewed for impairment at least annually or more frequently if impairment indicators arise. In evaluating the potential for\nimpairment of goodwill and trade names, we make assumptions regarding future operating performance, business trends and market and economic\nconditions. Such analyses further require us to make certain assumptions about our sales, operating margins, growth rates and discount\nrates. There are inherent uncertainties related to these factors and in applying these factors to the assessment of goodwill and trade\nname recoverability. Goodwill reviews are prepared using estimates of the fair value of reporting units based on the estimated present\nvalue of future discounted cash flows. We could be required to evaluate the recoverability of goodwill or trade names prior to the annual\nassessment if we experience disruptions to the business, unexpected significant declines in operating results, a divestiture of a significant\ncomponent of our business or market capitalization declines. For the year ended December 31, 2025, we conducted such a review and recorded\nan impairment of $6,911,770 related to goodwill and intangible assets.\n\n \n\nWe\nalso continually evaluate whether events or circumstances have occurred that indicate the remaining estimated useful lives of our definite-lived\nintangible assets, such as franchise agreements, agent relationships, real estate listings, and non-compete agreements, and other long-lived\nassets may warrant revision or whether the remaining balance of such assets may not be recoverable. We use an estimate of the related\nundiscounted cash flow over the remaining life of the asset in measuring whether the asset is recoverable.\n\n \n\n**If\nwe fail to raise additional capital, our ability to implement our business model and strategy could be compromised.**\n\n \n\nWe\nhave limited capital resources and operations. From time to time, we may seek additional financing to provide the capital required to\nexpand the production of our business operation and development initiatives and/or working capital, as well as to repay outstanding loans\nif cash flow from operations is insufficient to do so. We cannot predict with certainty the timing or amount of any such capital\nrequirements.\n\n \n\nIf\nwe do not raise sufficient capital to fund our ongoing development activities, it is likely that we will be unable to carry out our business\nplans. We may not be able to obtain additional financing on terms acceptable, or at all. Even if we obtain financing for near-term operations,\nwe may require additional capital beyond the near term. If we are unable to raise capital when needed, our business, financial condition\nand results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations. \n\n \n\n22\n\n \n\n \n\n**The\nresidential real estate market is cyclical, and we can be negatively impacted by downturns in this market and by general economic conditions.** \n\n \n\nThe\nresidential real estate market tends to be cyclical and typically is affected by changes in general economic conditions which are beyond\nour control. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets,\nlevels of unemployment, consumer confidence and the general condition of the U.S. and the global economy. The residential real estate\nmarket also depends upon the strength of financial institutions, which are sensitive to changes in the general macroeconomic environment.\nLack of available credit or lack of confidence in the financial sector could impact the residential real estate market, which in turn\ncould materially and adversely affect our business, financial condition and results of operations. Due to the cyclicality of the real\nestate market, we cannot predict whether the prior several year period of sustained growth will continue, whether mortgage rates which\nhave climbed over 2022-2025 will remain at relatively higher levels than in years past and whether home prices will stabilize. The U.S.\nhas experienced housing “bubbles” in the past which have burst, resulting in significant price declines, mortgage defaults\nand home foreclosures by lenders, the last one occurring in the early 2000s.\n\n \n\nAny\nof the following could be associated with cyclicality in the housing market by halting or limiting the current growth in the housing\nmarket, and have a material adverse effect on our business by causing periods of lower growth or a decline in the number of home sales\nand/or home prices which, in turn, could adversely affect our revenue and profitability:\n\n \n\n \n●\na continued rise in inflation;\n\n \n\n \n●\na period of slow economic\ngrowth or recessionary conditions;\n\n \n\n \n●\na continued increase in\nmortgage interest rates;\n\n \n\n \n●\na tightening of credit\nstandards by financial institutions;\n\n \n\n \n●\nlegislative, tax or regulatory\nchanges that would adversely impact the residential real estate market, including but not limited to those relating to mortgage financing,\nrestrictions imposed on mortgage originators as well as retention levels required to be maintained by sponsors to securitize certain\nmortgages, the elimination of the deductibility of certain mortgage interest expense, the application of the alternative minimum\ntax, and real property taxes and employee relocation expense;\n\n \n\n \n●\ninsufficient home inventory\nlevels in our markets;\n\n \n\n \n●\na continued increase in\nthe acquisition of single-family homes by corporate buyers for rental purposes;\n\n \n\n \n●\na decrease in the affordability\nof homes;\n\n \n\n \n●\na decrease in consumer\nconfidence;\n\n \n\n \n●\nincrease in the cost of\npremiums for home insurance due to recent hurricanes; and\n\n \n\n \n●\nnatural disasters, such\nas hurricanes, earthquakes and other disasters that disrupt local or regional real estate markets.\n\n \n\n**The\nlack of financing for homebuyers in the U.S. residential real estate market at favorable rates and on favorable terms has had a material\nadverse effect on our financial performance and results of operations.**\n\n** **\n\nOur\nbusiness is significantly impacted by the availability of financing at favorable rates or on favorable terms for homebuyers, which may\nbe affected by government regulations and policies. Certain on-going governmental actions or inactions, such as the U.S. federal government’s\nconservatorship of Fannie Mae and Freddie Mac, capital standards imposed on banks by the Office of the Comptroller of the Currency, the\nmonetary policy of the U.S. government, and any rising interest rate environment may adversely impact the housing industry, including\nhomebuyers’ ability to finance and purchase homes.\n\n \n\nThe\nmonetary policy of the U.S. government, and particularly the Federal Reserve Board, which regulates the supply of money and credit in\nthe U.S., significantly affects the availability of financing at favorable rates and on favorable terms, which in turn affects the domestic\nreal estate market. Policies of the Federal Reserve Board can affect interest rates available to potential homebuyers. Further, we will\nbe adversely affected by any rising interest rate environment. Changes in the Federal Reserve Board’s policies, the interest rate\nenvironment and mortgage market are beyond our control, are difficult to predict and could restrict the availability of financing on\nreasonable terms for homebuyers, which could have a material adverse effect on our business, results of operations and financial condition.\nWe review all aspects of the current state of legislation, regulations and policies affecting the domestic real estate market and cannot\npredict whether or not such legislation, regulation and policies may result in increased down payment requirements, increased mortgage\ncosts, and result in increased costs and potential litigation for housing market participants, any of which could have a material adverse\neffect on our financial condition and results of operations.\n\n \n\n23\n\n \n\n \n\nThe\nU.S. Bureau of Labor Statistics (“BLS”) reported that the Consumer Price Index for All Urban Consumers (CPI-U), a broad-based\nmeasure of goods and services costs, rose 0.3 percent in February 2026 seasonally adjusted, and rose 2.4 percent over the last 12 months\nending January 2026, not seasonally adjusted.1 This increase was above the Federal Reserve System’s (the “Fed”)\ntargeted inflation rate of 2.0%, The 2025 federal funds interest rate in late December decreased to a range of 3.50 to 3.75\nprimarily due to stubborn inflation and signs of a weakening labor market.2 Inflation continues to decline after\na period of rising prices, which contributed to the decision. The Fed aims to provide financial relief to borrowers and continue\nto cool down an overheated economy. Fed funds rates impact interest rates on government bonds that have a correlated effect on mortgage\ninterest rates, which, as of March 26, 2026, the average rate for a 30-year fixed rate mortgage was 6.38 according to Freddie Mac, the\nfederally chartered home mortgage loan securitizer.3 Mortgage interest rates have continued to have an effect on the sale\nof existing homes, that include single-family homes, townhomes, condominiums and co-ops, with a year over year decrease of 1.4% in February\n2026 to a seasonally adjusted annual rate of 4.09 million.4 The slowdown of home sales transactions resulted from many would-be\nbuyers being priced out of homeownership while many homeowners with mortgage rates below 4.0% feeling stuck in place, since selling would\nmean taking on a mortgage with a significantly higher interest rate. This has had an adverse effect on our agents’ ability to close\nsales and thus on our results of operations in the year ended December 31, 2025. Thus, we expect these trends to continue to adversely\naffect our revenues in 2026. Any further increase in the Fed funds rate could push the U.S. economy into a recession which is likely\nto have a further negative effect on our operations, income and financial condition.\n\n \n\n**The\nhousing market is currently in flux with higher mortgage interest rates and generally increasing home prices which makes it difficult\nto predict future market trends. Any decrease in home sales in the future will have an adverse effect on our financial performance and\nresults of operations.**\n\n** **\n\nThe\ncombination of high mortgage rates, continuing high home prices and limited inventory slowed the housing market substantially in 2025.\nTight inventory was reflected by the sustained high national median existing home sale price in February 2026 of $398,000, a slight increase\nof 0.3% from a year earlier. Homes usually go under contract a month or two before they close, so the February data is based on purchase\ndecisions made in December 2025 and January 2026. The average rate for a 30-year fixed mortgage was 6.38% as of March 26, 2026, down\nfrom 6.65% during the most recent 52-week period, according to Freddie Mac. This combination of higher mortgage rates and higher sales\nprices has kept many sellers, who would have to relinquish a mortgage at 4.0% or less, from selling, and has pushed many prospective\nbuyers, especially first-time home buyers, out of the market. Total housing inventory at the end of February 2026 was 1.29 million units,\nup 3.1% from January and up 7.9% from one year ago (1.24 million). There was an unsold inventory supply of 3.8-months at the current\nsales pace, 2.4% higher than January 2026 but only up from 0.1 month from February 2025. Management expects the housing-market slowdown\nto persist throughout 2025 because home-buying affordability is near its lowest level in decades. Any decline in home sales directly\naffects the productivity and income of our agents who are paid only upon the closing of their clients’ home purchase or sale. A\nprolonged depression in home sales will force the least successful agents out of the industry and a decrease in the number of earning\nagents will have a negative impact on our financial performance and results of operations.\n\n \n\n**We\nmay fail to successfully execute our strategies to grow our business, including increasing our agent count, expanding the number of our\nfranchisees and agents, or we may fail to manage our growth effectively, which could have a material adverse effect on our brand, our\nfinancial performance and results of operations.**\n\n** **\n\nWe\nintend to pursue a number of different strategies to grow our revenue and earnings. However, we may not be able to successfully execute\nthese strategies. We intend to pursue a strategy of increasing our agent count by increasing our recruiting efforts. Recent history has\nshown that a strong real estate market brings in more realtors, some of whom have worked in the industry on a part-time basis. As the\nmarket continues to grow, we believe that will enable us to sell more franchises and recruit and retain higher numbers of agents, increasing\nour revenue and profitability. However, competition for qualified and effective agents is intense, and we may be unable to recruit and\nretain enough qualified and effective agents to satisfy our growth strategies. This competition creates challenges that include:\n\n \n\n \n●\nour ability to discover\nand recruit independent brokerage firms in new markets and being able to acquire them;\n\n \n\n \n●\nour ability to increase\nour brand awareness in new markets in order to penetrate them with our brokerages;\n\n \n\n \n●\nour ability to effectively\ntrain and mentor a larger number of new agents and franchisees;\n\n \n\n \n●\nour ability to continually\nimprove the performance, features and reliability of our technological developments in response to both evolving demands of the marketplace\nand competitive product offerings;\n\n \n\n \n●\nour ability to scale our\nbusiness services and support quickly enough to meet the growing needs of our real estate agents by improving our internal systems,\nintegrating with third-party systems, and maintaining infrastructure performance;\n\n \n\n \n\n1https://www.usinflationcalculator.com/inflation/current-inflation-rates/#:~:text=February%202024%20%7C%200.4%20%7C%203.2\n\n2https://www.federalreserve.gov/newsevents/pressreleases/monetary20260128a.htm\n\n3https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-average-638\n\n4https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-1-7-increase-in-february\n\n \n\n24\n\n \n\n \n\n \n●\nour ability to attract\nand retain senior management to operate and control the expansion of our business, organically and potentially, through acquisitions;\nand\n\n \n\n \n●\nour ability to enhance\nour financial reporting, internal control, human resources, legal and other administrative areas to effectively manage the growth\nof our Company.\n\n \n\nIf\nwe do not effectively manage our growth, our brand could suffer. In order to successfully expand our business, we must effectively recruit,\ndevelop and motivate new franchisees and new agents and employees, and we must maintain the beneficial aspects of our “three pillars”\nphilosophy. We may not be able to hire new agents or employees and our franchisees may not be able to recruit new agents necessary to\nmanage our growth quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully develop our franchisees,\nour franchisee, agent and employee morale, productivity and retention could suffer, and our brand and results of operations could be\nharmed. These improvements could require significant capital expenditures and place increasing demands on our management. We may not\nbe successful in managing or expanding our operations or in maintaining adequate financial and operating systems and controls. If we\ndo not successfully manage these processes, our results of operations, financial condition and prospects could be adversely affected.\n\n \n\n**The\nfailure to attract and retain highly qualified franchisees and to acquire and open new corporate offices could compromise our ability\nto pursue our growth strategy.**\n\n** **\n\nThe\nsuccess of our franchisees depends largely on the efforts and abilities of franchisees and their agents, which are subject to numerous\nfactors, including the fees or sales commissions they receive, and our ability to train and oversee their operations to ensure that they\nprovide the quality service promoted by our brands. If our franchisees do not continue to believe in the value proposition we offer with\nour brand, believe that we are overcharging them for the services we provide, or, for other reasons decide not to renew their franchise\nagreements with us, our business may be materially adversely affected. Additionally, if our franchisees are not successful, they will\nfail to attract and retain productive agents and will fail to generate the revenue necessary to pay the contractual fees and dues owed\nto us.\n\n \n\nIn\naddition, if we are unable to organically increase the number of, and acquire new, corporate realty offices in the future, our growth\nwill stagnate and we could lose high producing agents to other competing brokerages, all of which would have a material adverse effect\non our results of operations, financial condition and prospects.\n\n \n\n**We\nmight not be able to attract and retain additional qualified agents and other personnel.**\n\n** **\n\nIn\norder to grow our business, we must attract and retain highly qualified agents and other personnel. In particular, we compete with both\nnational and local real estate brokerages for qualified agents who manage our operations in each state and who are our on-the-ground\nrepresentatives. With the evolving real estate brokerage market, we must find ways to attract and retain these people. And with the change\nin the way people work that has been accelerated by the COVID-19 pandemic, finding qualified agents and employees has become more difficult.\nWe might have difficulty in finding, hiring and retaining highly skilled personnel with appropriate qualifications. Many of the companies\nwith whom we compete for experienced personnel have greater resources than we do. In addition, in making decisions about where to work,\nin addition to cash compensation, people often consider the value of the stock options or other equity incentives they receive. We currently\nhave an equity incentive plan to offer stock incentives to our employees and our agents that we believe is competitive with plans offered\nby other publicly traded real estate brokerage companies. However, if those plans fail to encourage new hires or to motivate our existing\nstaff, we may fail to attract new personnel or fail to retain our current personnel which would severely harm our growth prospects. Moreover,\nthe forthcoming changes in the way real estate brokers will be compensated brought about by the recent antitrust litigation settlements\nwill likely diminish the revenues earned by lesser producing agents and agents that represent home buyers. This decrease in earnings\nis likely to result in many agents leaving the industry, increasing competition for high performing agents.\n\n \n\n**A\nsignificant adoption by consumers of alternatives to full-service agents or loan originators could have a material adverse effect on\nour business, prospects and results of operations.**\n\n** **\n\nA\nsignificant increase in consumer use of technology that eliminates or minimizes the role of the real estate agent could have a materially\nadverse effect on our business, prospects and results of operations. These options include cloud-based competitors such as direct-buyer\ncompanies that purchase directly from the seller, and online discounters who reduce the role of the agent in order to offer sellers a\nlow commission or a flat fee while giving rebates to buyers. How consumers want to buy or sell houses will determine if these models\nreduce or replace the long-standing preference for full-service agents. In addition, advances in AI and related technology may accelerate\nthe development of tools that diminish the perceived value of full-service real estate agents.\n\n \n\n25\n\n \n\n \n\n**Competition\nin the residential real estate franchising business is intense and may adversely affect our financial performance.**\n\n \n\nWe\ncompete against national and international real estate brokerage franchisors as well as smaller franchisors. Our products are the brands\nwe sell and their reputation in the marketplace. Potential franchisees, when shopping for a brand, look to see the level of support that\nthey can receive compared to the fees and dues that they will have to pay. This is our value proposition. While the national and international\nbrands far exceed us in financial resources, geographic coverage, marketing ability and infrastructure, we believe that our “family-oriented”\nstyle of business, based on our “three pillars” philosophy, is a strong selling point. So, while competing franchisors may\noffer franchisees monthly ongoing fees that are lower than those we charge, or that are more attractive in particular market environments,\nwe believe that our “high touch” approach is able to overcome many of the factors that competitors sell. Corporate-owned\ncompetitors compete primarily on the basis of commission payments to their agents. While we believe that we are competitive in that market,\nour brand is not as strong as competitors who have been in the market longer and have the financial wherewithal to promote themselves\nin the media. Our largest competitors in this industry in the U.S. include RE/MAX Holdings, Inc., Realogy Holdings, Corp. (which operates\nseveral brands including the Coldwell Banker and Century 21 brands), Fathom Holdings Inc., eXp World Holdings Inc., Real Brokerage Inc.,\namong others.\n\n \n\n**Our\nCompany owned brokerage business is subject to competitive pressures.**\n\n** **\n\nOur\nCompany owned brokerage business, like that of our franchisees, is generally subject to intense competition. We compete with other national\nand independent real estate organizations including our franchisees and those of other national real estate franchisors, franchisees\nof local and regional real estate franchisors, regional independent real estate organizations, discount brokerages, internet-based brokerages\nand smaller niche companies competing in local areas. Competition is particularly intense in the densely populated metropolitan areas\nin which we operate. In addition, in the real estate brokerage industry, new participants face minimal barriers to entry into the market.\nWe also compete for the services of qualified licensed agents as well as franchisees. The ability of our Company owned brokerage offices\nto retain agents is generally subject to numerous factors, including the sales commissions, the training and coaching and technological\nsupport that they receive and their perception of our brand value. Our largest competitors in the corporate-owned space include Compass\nHoldings, Inc. and Fathom Holdings, Inc.\n\n \n\n**Our\nfinancial results are affected directly by the operating results of franchisees and agents, over whom we do not have direct control.**\n\n** **\n\nOur\nreal estate franchises generate revenue in the form of monthly ongoing royalties and fees, including monthly broker fees tied to gross\ncommissions, training and technology fees charged to our franchisees. Our agents pay us dues out of their income from real estate transactions\nand new agents split their transaction-based commissions with us. Accordingly, our financial results depend upon the operational and\nfinancial success of our franchisees and their agents and our corporate agents, all of whom are independent contractors that we do not\ncontrol. If industry trends or economic conditions are not sustained or do not continue to improve, our franchisees’ and our agents’\nfinancial results could worsen, and our revenue may decline. We may also have to terminate franchisees more frequently in the future\ndue to non-reporting and non-payment. Further, if franchisees fail to renew their franchise agreements our revenue from ongoing monthly\nfees may decrease, and profitability may be lower than in the past due to reduced ongoing monthly fees.\n\n \n\n**We\nare dependent upon the truthfulness of our franchisees to provide accurate reports and accounting to us.**\n\n** **\n\nWhile\nwe have significant insight into the business activity of our domestic and international regional franchisees and are able to observe\ntheir books and records in real time, the franchisees self-report their agent counts, agent commissions and fees due to us. Our tools\nto validate or verify these reports are not equipped to ferret out under or erroneous reporting, even if unintentional or intentional\nfraud. If any of those circumstances occur, we may not receive all of the annual agent dues or monthly ongoing fees due to us. In addition,\nto the extent that we are underpaid, we may not have a definitive method for determining such underpayment. If a material number of our\nfranchisees were to under report or erroneously report their agent counts, agent commissions or fees due to us, it could have a material\nadverse effect on our financial performance and results of operations.\n\n \n\n**Failing\nto develop and maintain a positive relationship with our franchisees, agents and loan originators could compromise our ability to maintain\nor expand or franchisee network.**\n\n** **\n\nAlthough\nwe believe our relationships with our franchisees and their agents are strong, the nature of such relationships can give rise to conflict.\nFor example, franchisees, or agents may become dissatisfied with the fees and dues owed to us, particularly in a period of economic downturn\nand uncertainty or in the event that we increase fees and dues. Affiliates may also disagree with certain network-wide policies and procedures,\nincluding policies dictating brand standards or affecting their marketing efforts. They may also be disappointed with other aspects of\nour value proposition including our marketing initiatives, technology offerings, or educational content. If we experience any conflicts\nwith our franchisees on a large scale, our franchisees may decide not to renew their franchise agreements upon expiration or seek to\ndisaffiliate with us, which could result in litigation. These events may, in turn, materially and adversely affect our business and operating\nresults.\n\n \n\nAn\norganized franchisee association could also pose risks to our ability to set the terms of our franchise agreements and our pricing.\n\n \n\n26\n\n \n\n \n\n**Our\nfranchise model can be subject to particular litigation risks.**\n\n** **\n\nLitigation\nagainst a franchisee or its affiliated agents or loan originators, whether in the ordinary course of business or otherwise, may also\ninclude claims against us for liability by virtue of the franchise relationship. Franchisees may fail to obtain insurance that is required\npursuant to the terms of our franchise agreements, naming the Company as an additional insured on such claims. Claims against us (including\nvicarious liability claims) could result in substantial costs, divert our management resources and could cause adverse publicity, which\nmay materially and adversely affect us and our brand, regardless of whether such allegations are valid or whether we are liable.\n\n** **\n\nIn\naddition to claims over individual or isolated franchisee actions, third parties could attempt to hold us responsible for actions of\nour franchisees and their agents or loan originators in the aggregate. Our franchised business model is unlike a traditional, integrated\ncorporation where company-owned outlets provide goods or services to consumers and the corporation has direct responsibility for operations\nat those outlets. Our franchised business model is also unlike many franchisors in other industries—such as the restaurant and\nhospitality industries—where franchisors may dictate many operational details of the franchisees’ businesses and the delivery\nof goods and services to consumers and thereby have some of the liability for those or other aspects of the franchisees’ operations.\nBecause we franchise in professional service fields where licensure is required—real estate and mortgage brokerage—we do\nnot dictate or control the day-to-day operations, or the advice provided by our franchisees or their affiliated agents or loan originators.\nNonetheless, third parties may try to hold us liable for actions of our franchisees and their agents or loan originators, even when we\nhave no involvement with those actions and they are beyond our control and, we believe, should not result in liability to us. As a franchisor,\nunlike an integrated corporation, we obtain only a small portion of the revenue of our franchisees, and as a result our capital is limited in\ncomparison with the size of our entire franchise networks. Therefore, if third parties were successful in asserting liability for practices\nof our franchise network in its entirety, and in holding us vicariously responsible for that liability, the resulting damages could exceed\nour available capital, could materially affect our earnings, or even render us insolvent.\n\n \n\n**Our\nfranchise operations are subject to additional business risks.**\n\n** **\n\nOur\nfranchise business is exposed to other business risks which may impact our ability to collect recurring, contractual fees and dues from\nour franchisees, may harm the goodwill associated with our brand, and/or may materially and adversely impact our business, results of\noperations, financial condition and prospects. One such risk is that one of our franchisees could declare bankruptcy which could have\na substantial negative impact on our ability to collect fees and dues owed under such franchisee’s franchise arrangements. In a\nfranchisee bankruptcy, the bankruptcy trustee may reject its franchise contract pursuant to Section 365 under the U.S. Bankruptcy\nCode, in which case there would be no further payments for fees and dues from such franchisee. Other risks include the risk that our\nfranchisees may be uninsured or underinsured against certain business hazards or that insurance may be unavailable, as was hurricane\ninsurance in Florida for a number of years. Any casualty loss happening to our franchisees could put their entire business at risk and\npotentially result in its failure and the termination of our franchise agreement. Any such loss or delay in an insurance payment could\nhave a material and adverse effect on a franchisee’s ability to satisfy its obligations under its franchise agreement with us,\nincluding its ability to make payments for contractual fees and dues or to indemnify us. Each franchise agreement is subject to termination\nby us in the event that the franchisee breaches its contract, generally after expiration of applicable cure periods, although under certain\ncircumstances a franchise agreement may be terminated by us upon notice without an opportunity to cure. The default provisions under\nthe franchise arrangements are drafted broadly and include, among other things, any failure to meet operating standards and actions that\nmay threaten our brands. In addition, each franchise agreement eventually expires and upon expiration, we or the franchisee may or may\nnot elect to renew the franchise arrangement. If our agreement is renewed, such renewal is generally contingent on the franchisee’s\nexecution of the then-current form of franchise contract (which may include terms the franchisee deems to be more onerous than the prior\nfranchise agreement), the satisfaction of certain conditions and the payment of a renewal fee. If a franchisee is unable or unwilling\nto satisfy any of the foregoing conditions, the expiring franchise agreement will terminate upon expiration of the term of the franchise\narrangement.\n\n \n\n**Our\noperating results are subject to seasonality and vary significantly among quarters during each calendar year, making meaningful comparisons\nof successive quarters difficult.**\n\n** **\n\nThe\nresidential real estate industry is subject to seasonality. Sales activity is typically stronger in the spring and summer months when\nschool is not in session compared to the fall and winter seasons. This is true even in the Southeastern U.S. where weather patterns do\nnot change significantly with the seasons. However, extreme weather does affect our business by keeping people focused on matters other\nthan home buying. We have historically experienced lower revenues during the fall and winter seasons, as well as during periods of unseasonable\nweather, which reduces our operating income, net income, operating margins and cash flow. Real estate listings precede sales, and a period\nof poor listings activity will negatively impact revenue. Our revenue and operating margins each quarter will remain subject to seasonal\nfluctuations, which may make it difficult to compare or analyze our financial performance effectively across successive quarters.\n\n \n\n27\n\n \n\n \n\n**A\nsignificant increase in private sales of residential property, including through the internet, could have a material adverse effect on\nour business, prospects and results of operations.**\n\n \n\nAlthough,\nas of 2025, NAR estimated that almost nine in ten home sellers worked with a real estate agent to sell their home, a significant increase\nin the volume of private sales due to, for example, increased access to the internet and the proliferation of websites that facilitate\nsuch sales, and a corresponding decrease in the volume of sales through real estate agents could have a material adverse effect on our\nbusiness, prospects and results of operations.\n\n \n\n**The\nreal estate brokerage business is highly regulated and any failure to comply with such regulations or any changes in such regulations\ncould adversely affect our business.**\n\n** **\n\nOur\nCompany owned real estate brokerage business and our franchising business are highly regulated and must comply with Federal and state\nrequirements governing the licensing and conduct of real estate brokerage and brokerage-related businesses and franchising in the jurisdictions\nin which we and they do business. These laws and regulations contain general standards for and prohibitions on the conduct of real estate\nbrokers and agents, including those relating to licensing of brokers and agents, fiduciary and agency duties, administration of trust\nfunds, collection of commissions, advertising and consumer and franchising disclosures. Under state law, the franchisees and our real\nestate brokers have certain duties to supervise and are responsible for the conduct of their brokerage business.\n\n \n\nOur\nCompany owned real estate brokerage business and our franchisees (excluding commercial brokerage transactions) must comply with the Real\nEstate Settlement Procedures Act (“RESPA”). RESPA and comparable state statutes, among other things, restrict payments which\nreal estate brokers, agents and other settlement service providers may receive for the referral of business to other settlement service\nproviders in connection with the closing of real estate transactions. Such laws may to some extent restrict preferred vendor arrangements\ninvolving our franchisees and our Company owned brokerage business. RESPA and similar state laws also require timely disclosure of certain\nrelationships or financial interests that a broker has with providers of real estate settlement services. In addition, the Dodd-Frank\nWall Street Reform and Consumer Protection Act (the “Dodd Frank Act”) contains the Mortgage Reform and Anti-Predatory Lending\nAct (the “Mortgage Act”), which imposes a number of additional requirements on lenders and servicers of residential mortgage\nloans, by amending certain existing provisions and adding new sections to RESPA and other federal laws.\n\n \n\nWe\nare also subject to various other rules and regulations such as:\n\n \n\n \n●\nthe Gramm-Leach-Bliley\nAct which governs the disclosure and safeguarding of consumer financial information;\n\n \n \n \n\n \n●\nthe Sherman Antitrust Act\nwhich governs anti-competitive practices in the marketplace;\n\n \n\n \n●\nvarious state and federal\nprivacy laws protecting consumer data;\n\n \n\n \n●\nthe USA PATRIOT Act;\n\n \n\n \n●\nthe sale of franchises\nis regulated by various state laws as well as by the Federal Trade Commission (the “FTC”) that generally require that\nfranchisors make extensive disclosure to prospective franchisees and several states have “franchise relationship laws”\nor “business opportunity laws” that limit the ability of franchisors to terminate franchise agreements or to withhold\nconsent to the renewal or transfer of these agreement;\n\n \n\n \n●\nrestrictions on transactions\nwith persons on the Specially Designated Nationals and Blocked Persons list promulgated by the Office of Foreign Assets Control of\nthe Department of the Treasury;\n\n \n\n \n●\nthe Fair Housing Act;\n\n \n\n \n●\nstate and federal employment\nlaws and regulations, including any changes that would require classification of independent contractors to employee status, and\nwage and hour regulations;\n\n \n\n \n●\nfederal and state, “Do\nNot Call,” “Do Not Fax,” and “Do Not E-Mail” laws;\n\n \n\n \n●\nlaws and regulations in\njurisdictions outside the U.S. in which we do business; and\n\n \n\n \n●\nconsumer fraud statutes\nthat are broadly written.\n\n \n\n28\n\n \n\n \n\nFederal,\nstate and local regulatory authorities also have relatively broad discretion to grant, renew and revoke licenses and approvals and to\nimplement regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend our Company owned brokerages or\nour franchisees from carrying on some or all of our activities or otherwise penalize them if their financial condition or our practices\nwere found not to comply with the then current regulatory or licensing requirements or any interpretation of such requirements by the\nregulatory authority. Our failure to comply with any of these requirements or interpretations could limit our ability to renew current\nfranchisees or sign new franchisees or otherwise have a material adverse effect on our operations.\n\n \n\nWe\nmight not be aware of all the laws, rules and regulations that govern our business, or be able to comply with all of them, given the\nrate of regulatory changes, ambiguities in regulations, contradictions in laws and regulations between jurisdictions, and the difficulties\nin achieving both Company-wide and region-specific knowledge and compliance. If we fail, or we have been alleged to have failed, to comply\nwith any existing or future applicable laws, rules and regulations, we could be subject to lawsuits and administrative complaints and\nproceedings, as well as criminal proceedings. Our noncompliance could result in significant defense costs, settlement costs, damages\nand penalties.\n\n \n\n**Adverse\nU.S. and global market, economic and political conditions, including the ongoing conflict between Ukraine and Russia, recent conflicts\nin the Middle East and other events or circumstances beyond our control could have a material adverse effect on us.**\n\n \n\nAnother\neconomic or financial crisis or rapid decline of the consumer economy, significant concerns over energy costs, geopolitical issues, including\nthe ongoing armed conflicts between Ukraine and Russia, United States and Iran, as well as in Israel and the Gaza Strip, the availability\nand cost of credit, the U.S. mortgage market, or a declining real estate market in the U.S. can contribute to increased volatility, diminished\nexpectations for the economy and the markets, and high levels of structural unemployment by historical standards.\n\n \n\nMarket,\npolitical and economic challenges, including dislocations and volatility in the credit markets, general global economic uncertainty,\nuncertainty or volatility from matters such as the implementation of the governing agenda of President Donald J. Trump, and changes in\ngovernmental policy on a variety of matters such as trade, tariffs and manufacturing policies may adversely affect the economy and financial\nmarkets, our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading\nprice of, our Common Stock.\n\n \n\n**Climate\nchange and environmental risks could increase our costs and subject us to liability.**\n\n \n\nOur\noperations are affected by federal, state and/or local environmental laws in the countries in which we operate, and we may face liability\nwith respect to environmental issues occurring at properties we manage or occupy. We may face costs or liabilities under these laws as\na brokerage company if our agents violate applicable disclosure laws and regulations or as a result of our agents’ role as a property\nmanager. The impact of climate change presents a significant risk. Damage to assets caused by extreme weather events linked to climate\nchange is becoming more evident, highlighting the fragility of global infrastructure. We believe that the effects of climate change will\nincreasingly impact our own operations and those of properties we manage, especially when they are in coastal cities. The impact includes\nthe relative desirability of locations and the cost of operating and insuring acquired properties. Due to residential property damages\nresulting from hurricanes in the past several years, many insurers have either raised premiums above the national average or ceased doing\nbusiness in Florida, our main market area. We also may face several layers of national and regional regulations. The risks may not be\nlimited to fines and the costs of remediation. We continue to monitor the effects of climate change and the changes in law, regulation\nand policies of other companies, especially insurance companies and intend to adjust our business accordingly in the future.\n\n \n\n**We\nare subject to risks of operating in foreign countries.**\n\n** **\n\nIn\n2025, we commenced an expansion of our business in Europe, starting with engaging an area developer and establishing a subsidiary in\nSpain. Our international operations are subject to risks that are different from those of our U.S. operations that could result in losses\nagainst which we are not insured and therefore negatively affect our profitability. Those international risks include:\n\n \n\n \n●\nfluctuations in foreign\ncurrency exchange rates and foreign exchange restrictions;\n\n \n\n \n●\nexposure to local economic\nconditions and local laws and regulations, including those relating to the agents of our franchisees;\n\n \n\n \n●\nforeign economic and credit\nmarkets;\n\n \n\n \n●\npotential adverse changes\nin the political stability of foreign countries or in their diplomatic relations with the U.S.;\n\n \n\n \n●\nrestrictions on the withdrawal\nof foreign investment and earnings;\n\n \n\n \n●\ngovernment policies against\nbusinesses owned by foreigners;\n\n \n\n29\n\n \n\n \n\n \n●\ninvestment restrictions\nor requirements;\n\n \n\n \n●\ndiminished ability to legally\nenforce our contractual rights in foreign countries;\n\n \n\n \n●\ndifficulties in registering,\nprotecting or preserving trade names and trademarks in foreign countries;\n\n \n\n \n●\npotential governmental\nand industry corruption;\n\n \n\n \n●\nrestrictions on the ability\nto obtain or retain licenses required for operation; and\n\n \n\n \n●\nchanges in foreign tax\nlaws.\n\n \n\n**We\ndepend substantially on our Founder, Joseph La Rosa, and our Chief Operating Officer, Deana La Rosa, and the loss of any our senior management\nor other key employees or the inability to hire additional qualified personnel could adversely affect our operations, our brand and our\nfinancial performance.**\n\n** **\n\nOur\nfuture success is largely dependent on the efforts and abilities of our Founder, Chief Executive Officer, Interim Chief Financial Officer\nand President, Joseph La Rosa, our Chief Operating Officer, Deana La Rosa, our senior management and other key employees. The loss of\nthe services of Mr. La Rosa, Mrs. La Rosa and other senior management would have a significant detrimental effect on the Company as its\nbrand is tied to their name, image and personality. We do not maintain key employee life insurance policies on Mr. La Rosa or our other\nsenior management and therefore their loss could make it more difficult to successfully operate our business and achieve our business\ngoals. As a result, we may not be able to cover the financial loss we may incur in losing the services of any of these individuals.\n\n \n\nOur\nability to retain our employees is generally subject to numerous factors, including the compensation and benefits we pay, the mix between\nthe fixed and variable compensation we pay our employees and prevailing compensation rates. As such, we could suffer significant attrition\namong our current key employees. Competition for qualified employees in the real estate brokerage and franchising industry is intense.\nWe may be unable to retain existing employees that are important to our business or hire additional qualified employees. The process\nof locating employees with the combination of skills and attributes required to carry out our goals is often lengthy. We cannot assure\nyou that we will be successful in attracting and retaining qualified employees.\n\n \n\n**Concentration\nof ownership of our voting stock by Mr. La Rosa will prevent new investors from influencing significant corporate decisions.**\n\n** **\n\nBased on our Common Stock outstanding as of June 3, 2026, Mr. La Rosa\nbeneficially owned approximately 0.19% of our outstanding Common Stock and all 1,800 shares of our Series X Preferred Stock that provides\nfor 10,000 votes per share when voting with the Common Stock, representing 91.81% of the total voting power of our capital stock. Thus,\nMr. La Rosa, our President, Chief Executive Officer, and Interim Chief Financial Officer, and majority stockholder, controls all matters\nrequiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions.\nThe interests of Mr. La Rosa may not coincide with the interests of other stockholders.\n\n \n\nMr.\nLa Rosa may have interests different than yours and may vote in a way with which you disagree and that may be adverse to your interests.\nIn addition, Mr. La Rosa’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise\ndiscouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our Common Stock to\ndecline or prevent our stockholders from realizing a premium over the market price for their Common Stock. In addition, he may want the\nCompany to pursue strategies that deviate from the interests of other stockholders. Investors should consider that the interests of Mr.\nLa Rosa may differ from their interests in material respects.\n\n \n\n**Mr.\nLa Rosa will control all matters that come before the stockholders for a vote and thus we are a “controlled company” within\nthe meaning of the Nasdaq listing requirements and, as a result, the Company will qualify for exemptions from certain corporate governance\nrequirements. If we take advantage of such exemptions, you will not have the same protections afforded to stockholders of companies that\nare subject to such corporate governance requirements.**\n\n** **\n\nMr.\nJoseph La Rosa has voting control with respect to director elections and all other matters. Subject to any fiduciary duties owed to other\nstockholders under Nevada law, Mr. La Rosa controls all matters requiring approval by our stockholders, including the election and removal\nof directors and any proposed merger, acquisition, consolidation or sale of all or substantially all of our assets. In addition, due\nto his significant ownership stake and his service as our Chief Executive Officer, Director and Interim Chief Financial Officer, Mr.\nLa Rosa controls the management of our business and affairs. Mr. La Rosa may have interests that are different than yours and may support\nproposals and actions with which you may disagree. This concentration of ownership could have the effect of delaying, deferring or preventing\na change in control, or impeding a merger or consolidation, takeover or other business combination that could be favorable to our other\nstockholders and adversely affecting the market price of our Common Stock.\n\n \n\n30\n\n \n\n \n\nBecause\nMr. La Rosa controls, as of June 3, 2026, 91.81% of the total voting power of our capital stock, we are considered a “controlled\ncompany” for the purposes of the listing requirements of the Nasdaq Capital Market. A controlled company is not required to have\na majority of independent directors or form an independent compensation or nominating and corporate governance committee. Nevertheless,\nwe have a majority of independent directors who will serve on our Audit, Compensation and Nominating and Corporate Governance Committees.\nHowever, although we have no current plans to do so, for as long as we remain a controlled company, we could take advantage of such exemptions\nin the future.\n\n \n\n**Infringement,\nmisappropriation, or dilution of our intellectual property could harm our business.**\n\n** **\n\nWe\nregard our “LR” logo that we own, as having significant value and as being important factors in the marketing of our brand.\nWe believe that this and other intellectual property are valuable assets that are critical to our success. We rely on a combination of\nprotections provided by contracts, as well as copyright, trademark, trade secret and other laws, to protect our intellectual property\nfrom infringement, misappropriation, or dilution. We have registered certain trademarks and service marks and have other trademark and\nservice mark registration applications pending in the U.S. and foreign jurisdictions. However, not all trademarks or service marks that\nwe currently use have been registered in all of the countries in which we may do business in the future, and they may never be registered\nin all of those countries. Although we monitor trademark portfolios internally and impose an obligation on franchisees to notify us upon\nlearning of potential infringement, there can be no assurance that we will be able to adequately maintain, enforce and protect our trademarks\nor other intellectual property rights.\n\n \n\nWe\nare not aware of any challenges to our right to use any of our brand names or trademarks. We are vigilant in enforcing our intellectual\nproperty and protecting our brands. Unauthorized uses or other infringement of our trademarks or service marks, including ones that are\ncurrently unknown to us, could diminish the value of our brands and may adversely affect our business. Effective intellectual property\nprotection may not be available in every market in which we have franchised or intend to franchise. Failure to adequately protect our\nintellectual property rights could damage our brands and impair our ability to compete effectively. Even where we have effectively secured\nstatutory protection for our trademarks and other intellectual property, our competitors may misappropriate our intellectual property.\nDefending or enforcing our trademark rights, branding practices and other intellectual property, and seeking an injunction and/or compensation\nfor misappropriation of confidential information, could result in the expenditure of significant resources and divert the attention of\nmanagement, which in turn may materially and adversely affect our business and operating results.\n\n \n\nAlthough\nwe monitor and restrict our franchisees’ activities through our franchise agreements, franchisees may refer to our brands improperly\nin writings or conversations, resulting in the dilution of our intellectual property. Franchisee noncompliance with the terms and conditions\nof our franchise agreements and our brand standards may reduce the overall goodwill of our brands, whether through the failure to meet\nthe FTC guidelines or applicable state laws, or through the participation in improper or objectionable business practices. Moreover,\nunauthorized third parties may use our intellectual property to trade on the goodwill of our brand, resulting in consumer confusion or\ndilution. Any reduction of our brand’s goodwill, consumer confusion, or dilution is likely to impact sales, and could materially\nand adversely impact our business and operating results.\n\n \n\n**We\nare subject to certain risks related to litigation filed by or against us, and adverse results may harm our business and financial condition.**\n\n \n\nThe\nreal estate industry often involves litigation, ranging from individual lawsuits by brokerage clients, sales associates, employees and\nfranchisees to large class actions and government investigations. We often are involved in various lawsuits and legal proceedings that\narise in the ordinary course of business. Such litigation and other proceedings have included, and may in the future include, but are\nnot limited to, actions relating to breach of contract, employment matters, sales agent commissions, intellectual property, commercial\narrangements, negligence and fiduciary duty claims arising from our brokerage operations, fraud or failure to disclose matters in our\nfranchise documents or agreements, standard brokerage disputes like the failure to disclose hidden defects in a property such as mold,\nvicarious liability based upon the conduct of individuals or entities outside of our control, including our agents, third-party service\nor product providers, antitrust claims, general fraud claims, employment law claims, including claims challenging the classification\nof our agents as independent contractors and compliance with wage and hour regulations, and claims alleging violations of the Real Estate\nSettlement Procedures Act or state consumer fraud statutes.\n\n \n\nEach\nlawsuit filed against or by us has factors that are unpredictable, including but not limited to, legal fees, insurance coverage, or the\nultimate outcome of litigation and remedies or damage awards. Adverse results in such litigation and other proceedings may harm our business,\nour brands and our financial condition.\n\n \n\nWe\nhave general liability and an errors and omissions insurance policy to help protect us against claims of inadequate work or negligent\naction. This insurance might not continue to be available to us on commercially reasonable terms or at all, or a claim otherwise covered\nby our insurance may exceed our coverage limits, or a claim might not be covered at all. We may be subject to errors or omissions claims\nthat could have an adverse effect on us. Moreover, defending a suit, regardless of its merits, could entail substantial expense and require\nthe time and attention of our senior management. Substantial financial judgments against us would have a material adverse effect on our\nbusiness, brands, results of operations, financial condition and prospects.\n\n \n\n31\n\n \n\n \n\n**Adverse\noutcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could\nadversely impact our financial results.**\n\n \n\nAdverse\noutcomes in legal and regulatory actions against the NAR, other companies, brokers, and agents in the residential and commercial real\nestate industry may adversely impact our financial condition and our real estate brokers and agents when those matters relate to business\npractices shared by the Company, our real estate brokers and agents, or our industry at large. Such matters may include, without limitation,\nantitrust and anticompetition, RESPA, Telephone Consumer Protection Act of 1991 and state consumer protection law, and worker classification\nclaims. Additionally, if plaintiffs or regulatory bodies are successful in such actions, this may increase the likelihood that similar\nclaims are made against the Company and/or our real estate brokers and agents which claims could result in significant liability and\nbe adverse to our financial results if we or our brokers and agents are unable to distinguish or defend our business practices.\n\n \n\nAs\nan example, in the matter of Burnett v. National Association of Realtors (U.S. District Court for the Western District of Missouri),\na federal jury found the NAR and certain other remaining brokerage defendants liable for $1.8 billion in damages on claims that\nthese companies conspired to artificially inflate brokerage commissions, which is in violation of federal antitrust law (the “Burnett\nRuling”). The verdict was appealed on October 31, 2023. Additionally, certain other brokerage defendants settled with the plaintiffs,\nincluding both monetary and non-monetary settlement terms. That same day, the NAR, EXP World Holdings, Inc., Compass, Inc., Redfin Corporation,\nWeichert Realtors, United Real Estate, Howard Hann Real Estate Services, Douglas Elliman, Inc., The Keyes Company, Illustrated Properties,\nLLC, Baird & Warner, Inc., Real Estate One, Inc., and others were named as defendants in Gibson v. National Association of Realtors\n(U.S. District Court for the Western District of Missouri), alleging a similar fact pattern and antitrust violations. On or about March\n15, 2024, NAR agreed to settle the Burnett Ruling, along with a sister litigation, by agreeing to pay $418 million over approximately\nfour years, and changing certain of its rules surrounding agent commissions. On November 26, 2024, the NAR Settlement was granted over\nobjections, The final approval order is currently being appealed. If the NAR Settlement is sustained on appeal, it is expected to resolve\nclaims against the NAR and certain companies related to this matter.\n\n \n\nOn\nMarch 22, 2024, real estate brokerage company Compass Inc. (“Compass”) announced that it will pay $57.5 million as part of\na proposed settlement to resolve lawsuits over real estate commissions and agreed to change its business practices to ensure clients\ncan more easily understand how brokers and agents are compensated for their services. Compass’s motion for final approval of the\nsettlement agreement was granted on October 31, 2024 and the settlement agreement is now effective. The final approval ruling was appealed\nby certain class members that objected to the settlement and is now pending before the United States Circuit Court of Appeals for the\nEighth Circuit. In the same litigation, the court granted final approval of multiple additional settlements, including (i) an $8.62 million\nsettlement on June 25, 2025 involving The Keyes Company Illustrated Properties, LLC, Baird & Warner, Inc. Real Estate One, Inc. and\nother defendants, and (ii) a $42 million settlement on February 5, 2026 involving William Raveis Real Estate Inc., Hanna Holdings Inc.,\nWindermere Real Estate Services Company Inc., Exit Realty Corp. International, Exit Realty Corp. USA, and William L. Lyon & Associates\nInc.\n\n \n\nWhile\nthe Company was not named as a defendant in any of these actions, it is possible that it could be a litigant at some point in the future.\nThese settlements can result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers\nwill no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the\nfull breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition\nand results of operations for the foreseeable future.\n\n \n\n**Security\nbreaches, interruptions, delays and failures in our systems and operations could materially harm our business.**\n\n** **\n\nThe\nperformance and reliability of our systems and operations and third-party applications are critical to our reputation and ability to\nattract franchisees and agents to join us. Our systems and operations, as well as the third-party applications that we license are vulnerable\nto security breaches, interruption or malfunction due to certain events beyond our control, including natural disasters, such as earthquakes,\nfire and flood, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar\nevents. In addition, we rely on third-party vendors to provide website platforms and additional systems and related support. If we cannot\ncontinue to retain these services on acceptable terms, our access to these systems and services could be interrupted. Any security breach,\ninterruption, delay or failure in our systems and operations could substantially harm our franchisees and agents by interfering with\ntheir daily business routines, reducing their transaction volume, impairing the quality of the services we provide, increasing our costs,\nprompting litigation and other claims, and damaging our reputation, any of which could substantially harm our results of operations,\nfinancial condition and prospects.\n\n \n\n32\n\n \n\n**If\nwe attempt to, or acquire other complementary businesses, we will face certain risks inherent with such activities.**\n\n \n\nWe\nmay seek to acquire, and acquire, certain complementary businesses, including one or more of our affiliates. Any future growth through\nacquisitions will depend in part on the availability of suitable acquisition targets at favorable prices and with advantageous terms\nand conditions, which may not be available to us. In addition, we may take on debt to finance these acquisitions which will create new\nfinancial risks, or use our Common Stock as currency, which could dilute our then current stockholders. Acquisitions subject us to several\nsignificant risks, any of which may prevent us from realizing the anticipated benefits or synergies of the acquisition. The integration\nof companies is a complex and time-consuming process that could significantly disrupt our businesses and the business of the acquired\ncompany, including the diversion of management attention, failure to identify certain liabilities and issues during the due diligence\nprocess, the inability to retain personnel and clients of the acquired business and litigation. Any negative outcomes from acquisitions\nor attempted acquisitions could result in a material adverse effect on our financial condition, results of operations and prospects.\n\n \n\n**If\nwe were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”) as a result\nof our ownership of our subsidiaries, applicable restrictions could make it impractical for us to continue our business as contemplated\nand could have an adverse effect on our business.**\n\n** **\n\nUnder\nSections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes\nof the 1940 Act if: (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing,\nreinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding\nor trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total\nassets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment\ncompany,” as such term is defined in either of those sections of the 1940 Act and intend to conduct our operations so that we will\nnot be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including\nlimitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business\nas contemplated and could have a material adverse effect on our business and prospects.\n\n \n\n**Risks\nRelated to Cryptocurrencies and Digital Assets**\n\n \n\n**The\ncontinuing development and acceptance of digital assets and distributed ledger technology are subject to a variety of risks.**\n\n \n\nCryptocurrencies,\nsuch as stablecoins, and the other types of digital assets in which we began investing and trading in 2026 involve a new and rapidly\nevolving industry of which blockchain technology is a prominent, but not unique, part. The growth of the digital asset industry in general,\nand distributed ledger technology that supports digital assets, is subject to a high degree of uncertainty. The factors affecting the\nfurther development of the digital asset industry, as well as distributed ledger technology, include:\n\n \n\n●continued\nworldwide growth in the adoption and use of digital assets;\n\n \n\n●the\nlimited operating histories of many cryptocurrency networks, which have not been validated\nin production and are still in the process of developing and making significant decisions\nthat will affect the design, supply, issuance, functionality, and governance of their respective\ndigital assets and underlying blockchain networks;\n\n \n\n●government\nand quasi-government regulation of digital assets and their use, or restrictions on or regulation\nof access to and operation of applicable distributed ledger technology or systems that facilitate\ntheir issuance and secondary trading;\n\n \n\n●the\ntaxation, and tax-related reporting, of transactions involving digital assets by the United\nStates and other jurisdictions;\n\n \n\n●the\nmaintenance and development of the open-source software protocols of certain blockchain networks\nused to support digital assets;\n\n \n\n33\n\n \n\n \n\n●quantum\ncomputing, which poses a critical technical challenge to the viability of current digital\nasset standards underpinning blockchain technology and digital assets, as sufficiently powerful\nquantum computers could potentially break widely used encryption algorithms;\n\n \n\n●other\nadvancements in technology, including computing power, that may adversely affect the respective\ncryptocurrency networks, render existing distributed ledger technology obsolete, inefficient,\nor fail to remediate or introduce new bugs and security risks;\n\n \n\n●the\nuse of the networks supporting digital assets for developing smart contracts and distributed\napplications;\n\n \n\n●development\nof new technologies for mining and staking and the rewards and transaction fees for miners\nor validators on digital asset networks;\n\n \n\n●changes\nin consumer demographics and public tastes and preferences;\n\n \n\n●the\navailability and popularity of other forms or methods of buying and selling goods and services,\nincluding new means of using fiat currencies; and\n\n \n\n●general\neconomic conditions and the regulatory environment relating to digital assets.\n\n \n\nMany\ndigital asset networks, including Bitcoin and Ethereum, operate on open-source protocols maintained by groups of core developers. The\nopen-source structure of these network protocols means that certain core developers and other contributors may not be compensated, either\ndirectly or indirectly, for their contributions in maintaining and developing the network protocol. A failure to properly monitor and\nupgrade network protocol could damage digital asset networks. As these network protocols are not sold and their use does not generate\nrevenues for development teams, core developers may not be directly compensated for maintaining and updating the network protocols. Consequently,\ndevelopers may lack a financial incentive to maintain or develop the network, and the core developers may lack the resources to adequately\naddress emerging issues with the networks. There can be no guarantee that developer support will continue or be sufficient in the future.\nTo the extent that material issues arise with certain digital asset network protocols and the core developers and open-source contributors\nare unable or unwilling to address the issues adequately or in a timely manner, such digital asset networks, and any corresponding digital\nassets held may be adversely affected.\n\n** **\n\n**Digital\nassets represent a new and rapidly evolving industry, and the market price of our Common Stock may in the future be impacted by the acceptance\nof stablecoins and other digital assets.**\n\n \n\nDigital\nassets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. The Bitcoin network\nwas first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass.\nCryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is\nsubject to a variety of factors that are difficult to evaluate. If we continue investing significant funds in stablecoins and other digital\nassets, our results of operations and the market price of our Common Stock may be closely correlated with the acceptance and perception\nof such digital assets. As a result, the realization of one or more of the following risks could materially adversely affect the market\nprice of our Common Stock:\n\n \n\n●Bitcoins\nhave only recently become selectively accepted as a means of payment by some retail and commercial\noutlets, and use of bitcoins by consumers to pay such retail and commercial outlets remains\nlimited. Banks and other established financial institutions may refuse to process funds for\nbitcoin transactions; process wire transfers to or from digital asset trading platforms,\nbitcoin-related companies or service providers; or maintain accounts for persons or entities\ntransacting in bitcoin. As a result, the prices of bitcoins are largely determined by speculators\nand miners, thus contributing to price volatility that makes retailers less likely to accept\nit as a form of payment in the future.\n\n \n\n●Banks\nmay choose to not provide banking services, or may choose to cut off banking services, to\nbusinesses that provide digital asset-related services or that accept digital assets as payment,\nwhich could dampen liquidity in the market and damage the public perception of digital assets\ngenerally or any one digital asset in particular, such as bitcoin, and their or its utility\nas a payment system, which could decrease the price of digital assets generally or individually.\n\n \n\n34\n\n \n\n \n\n●Some\ndigital asset networks and digital asset trading platforms or businesses that facilitate\ntransactions in digital assets (including bitcoin) may be at an increased risk of having\nbanking services cut off if they introduce or use certain privacy-preserving features. This\nis due to concerns that such features could interfere with anti-money laundering duties and\neconomic sanctions checks.\n\n \n\n●Users,\ndevelopers and miners may otherwise switch to or adopt certain digital assets at the expense\nof their engagement with other digital asset networks, which may negatively impact those\nnetworks.\n\n \n\nDigital\nassets are a new asset class and represent a technological innovation and they are subject to a high degree of uncertainty. The adoption\nof digital assets will require growth in usage and in the blockchain technology generally for various applications. Adoption of digital\nassets will also require greater regulatory clarity. A lack of expansion in use of digital assets and blockchain technologies would adversely\naffect our financial performance. In addition, there is no assurance that digital assets generally will maintain their value over the\nlong term. The value of digital assets is subject to risks related to our use. If growth in the use of digital assets generally occurs\nin the near or medium term, there is no assurance that such use will continue to grow over the long term. A contraction in use of digital\nassets may result in increased volatility or a reduction in digital asset prices, which would materially and adversely affect our investment\nand trading strategies, the value of our assets and the value of any investment in us.\n\n** **\n\n**Due\nto a lack of familiarity and some negative publicity associated with digital asset trading platforms, existing and potential customers,\ncounterparties and regulators may lose confidence in digital asset trading platforms.**\n\n \n\nSince\nthe inception of the cryptoeconomy, numerous digital asset trading platforms have been sued, investigated, or shut down due to fraud,\nmanipulative practices, business failure, and security breaches. In many of these instances, customers of these platforms were not compensated\nor made whole for their losses. Larger platforms are more appealing targets for hackers and malware, and may also be more likely to be\ntargets of regulatory enforcement actions. For example, in 2022 and 2023, each of Celsius Networks, Voyager Digital, Three Arrows Capital,\nFTX and Genesis declared bankruptcy. In particular, in November 2022, FTX-which was at the time one of the world’s largest and\nmost popular digital asset trading platforms-became insolvent, and it was revealed that the platform had been misusing customer assets.\nThese events resulted in a loss of confidence in the broader cryptoeconomy, adverse reputational impact to digital asset platforms, increased\nnegative publicity surrounding crypto more broadly, heightened scrutiny by regulators and lawmakers and a call for increased regulation\nof digital assets and digital asset platforms.\n\n \n\nIn\naddition, there have been reports that a significant amount of trading volume on digital asset trading platforms is fabricated and false\nin nature. Such reports may indicate that the market for digital asset trading platform activities is significantly smaller than otherwise\nunderstood.\n\n \n\nNegative\nperception, a lack of stability and standardized regulation in the cryptoeconomy, and the closure or temporary shutdown of digital asset\ntrading platforms due to fraud, business failure, hackers or malware, or government mandated regulation, and associated losses suffered\nby customers may reduce confidence in the cryptoeconomy and result in greater volatility of the prices of assets, including significant\ndepreciation in value. If we continue investing significant funds into digital assets, any of these events could have an adverse impact\non our financial condition and our business.\n\n** **\n\n**The\nforeign and U.S. tax treatment of transactions in digital assets is unclear.**\n\n \n\nDue\nto the new and evolving nature of digital assets and the absence of comprehensive guidance with respect to digital assets, many significant\naspects of the foreign and U.S. federal income tax treatment of digital assets are uncertain. Our operations and dealings in or in connection\nwith digital assets, as well as transactions in digital assets generally, could be subject to adverse tax consequences in the United\nStates, including as a result of development of the legal regimes surrounding digital assets, and our operating results, as well as the\nprice of digital assets, could be adversely affected thereby.\n\n \n\nMany\nsignificant aspects of the U.S. federal income tax treatment of digital assets (including with respect to the amount, timing and character\nof income recognition) are uncertain. In 2014, the IRS released Notice 2014-21, discussing certain aspects of “virtual currency”\nfor U.S. federal income tax purposes and, in particular, stating that such virtual currency (i) is “property,” (ii) is not\n“currency” for purposes of the rules relating to foreign currency gain or loss, and (iii) may be held as a capital asset.\nFrom time to time, the IRS has released other notices and rulings relating to the tax treatment of virtual currency or digital assets\nreflecting the IRS’s position on certain issues. The IRS has not addressed many other significant aspects of the U.S. federal income\ntax treatment of digital assets and related transactions.\n\n** **\n\n35\n\n \n\n** **\n\nThere\ncontinues to be uncertainty with respect to the timing, character and amount of income inclusions\nfor various digital asset transactions including, but not limited to, lending and borrowing\ndigital assets, staking, and other digital asset products that we offer. Although we believe\nour treatment of digital asset transactions for federal income tax purposes is consistent\nwith current public positions of the IRS and/or existing U.S. federal income tax principles,\nbecause of the rapidly evolving nature of digital asset innovations and the increasing variety\nand complexity of digital asset transactions and products, it is possible the IRS and various\nU.S. states may disagree with our treatment of certain digital asset offerings for U.S. tax\npurposes, which could adversely affect the vitality of our business. We do not intend to\nrequest a ruling from the IRS on these issues, and we will take positions on these and other\nU.S. federal income tax issues relating to digital assets that we believe to be reasonable.\n\n \n\nThere\ncan be no assurance that the IRS, U.S. state revenue agencies, or other foreign tax authorities will not alter their respective positions\nwith respect to digital assets in the future or that a court would uphold the treatment set forth in existing positions. It also is unclear\nwhat additional tax authority positions, regulations, or legislation may be issued in the future on the treatment of existing digital\nasset transactions and future digital asset innovations under U.S. federal, U.S. state, or foreign tax law. Any such developments could\nresult in adverse tax consequences for holders of digital assets and could have an adverse effect on the value of digital assets and\nthe broader digital assets markets. Future technological and operational developments that may arise with respect to digital assets may\nincrease the uncertainty with respect to the treatment of digital assets for U.S. and foreign tax purposes. The uncertainty regarding\ntax treatment of digital asset transactions could impact our business, both domestically and abroad.\n\n** **\n\n**Blockchain\nnetworks, digital assets and the digital asset trading platforms on which these assets are traded are dependent on internet and other\nblockchain infrastructure, which are susceptible to system failures, security risks and rapid technological change.**\n\n \n\nThe\nsuccess of cryptocurrency-based blockchain and other digital asset platforms will depend on the continued development of a stable public\ninfrastructure, with the necessary speed, data capacity and security, and the timely development of complementary products such as high-speed\nmodems for providing reliable internet access and services. Digital assets have experienced, and are expected to continue to experience,\nsignificant growth in the number of users and amount of content. Blockchains will continue to be increasingly interconnected with other\nblockchains and real-world applications. As services and applications continue to be built on top of blockchains, they will place increased\nreliance on third-party infrastructure providers, including in connection with cross-chain bridges and messaging, liquidity providers,\nwallets, data feeds and oracles. Reliance on any of these third-parties introduces additional risks and points of failure. There is no\nassurance that the relevant digital asset infrastructure will continue to be able to support the demands placed on it by this continued\ngrowth or that the performance or reliability of the technology will not be adversely affected by this continued growth. There is also\nno assurance that the infrastructure or complementary products or services necessary to make digital assets a viable product for their\nintended use will be developed in a timely manner, or that such development will not result in the requirement of incurring substantial\ncosts to adapt to changing technologies. The failure of these technologies or platforms or their development could materially and adversely\naffect our investment and trading strategies, the value of our assets and the value of any investment in us. Any number of anticipated\nor unforeseen technical changes, software upgrades, soft or hard forks, cybersecurity incidents or other changes to the underlying blockchain\nnetwork may occur from time to time, causing incompatibility, technical issues, disruptions or security weaknesses to our systems. If\nour third-party providers are unable to identify, troubleshoot and resolve any such issues successfully, they may no longer be able to\nsupport certain cryptocurrencies or blockchain networks, our assets may be frozen or lost, the security of our hot or cold wallets may\nbe compromised and their systems and technical infrastructure may be affected, all of which could adversely impact the success of our\nbusiness, financial condition and results of operations. Cryptocurrencies are created, issued, transmitted, and stored according to protocols\nrun by computers in the cryptocurrency network. It is possible these protocols have undiscovered flaws or could be subject to network\nscale attacks which could result in losses to us.\n\n** **\n\n36\n\n \n\n \n\n**If\nwe hold digital assets through custodial arrangements or otherwise rely on private keys in the future, the loss, theft, destruction,\nor compromise of such private keys could result in the loss of digital assets and other adverse consequences.**\n\n \n\nAccess\nto and transfer of digital assets generally requires the use of private cryptographic keys associated with a digital asset wallet. If\nwe hold digital assets directly or through one or more custodians in the future, the security and availability of those private keys\nwould be critical to our ability to access, transfer, and safeguard our digital assets. If private keys are lost, destroyed, stolen,\ncompromised, or otherwise become inaccessible, and any backup or recovery mechanisms are unavailable or ineffective, the associated digital\nassets may become permanently inaccessible or may be misappropriated by unauthorized parties.\n\n \n\nIn\nconnection with any future digital asset activities, we may rely on third-party custodians, wallet providers, or other service providers\nto store, safeguard, or administer digital assets. Such service providers may experience cybersecurity incidents, hacking events, insider\nmisconduct, operational failures, technological malfunctions, data loss, or other disruptions that could impair their ability to safeguard\nor provide access to digital assets. In addition, digital asset wallets, blockchain networks, smart contracts, and related technologies\nmay be vulnerable to security breaches, software defects, coding errors, phishing attacks, private key compromises, or other malicious\nactivities.\n\n \n\nIf\nany private keys associated with digital assets owned by us or held on our behalf are compromised, or if any custodian or service provider\nis unable to access or recover such private keys, we could lose access to some or all of our digital assets. Any such event could result\nin financial losses, litigation, regulatory investigations or enforcement actions, reputational harm, increased compliance costs, operational\ndisruptions, and other adverse effects on our business, financial condition, and results of operations.\n\n \n\nFurthermore,\nto the extent we expand our digital asset activities in the future to include customer-facing products or services, any loss of or inability\nto access digital assets could adversely affect our customers, expose us to contractual or legal liabilities, and damage our reputation\nand relationships with customers, counterparties, and regulators.\n\n \n\n37\n\n \n\n \n\n**Risks\nAssociated with Our Capital Stock**\n\n \n\n**We\nare currently listed on The Nasdaq Capital Market. Our failure to maintain our compliance with Nasdaq’s continued listing standards\nor other requirements could result in our Common Stock being delisted from Nasdaq, which could adversely affect our liquidity and the\ntrading volume and market price of our Common Stock and decrease or eliminate your investment.**\n\n \n\nOur\nCommon Stock is currently listed on the Nasdaq Capital Market on Nasdaq under the symbol “LRHC.” Nasdaq requires listed issuers\nto comply with certain standards in order to remain listed on its exchange. If, for any reason, Nasdaq should delist our securities from\ntrading on its exchange and we are unable to obtain listing on another reputable national securities exchange, a reduction in some or\nall of the following may occur, each of which could materially adversely affect our stockholders.\n\n \n\nIf\nwe violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our Common Stock may be\ndelisted. A delisting of our Common Stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our Common\nStock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. The delisting\nof our Common Stock could significantly impair our ability to raise capital and the value of your shares.\n\n \n\nOn\nJune 3, 2026, the closing price of our Common Stock was $1.21. Pursuant to Nasdaq Rule 5810(c)(3)(A)(iii), if the closing price of our\nCommon Stock is $0.10 or less for 10 consecutive trading days, we will be issued a Staff Delisting Determination by Nasdaq. If we receive\na Staff Delisting Determination Letter resulting from our Common Stock trading at or below $0.10 for 10 consecutive trading days, we\nwill have 7 calendar days to request a hearing before a Nasdaq hearings panel to review the Staff Delisting Determination, which will\ndetermine the delisting of our Common Stock by Nasdaq. A hearing would then take place within 45 days of the hearing request to determine\nwhether or not our Common Stock would be delisted. If, in the future, we receive a Staff Delisting Determination there can be no assurance\nthat we would be successful in preventing a determination by the Nasdaq hearing panel that our stock will be delisted.\n\n \n\nAny\ndelisting determination by Nasdaq could seriously decrease or eliminate the value of an investment in our Common Stock and other securities\nlinked to our Common Stock. While a listing on an over-the-counter exchange could maintain some degree of a market in our Common Stock,\nwe could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market\nquotations for our Common Stock; reduced liquidity with respect to and decreased trading prices of our Common Stock; a determination\nthat shares of our Common Stock are “penny stock” under the Securities and Exchange Commission rules, subjecting brokers\ntrading our Common Stock to more stringent rules on disclosure and the class of investors to which the broker may sell the Common Stock;\nlimited news and analyst coverage for our Company, in part due to the “penny stock” rules; decreased ability to issue additional\nsecurities or obtain additional financing in the future; and potential breaches under or terminations of our agreements with current\nor prospective large stockholders, strategic investors and banks. The perception among investors that we are at heightened risk of delisting\ncould also negatively affect the market price of our securities and trading volume of our Common Stock.\n\n \n\nAdditionally,\nin January 2026, Nasdaq proposed a rule change that would require companies listed on the Nasdaq Global and Capital Markets to maintain\na minimum market value of listed securities (“MVLS”) of at least $5 million. If adopted, this requirement would represent\nan additional continued listing standard applicable to our Common Stock. Under the proposed rule, if a company’s MVLS falls below\n$5 million for 30 consecutive business days, Nasdaq would immediately suspend trading and delist the company’s securities, with\nno compliance or cure period. Unlike some other Nasdaq listing deficiencies, the proposed rule would not provide an opportunity to regain\ncompliance prior to suspension, and a hearing request would not stay the suspension of trading. As of the date of this report, the Company’s\nMVLS is below $5 million. In addition, the market value of our Common Stock may fluctuate significantly due to a number of factors, many\nof which are outside of our control, including market conditions, investor sentiment toward small-cap companies, our operating performance,\nand general economic conditions. As a result, we may be unable to maintain the required MVLS threshold at all times. If this proposed\nrule is approved and adopted, any sustained decline in our MVLS below $5 million could result in the immediate suspension and delisting\nof our Common Stock from Nasdaq.\n\n \n\n38\n\n \n\n \n\n**The\nmarket price for our Common Stock may be particularly volatile given our status as a relatively unknown company with a small and thinly\ntraded public float, and minimal profits, which could lead to wide fluctuations in our share price.**\n\n \n\nThe\nmarket for our Common Stock is characterized by significant price volatility when compared to the shares of larger, more established\ncompanies that have large public floats, and we expect that our share prices will be more volatile than the shares of such larger, more\nestablished companies for the indefinite future, although such fluctuations may not reflect a material change to our financial condition\nor operations during any such period. Such volatility can be attributable to a number of factors. First, as noted above, our Common Stock\nwill, compared to the shares of such larger, more established companies, likely be sporadically and thinly traded. The price for our\nCommon Stock could, for example, decline precipitously in the event that a large number of our shares are sold on the market without\ncommensurate demand. Secondly, we are a speculative or “risky” investment due to our minimal profits to date. As a consequence\nof this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative\nnews or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the\ncase with the stock of a larger, more established company that has a large public float. Many of these factors are beyond our control\nand may decrease the market price of our Common Stock regardless of our operating performance.\n\n \n\nIn\naddition to being highly volatile, our Common Stock could be subject to rapid and substantial price volatility in response to a number\nof factors that are beyond our control, including, but not limited to:\n\n \n\n \n●\nvariations in our revenues and operating expenses;\n\n \n\n \n●\nactual or anticipated changes\nin the estimates of our operating results or changes in stock market analyst recommendations regarding our Common Stock, other comparable\ncompanies or our industry generally;\n\n \n\n \n●\nmarket conditions in our industry and the economy as\na whole;\n\n \n\n \n●\nactual or expected changes in our growth rates or our\ncompetitors’ growth rates;\n\n \n\n \n●\ndevelopments in the financial markets and worldwide\nor regional economies;\n\n \n\n \n●\nannouncements of innovations or new products or services\nby us or our competitors;\n\n \n\n \n●\nannouncements by the government relating to regulations\nthat govern our industry;\n\n \n\n \n●\nsales of our Common Stock\nor other securities by us, or in the open market;\n\n \n\n \n●\nchanges in the market valuations of other comparable\ncompanies; and\n\n \n\n \n●\nother events or factors,\nmany of which are beyond our control, including those resulting from such events, or the prospect of such events, including war,\nterrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic,\nand natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring\nin the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or\neconomic instability.\n\n \n\nThere\nhave recently been instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated\nto company performance following a number of recent initial public offerings, particularly among companies, like ours, that have had\nrelatively smaller public floats. Such volatility, including any stock run-up, may be unrelated to our actual or expected operating performance\nand financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Common\nStock.\n\n \n\nIf,\nfor example, the market for real estate-related stocks or the stock market in general experiences loss of investor confidence, the trading\nprice of our Common Stock could decline for reasons unrelated to our business, financial condition or operating results. The trading\nprice of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not\ndirectly affect us. Each of these factors, among others, could harm the value of our Common Stock.\n\n \n\n39\n\n \n\n \n\nFurther,\nin the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.\nSuch litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources,\nwhich could materially and adversely affect our business, operating results and financial condition.\n\n**  **\n\n**Certain\nshares previously issued and sold under our Third Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan may have\nbeen sold in violation of federal and state securities laws and may be subject to rescission rights and other penalties, requiring us\nto repurchase shares sold thereunder. **\n\n \n\nDuring\nthe period from December 31, 2024 to September 30, 2025, the Company mistakenly issued an aggregate 31 shares (as adjusted for the reverse\nstock split effected on July 7, 2025, January 26, 2026 and April 20, 2026) of restricted common stock to its contractors pursuant to\nThird Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan (a part of the La Rosa Holdings Corp. 2022 Equity Incentive\nPlan, as amended), as free trading shares (the “Sales”). At the time of issuance of such securities, the Company mistakenly\nrelied on the Registration Statement on Form S-8 (File No. 333-275118) filed by the Company with the SEC and declared effective upon\nsuch filing on October 20, 2023, while the shares issued in such Sales were not registered pursuant to such registration statement.\n\n \n\nBecause\nthe registration statement did not cover the Sales, the Sales could be determined to be unregistered sales of securities and, in accordance\nwith Section 5 of the Securities Act, direct purchasers in the Sales may have rescission rights pursuant to which they may be entitled\nto recover the amount paid for such shares, plus statutory interest, upon returning the shares to us within one year from the transaction\ndate. In addition, we could be subject to enforcement actions or penalties and fines by federal and/or state regulatory authorities.\nWe cannot predict the likelihood of any claims or actions being brought against us or the amount of any penalties or fines in connection\nwith the Sales.\n\n \n\n**Future\nissuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation, and future issuances of\npreferred stock, which could rank senior to our Common Stock for the purposes of dividends and liquidating distributions, may adversely\naffect the level of return you may be able to achieve from an investment in our Securities.** \n\n \n\nIn\nthe future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of\nour debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior\nto any distributions being made to holders of our Common Stock. Moreover, if we issue preferred stock, the holders of such preferred\nstock could be entitled to preferences over holders of Common Stock in respect of the payment of dividends and the payment of liquidating\ndistributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend\nin part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any\nsuch future offerings or borrowings. Holders of our Securities must bear the risk that any future offerings we conduct or borrowings\nwe make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Securities.** **\n\n \n\n**If\nour securities become subject to the penny stock rules, it would become more difficult to trade our shares.**\n\n \n\nThe\nSEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally\nequity securities with a price of less than $5.00 per share, other than securities registered on certain national securities exchanges\nor authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to\ntransactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities\nexchange and if the price of our securities is less than $5.00, our securities could be deemed a penny stock. The penny stock rules require\na broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure\ndocument containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny\nstock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable\ninvestment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement;\n(ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement.\nThese disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and\ntherefore shareholders may have difficulty selling their Common Stock.\n\n** **\n\n40\n\n \n\n \n\n**We\nmay have violated Section 13(k) of the Exchange Act (implementing Section 402 of\nthe Sarbanes-Oxley Act of 2002) and may be subject to sanctions as a result.**\n\n \n\nSection\n13(k) of the Exchange Act provides that it is unlawful for a company that has a class of securities registered under Section 12 of the\nExchange Act to, directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to\nor for any of its directors or executive officers. From February 2017 to July 2023, La Rosa Realty, LLC, a subsidiary of the Company,\nprovided interest free, due on demand advances to La Rosa Insurance LLC, a company owned by our Chief Executive Officer, which may be\ndeemed to be personal loans made by us to Mr. La Rosa that are not permissible under Section 13(k) of the Exchange Act. Issuers that\nare found to have violated Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary\npenalties, as well as criminal sanctions. During the fourth quarter of 2023, upon us completing our IPO, the Compensation Committee\nreviewed the advance and determined that the existing related party receivable would be charged as part of the Company’s chief\nexecutive officer’s annual bonus as specified in his employment agreement. No outstanding balance existed as of December 31, 2023. Notwithstanding,\nthe imposition of any sanctions on us could have a material adverse effect on our business, financial position, results of operations\nor cash flows.\n\n \n\n**We\nare an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities\nAct, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting\ncompanies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with\nother public companies.**\n\n** **\n\nWe\nare an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we\nmay take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not\nemerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation\nrequirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), reduced disclosure obligations\nregarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding\nadvisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result,\nour stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to\nfive years, although circumstances could cause us to lose that status earlier, including if the market value of our shares held by non-affiliates\nexceeds $700 million as of the end of the prior fiscal year’s second quarter, in which case we would no longer be an emerging growth\ncompany as of the following fiscal year end. We cannot predict whether investors will find our securities less attractive because we\nwill rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions,\nthe trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities\nand the trading prices of our securities may be more volatile.\n\n \n\nFurther,\nSection 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial\naccounting standards until private companies (that is, those that have not had a Securities Act registration statement declared\neffective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised\nfinancial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period\nand comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have\nelected to avail ourselves of the extended transition period which means that when a standard is issued or revised and it has different\napplication dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time\nprivate companies adopt the new or revised standard. This may make comparison of our financial statements with another public company\nwhich is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period\ndifficult or impossible because of the potential differences in accounting standards used.\n\n \n\n41\n\n \n\n \n\nAdditionally,\nwe are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K promulgated by the\nSEC. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing\nonly two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which\n(i) the market value of our shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter,\nor (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates\nexceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure\nobligations, it may also make comparison of our financial statements with other public companies difficult or impossible.\n\n \n\n**Our\nstatus as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need\nit.**\n\n \n\nBecause\nof the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will\nhave an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors,\nand it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with\nother companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry.\nIf we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially\nand adversely affected.\n\n \n\n**If\nsecurities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price\nand trading volume could decline.**\n\n** **\n\nThe\ntrading market for our Common Stock depends in part on the research and reports that securities or industry analysts publish about us\nor our business. As of the date of this annual report, no analysts cover our stock. If we do not obtain analyst coverage or if one or\nmore of those analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely\ndecline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock\ncould decrease, which might cause our stock price and trading volume to decline.\n\n \n\n**We\ndo not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.**\n\n \n\nWe\ncurrently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends\non our Common Stock in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors\nafter taking into account various factors, including, but not limited to, our financial condition, operating results, cash needs, growth\nplans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our\nCommon Stock may be limited by Nevada state law or any financial covenants to which we are bound by our debt obligations. Accordingly,\ninvestors must rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize a return\non their investment. Investors seeking cash dividends should not purchase our Common Stock.\n\n \n\n42\n\n \n\n \n\n**Risks\nRelating to the Restatement of the Prior Financial Statements**\n\n** **\n\n**We\nhave concluded that certain of our previously issued financial statements should not be relied upon and have restated them, which was\ntime-consuming, expensive and could expose us to additional risks that could have a negative effect on us.**\n\n \n\nAs\ndiscussed in the Explanatory Note of this Comprehensive Form 10-K and in Note 2, “Restatement of Previously Issued Consolidated\nFinancial Statements” under Item 8 of this Comprehensive Form 10-K, we have concluded that the Prior Financial Statements should\nnot be relied upon. We have restated our previously issued (i) audited consolidated financial statements as of and for the fiscal year\nended December 31, 2024, included in the 2024 10-K, and (ii) unaudited condensed consolidated financial statements for the quarterly\nperiods ended March 31, 2024, through September 30, 2025, included in the Form 10-Qs. The restatement process was time-consuming and\nexpensive and could expose us to additional risks that could have a negative effect on us. In particular, we incurred substantial unanticipated\nexpenses and costs, including audit, legal and other professional fees, in connection with the restatement of the Prior Financial Statements\nand the ongoing remediation of material weaknesses in our internal control over financial reporting related to the restatement (see Part\nII, Item 9A, Controls and Procedures of this Comprehensive Form 10-K for a description of these remediation measures). To the extent\nour remediation actions are not successful, we could be required to incur additional time and expense. Our management’s attention\nwas also diverted from some aspects of the operation of our business in connection with the restatement of the Prior Financial Statements\nand these ongoing remediation efforts. In addition, the restatement and related matters could impair our reputation and could cause our\ncounterparties to lose confidence in us. Each of these occurrences could have an adverse effect on our business, results of operations,\nfinancial condition and stock price.\n\n \n\n**The\nrestatement of the Prior Financial Statements may lead to future stockholder litigation.**\n\n** **\n\nLawsuits\nmay be commenced against the Company and its officers and directors based in part or whole on allegations related to the restatement\nof the Prior Financial Statements. As with any substantial litigation, the Company expects to devote significant time, attention and\nresources to the defense of the litigation, which may have a material adverse effect on the Company even if the litigation is resolved\nin a manner favorable to the Company, and cannot predict when or how the litigation will be resolved or estimate what the potential loss\nor range of loss would be, if any.\n\n \n\n**If\nwe continue to fail to maintain an effective system of disclosure controls and fail to maintain an effective system of internal control\nover financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could\nbe impaired.**\n\n** **\n\nAs\na public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations\nof the applicable listing standards of Nasdaq. We expect that the requirements of these rules and regulations will continue to increase\nour legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant\nstrain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure\ncontrols and procedures and internal control over financial reporting. Based upon evaluation of our Chief Executive Officer and Interim\nChief Financial Officer as of December 31, 2025, our disclosure controls and procedures are ineffective, as we are a smaller reporting\ncompany with limited resources in our finance department, and we are in the process of establishing our procedures around our disclosure\ncontrols. We are continuing to develop our disclosure controls and other procedures that are designed to ensure that information required\nto be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the applicable\ntime periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated\nand communicated to our principal executive and financial officers.\n\n \n\n43\n\n \n\n \n\nIn\norder to improve and maintain the effectiveness of our disclosure controls and procedures and internal control over financial reporting,\nwe have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant\nmanagement oversight. Our current controls and any new controls that we develop may become inadequate because of changes in conditions\nin our business. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require\nthat we establish new business processes, systems and controls to accommodate such changes. We have limited experience with implementing\nthe systems and controls necessary to operate as a public company, as well as adopting changes in accounting principles or interpretations\nmandated by the relevant regulatory bodies. Additionally, if these new systems, controls or standards and the associated process changes\ndo not give rise to the benefits that we expect or do not operate as intended, it could adversely affect our financial reporting systems\nand processes, our ability to produce timely and accurate financial reports, or the effectiveness of internal control over financial\nreporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in\ntheir implementation or increased costs to correct any post-implementation issues that may arise.\n\n \n\nFurther,\nadditional weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure\nto develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our business\nor cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.\nAny failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of\nperiodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness\nof our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be\nfiled with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors\nto lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of\nour Common Stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.\n\n \n\nSection\n404 of the Sarbanes-Oxley Act requires that we include a report from management on the effectiveness of our internal control over financial\nreporting in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Based on evaluation of our Chief Executive Officer and\nInterim Chief Financial Officer as of December 31, 2025, our management has identified material weaknesses primarily related to deficiencies\nin our overall control environment including limited accounting resources, inadequate segregation of duties, and the absence of formalized\npolicies and procedures. In addition, the Company did not maintain effective controls over (i) significant accounting estimates and judgments,\nincluding the goodwill impairment assessment and the income tax provision prepared by external consultants, (ii) revenue recognition,\nincluding the determination of gross versus net presentation under ASC 606, which resulted in errors in previously issued financial statements\nand the restatement of the Prior Financial Statements, (iii) the preparation, review, and approval of its periodic SEC filings to ensure\nthe completeness, accuracy, and consistency of financial disclosures, and (iv) controls and processes related to cybersecurity risk management.\nManagement has therefore concluded that our internal controls over financial reporting are not effective at the reasonable assurance\nlevel.\n\n \n\nOur\nindependent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial\nreporting until our first annual report filed with the SEC where we are an accelerated filer or a large accelerated filer. At such time,\nour independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level\nat which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure\ncontrols and internal control over financial reporting could harm our business, financial condition, and results of operations and could\ncause a decline in the trading price of our Common Stock.\n\n \n\n44\n\n \n\n \n\n**General\nRisks**\n\n \n\n**If\nwe fail to protect the privacy of employees, independent contractors, or consumers or personal information that they share with us, our\nreputation and business could be significantly harmed.**\n\n** **\n\nConsumers,\nagents, independent contractors, and employees have shared personal information with us during the normal course of our business processing\nresidential real estate transactions. This includes, but is not limited to, social security numbers, annual income amounts and sources,\nnames, addresses, telephone and cell phone numbers, and email addresses.\n\n \n\nThe\napplication, disclosure and safeguarding of this information is regulated by federal and state privacy laws. To comply with privacy laws,\nwe invested resources and adopted a privacy policy outlining policies and procedures for the use of safeguarding personal information.\nThis policy includes informing consumers, independent contractors and employees that we will not share their personal information with\nthird parties without their consent unless required by law.\n\n \n\nPrivacy\npolicies and compliance with federal and state privacy laws present risk, and we could incur legal liability for failing to maintain\ncompliance. We might not become aware of all privacy laws, changes to privacy laws, or third-party privacy regulations governing the\nreal estate business or be unable to comply with all of these regulations, given the rate of regulatory changes, ambiguities in regulations,\ncontradictions in regulations between jurisdictions, and the difficulties in achieving both Company-wide and region-specific knowledge\nand compliance.\n\n \n\nOur\npolicy and safeguards could be deemed insufficient if third parties with whom we have shared personal information fail to protect the\nprivacy of that information. Our legal liability could include significant defense costs, settlement costs, damages, and penalties, plus,\ndamage our reputation with consumers, which could significantly damage our ability to attract and maintain customers. Any or all of these\nconsequences would result in meaningful unfavorable impact on our brand, business model, revenue, expenses, income, and margins.\n\n \n\n**Cybersecurity\nincidents could disrupt our business operations, result in the loss of critical and confidential information, adversely impact our reputation\nand harm our business.**\n\n** **\n\nCybersecurity\nthreats and incidents directed at us could range from uncoordinated individual attempts to gain unauthorized access to information technology\nsystems to sophisticated and targeted measures aimed at disrupting our business or gathering personal data of our customers. In the ordinary\ncourse of our business, we collect and store sensitive data, including proprietary business information and personal information about\nour customers. Our business, and particularly our cloud-based platform, is reliant on the uninterrupted functioning of our information\ntechnology systems. The secure processing, maintenance, and transmission of information are critical to our operations, especially the\nprocessing and closing of real estate transactions. Although we employ measures designed to prevent, detect, address, and mitigate these\nthreats (including access controls, data encryption, vulnerability assessments, multi-factor authentication, and maintenance of\nbackup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation,\ndestruction, corruption, or unavailability of critical data and confidential or proprietary information (our own or that of third parties,\nincluding potentially sensitive personal information of our customers) and the disruption of business operations. Any such compromises\nto our security could cause harm to our reputation, which could cause customers to lose trust and confidence in us or could cause agents\nto stop working for us. In addition, we may incur significant costs for remediation that may include liability for stolen assets or information,\nrepair of system damage, and compensation to customers and business partners. We may also be subject to legal claims, government investigation,\nand additional state and federal statutory requirements.\n\n \n\nThe\npotential consequences of a material cybersecurity incident include regulatory violations of applicable U.S. and international privacy\nand other laws, reputational damage, loss of market value, litigation with third parties (which could result in our exposure to material\ncivil or criminal liability), diminution in the value of the services we provide to our customers, and increased cybersecurity protection\nand remediation costs (that may include liability for stolen assets or information), which in turn could have a material adverse effect\non our competitiveness and results of operations. \n\n \n\n**Claims\nfor indemnification by our directors and officers may reduce our available funds to satisfy successful stockholder claims against us\nand may reduce the amount of money available to us.**\n\n** **\n\nAs\npermitted by Section 78.7502 of Chapter 78 of the Nevada Revised Statutes (the “NRS”), our amended and restated articles\nof incorporation limit the liability of our directors to the fullest extent permitted by law. In addition, as permitted by Section 78.7502\nof the NRS, our amended and restated articles of incorporation and amended and restated bylaws provide that we shall indemnify, to the\nfullest extent authorized by the NRS, any person who is involved in any litigation or other proceeding because such person is or was\na director or officer of ours or is or was serving as an officer or director of another entity at our request, against all expense, loss,\nor liability reasonably incurred or suffered in connection therewith. Our amended and restated articles of incorporation provide that\nindemnification includes the right to be paid expenses incurred in defending any proceeding in advance of its final disposition; provided,\nhowever, that such advance payment will only be made upon delivery to us of an undertaking, by or on behalf of the director or officer,\nto repay all amounts so advanced if it is ultimately determined that such director or officer is not entitled to indemnification.\n\n \n\n45\n\n \n\n \n\nSection\n78.7502 of the NRS permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,\npending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except an action by or\nin the right of us, by reason of the fact that the person is or was a director, officer, employee, or agent of ours, or is or was serving\nat our request as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise,\nagainst expenses, including attorneys’ fees, judgment, fines, and amounts paid in settlement actually and reasonably incurred by\nthe person in connection with the action, suit, or proceeding if the person is not liable under Section 78.138 of the NRS, or acted in\ngood faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and,\nwith respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.\n\n \n\nThe\nabove limitations on liability and our indemnification obligations limit the personal liability of our directors and officers for monetary\ndamages for breach of their fiduciary duty as directors by shifting the burden of such losses and expenses to us. Certain liabilities\nor expenses covered by our indemnification obligations may not be covered by our directors’ and officers’ insurance policy\nor the coverage limitation amounts may be exceeded. As a result, we may need to use a significant amount of our funds to satisfy our\nindemnification obligations, which could severely harm our business and financial condition and limit the funds available to stockholders\nwho may choose to bring a claim against us.\n\n \n\nInsofar\nas indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the\nCompany pursuant to provisions of Nevada law, the Company has been informed that, in the opinion of the SEC, such indemnification is\nagainst public policy as expressed in that Act and is, therefore, unenforceable.\n\n \n\n**Anti-takeover\nprovisions in our amended and restated articles of incorporation and bylaws, as well as provisions in Nevada law, might discourage, delay\nor prevent a change of control of our Company or changes in our management and, therefore, depress the trading price of our securities.**\n\n** **\n\nOur\namended and restated articles of incorporation, bylaws and Nevada law contain provisions that could have the effect of rendering more\ndifficult or discouraging an acquisition deemed undesirable by our Board of Directors. Our corporate governance documents include provisions:\n\n \n\n \n●\nproviding for a single\nclass of directors where each member of the Board shall serve for a one-year term and may be elected to successive terms;\n\n \n\n \n●\nauthorizing blank check\npreferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our Common Stock;\n\n \n\n \n●\nlimiting the liability\nof, and providing indemnification to, our directors, including provisions that require the Company to advance payment for defending\npending or threatened claims;\n\n \n\n \n●\nlimiting the ability of\nour stockholders to call and bring business before special meetings of stockholders;\n\n \n\n \n●\nrequiring advance notice\nof stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election\nto our Board;\n\n \n\n \n●\ncontrolling the procedures\nfor the conduct and scheduling of the Board and stockholder meetings; and,\n\n \n\n \n●\nlimiting the determination\nof the number of directors on our Board and the filling of vacancies or newly created seats on the Board to our Board then in office.\n\n \n\nThese\nprovisions, alone or together, could delay hostile takeovers and changes in control or changes in our management.\n\n \n\nAs\na Nevada corporation, we are also subject to provisions of Nevada corporate law, including NRS Section 78.411, *et seq*., which\nprohibits a publicly-held Nevada corporation from engaging in a business combination with an interested stockholder, generally a person\nwho together with its affiliates owns, or within the last two years has owned, 10% of our voting stock, for a period of three years after\nthe date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed\nmanner.\n\n \n\nThe\nexistence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the\nfuture for shares of our Common Stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that\nour stockholders could receive a premium for their Common Stock in an acquisition."}