AGNT 10-K & 10-Q changes, risk factors and insider trading

The Company’s business results are materially influenced by the strength of the U.S. residential real estate sector and overall economic conditions.

The Company’s business results are closely related to the strength of the U.S. residential real estate market, which is cyclical in nature, and general economic conditions, which are beyond its control. Any of the risks identified below could reduce residential real estate transaction volumes, depress home prices, or otherwise negatively influence the industry and the Company’s results of operations:

Monetary policies of the U.S. federal government and its agencies, particularly those impacting mortgage interest rates and buyer affordability, may have a material adverse impact on the Company’s operations.

The Company generates a significant portion of its revenue from the U.S. real estate market, which is heavily influenced by the Federal Reserve Board. By regulating the supply of money and credit these policies directly impact mortgage interest rates – a primary driver of the U.S. real estate market The Company’s business and profitability are negatively impacted by any rising interest rate environment, as higher mortgage rates typically lead to a decrease in the number of home sale transactions.

Elevated mortgage rates, combined with an increased overall cost of living and broader economic pressures, create significant affordability challenges that reduce the ability and willingness of prospective buyers to purchase a home. Specifically:

Higher interest rates reduce purchasing power. In addition, rising costs associated with student loan obligations, healthcare, insurance, and other essential living expenses have further constrained affordability for households considering homeownership.

These affordability pressures have contributed to longer decision timelines and, in some cases, delayed or deferred home purchases, particularly among first-time buyers. As a result, the average age of first-time homebuyers has increased, which may reduce transaction activity earlier in the buyer lifecycle and negatively impact overall housing demand.

The mortgage market continues to rely heavily on government-sponsored enterprises such as Fannie Mae, Freddie Mac, and Ginnie Mae to provide liquidity. While these programs remain in place, changes to their underwriting standards, loan programs, or pricing, as well as sustained higher interest rates, could further affect affordability and buyer demand.

In addition, the availability and cost of homeowners’ insurance particularly in regions subject to increased climate-related risks - can materially affect the cost of homeownership and a buyer’s ability to obtain financing. If insurance coverage becomes more limited or more expensive, housing demand and transaction activity may decline.

If elevated interest rates, affordability challenges, or other economic pressures persist or worsen, the number of real estate transactions facilitated through the Company’s platform could continue to decline, which would adversely affect the Company’s revenues, operating results, and financial condition.

Fluctuations in housing inventory levels can negatively impact the Company’s business, which depends on the ability of its brokers and agents to facilitate home sales. In certain markets, limited supply in recent years has reduced transaction activity.

Factors outside the Company’s control such as the pace of new housing construction, macroeconomic conditions, rising mortgage costs that discourage potential sellers from moving, and increased purchases of residential properties by institutional investors for long-term rental or corporate use have contributed to lower inventory and fewer completed transactions in recent years. Conversely, periods of elevated inventory can also dampen demand and slow sales activity. Sustained imbalances in housing supply, whether too low or too high, could materially and adversely affect the Company’s business, financial condition, and results of operations.

Material decreases in the average brokerage commission rate, due to conditions beyond the Company’s control, could materially adversely affect its financial results.

There are many factors that contribute to average broker commission rates that are beyond the Company’s control. Factors that can contribute to a material decrease in brokerage commissions include changes in regulation, litigation (including pending litigation and industry practice changes described elsewhere in this Annual Report), the rise of certain competitive brokerage or non-traditional competitor models, an increase in the popularity of discount brokers and agents, increased adoption of flat fees, commission models with more competitive rates, rebates or lower commission rates on transactions, as well as other competitive factors. For example, the Company competes with other brokerages that may have reduced operating margins and access to capital resources permitting them to prioritize market share over profits, as well as the growing popularity of non-traditional platforms such as listing aggregators, which may put additional pressure on the Company’s commissions and related costs. The average broker commission rate for a real estate transaction is a key determinant of the Company’s profitability, and a material decrease in brokerage commission rates could have a material adverse effect on the Company’s business and profitability.

The introduction and integration of emerging technologies, including artificial intelligence, presents various operational, compliance, and reputational risks and could impact the Company’s competitive position and financial performance.

Emerging technologies, including artificial intelligence (“AI”) and machine learning, are reshaping the real estate brokerage industry and offer opportunities to enhance efficiency, productivity, and client experience; however, the Company’s adoption of these tools—including agent support chatbots, document processing systems, employee digital twins, and agent-facing custom Generative Pre-trained Transfer, or GPTs—also creates risks related to reliability, accuracy, data privacy, bias, and regulatory compliance. Failures or limitations in these technologies could disrupt operations, expose the Company to legal or reputational harm, and negatively affect agent productivity and its competitive position.

Additionally, AI algorithms and other emerging technologies may be flawed and datasets underlying such technologies may be insufficient or contain biased information. If the new technologies integrated into the Company’s operations produce analyses or recommendations that are or are alleged to be deficient, inaccurate, or biased, the Company’s reputation, business, financial condition, and results of operations may be adversely affected.

The Company expects that there will continue to be new laws or regulations governing the use of AI technology, which might be burdensome for the Company to comply with and may limit the Company’s ability to offer or enhance its existing tools and features or new offerings using, incorporating, or relying on AI technology. Further, the use of AI technology requires specialized expertise. The Company may not be able to attract and retain top talent to support the Company’s AI technology initiatives. If any of the operational, compliance or reputational risks were to materialize, the Company’s business and results of operations may be adversely affected.

The Company’s operating results are subject to seasonality and vary significantly among quarters during each calendar year, making meaningful comparisons of successive quarters difficult.

Home sales in successive quarters can fluctuate significantly due to a wide variety of factors, including, but not limited to, holidays, national or international emergencies, the school year calendar’s impact on timing of family relocations, interest rate changes or speculation of pending interest rate changes, natural disasters, including hurricanes, flooding and wildfires, and the overall macroeconomic market.

Additionally, seasons and weather traditionally impact the real estate industry. The Company has historically experienced lower revenues during the fall and winter seasons in comparison to spring and summer seasons, as well as during periods of unseasonable weather, which reduces the Company’s operating income, net income, operating margins and cash flow. Past performance in similar seasons or during similar weather events can provide no assurance of future or current performance and macroeconomic shifts in the markets the Company serves can conceal the impact of poor weather or seasonality.

The Company’s revenue and operating margins each quarter will remain subject to seasonal fluctuations, poor weather and natural disasters and macroeconomic market changes that may make it difficult to compare or analyze the Company’s financial performance effectively across successive quarters.

Climate-related physical impacts, regulatory changes, and disclosure obligations could increase costs, reduce transaction activity, and expose the Company to liability or reputational harm.

Chronic and acute physical impacts of climate change, such as rising home insurance costs, home insurance unavailability, flooding, wildfires, hurricanes, and other severe weather events, may reduce property values, disrupt housing supply, and limit affordability for buyers. These events can slow transaction volumes, shift population growth away from high-risk regions, negatively affect the geographic mix of the Company’s revenues, and pose direct risks to the safety of the Company’s agents, brokers, clients, and employees in affected markets. Transition risks, including new building codes, retrofitting mandates, energy-efficiency standards, and climate-related taxes or insurance market interventions, may increase the cost of property ownership, alter buyer demand, and extend transaction timelines. Liability risks may arise if the Company’s brokers or agents fail to comply with new climate-related disclosure requirements or misstate property-related risks, and the Company could also face regulatory penalties, litigation, or reputational harm if the Company fails to comply with evolving climate-related laws and regulations applicable to the Company’s operations. Any or all of these risks could materially and adversely impact the Company’s business, revenue, results of operations, and financial condition.

The Company may be unable to attract, retain, and incentivize qualified real estate professionals.

The Company’s success depends significantly on its ability to attract, retain, and engage qualified real estate agents and brokers, who are the foundation of the Company’s revenue-generating activities. Competition for skilled agents and brokers is intense, as the Company faces pressure from other brokerages offering alternative compensation models, technology tools, or support services, as well as from technology companies seeking experienced professionals in software development and cloud-based solutions. If the Company fails to recruit and retain a strong network of agents and brokers, the Company’s competitive position, market share, and overall business performance could be adversely affected.

Industry and regulatory changes, including recent revisions to National Association of Realtors (“NAR”) policies and standards, buyer-broker compensation practices, and the recent settlement resolving nationwide antitrust litigation against NAR and major brokerages, may increase compliance burdens for agents, raise operating costs, and impact the perceived value of the profession. These developments could lead to higher attrition rates across the industry and at the Company, particularly among part-time agents or those with lower transaction volumes. Broader shifts in compensation structures, licensing requirements, or competitive dynamics could further complicate the Company’s ability to recruit and retain agents, and if a significant number of agents leave the profession or fail to maintain active licenses, the Company’s agent base and market presence could be materially diminished.

Further, the Company’s value proposition for agents and brokers, which includes allowing them to participate in the revenue of the Company, is not typical in the real estate industry. If agents and brokers do not understand or appreciate this unique model, including the Company’s revenue share program, equity incentives, and cloud-based platform, the Company may not be able to attract, retain, and incentivize agents effectively. In addition, volatility in the value of the Company’s stock or changes to the perceived value of its programs could negatively impact recruitment and retention.

If the Company is unable to attract, retain qualified agents and brokers, or to maintain their engagement with its model and programs, the Company’s business, financial condition, results of operations, and growth prospects could be materially and adversely affected.

Loss of the Company’s current executive officers or other key management could significantly harm its business.

The Company depends on the industry experience and talent of its current executives. The Company believes that its future results will depend in part upon its ability to retain and attract highly skilled and qualified management. The loss of the Company’s executive officers could have a material adverse effect on its operations because other officers may not have the experience and expertise to readily replace these individuals. To the extent that one or more of the Company’s top executives or other key management personnel depart from the Company, its operations and business prospects may be adversely affected. In addition, changes in executives and key personnel could be disruptive to the Company’s business.

The Company’s business, financial condition and reputation may be substantially harmed by security breaches, interruptions, delays and failures in its systems and operations.

The performance and reliability of the Company’s systems and operations are critical to its reputation and ability to attract agents, teams of agents and brokers into the Company as well as its ability to service homebuyers and sellers. The Company’s systems and operations are vulnerable to security breaches, interruption or malfunction due to events beyond its control, including natural disasters, such as earthquakes, fires and floods, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar events. In addition, the Company relies on third-party vendors to provide key components of the Company’s cloud office platform and to provide additional systems and related support. If the Company cannot continue to retain these services on acceptable terms, its access to these systems and services could be interrupted. Any security breach, interruption, delay or failure in the Company’s systems and operations could substantially reduce the transaction volume that can be processed with its systems, impair quality of service, increase costs, prompt litigation and other consumer claims and damage the Company’s reputation, any of which could substantially harm the Company’s results of operations and financial condition.

Cybersecurity incidents could disrupt the Company’s business operations, result in the loss of critical and confidential information, adversely impact the Company’s reputation and harm its business.

Cybersecurity threats and incidents directed at the Company could range from uncoordinated individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted measures aimed at disrupting business or gathering personal data of clients, agents, or customers. Additionally, bad actors are increasingly using AI technology to launch more automated, targeted, and coordinated attacks, including deep-fake impersonations and other techniques that could facilitate wire fraud or other fraudulent activities. In the ordinary course of the Company’s business, the Company and its agents and brokers collect and store sensitive data, including proprietary business information and personal information about its clients.

The Company’s business, and particularly its cloud-based platform, is reliant on the uninterrupted functioning of its information technology systems. The secure processing, maintenance and transmission of information are critical to the Company’s operations, especially the processing and closing of real estate transactions, which are increasingly targeted by wire fraud schemes. Although the Company employs measures designed to prevent, detect, address and mitigate these threats (including access controls, data encryption, vulnerability assessments and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary information (the Company’s own or that of third parties, including potentially sensitive personal information of the Company’s clients, agents, and customers) and the disruption of business operations.

Any such compromises to the Company’s security could cause harm to its reputation, which could cause clients, agents and customers to lose trust and confidence in the Company or could cause agents and brokers to unaffiliate with us. In addition, the Company may incur significant costs for remediation that may include liability for stolen assets or information, repair of system damage and compensation to clients, agents, customers and business partners. The Company may also be subject to legal claims, government investigations and additional state and federal statutory requirements.

The potential consequences of a material cybersecurity incident include regulatory violations of applicable U.S. and foreign privacy and other laws, reputational damage, loss of market value, litigation with third parties (which could result in the Company’s exposure to material civil or criminal liability), diminution in the value of the services the Company provides to its customers, and increased cybersecurity protection and remediation costs (that may include liability for stolen assets or information), which in turn could have a material adverse effect on the Company’s competitiveness and results of operations.

The Company may not be able to utilize a portion of its net operating loss or research tax credit carryforwards, which may adversely affect the Company’s profitability.

As of December 31, 2025, the Company had federal, state and foreign net operating losses carryforwards due to prior years’ losses. Certain pre-fiscal 2018 state net operating losses will carry forward for a limited number of years. Federal, as well as some state and foreign net operating losses generated in and after fiscal 2018 do not expire and can be carried forward indefinitely. The Company also has recorded federal research tax credits for the years 2019 to 2025 which will carry forward for 20 years and are expected to be fully utilized before expiration. A nominal portion of the Company’s net operating loss may expire, increasing future income tax liabilities which may adversely affect its profitability.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize net operating loss carryforwards or other tax attributes, in any taxable year, may be limited if the Company experiences an "ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of the Company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. It is possible that an ownership change, or any future ownership change, could have a material effect on the use of the Company’s net operating loss carryforwards or other tax attributes, which could adversely affect its profitability.

The Company could be subject to changes in tax laws and regulations that may have a material adverse effect in its business.

The Company operates and is subject to taxes in the United States and numerous other jurisdictions throughout the world. Changes to federal, state, local, or international tax laws on income, sales, use, indirect, or other tax laws, statutes, rules or regulations may adversely affect the Company’s effective tax rate, operating results or cash flows.

The Company’s effective tax rate could increase due to several factors, including: changes in the relative amounts of income before taxes in the various jurisdictions in which the Company operates that have differing statutory tax rates; changes to the Company’s assessment about its ability to realize the Company’s deferred tax assets that are based on estimates of its future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which the Company does business; the outcome of current and future tax audits, examinations or administrative appeals; and limitations or adverse findings regarding the Company’s ability to do business in some jurisdictions.

In particular, new income, sales and use or other tax laws or regulations could be enacted at any time, which could adversely affect the Company’s business operations and financial performance. Further, existing tax laws and regulations could be interpreted, modified or applied adversely to us. For example, the One Big Beautiful Bill Act (“OBBBA”) enacted many significant changes to the U.S. tax laws. Future guidance from the IRS and other tax authorities with respect to the OBBBA may affect us, and certain aspects of the OBBBA could be repealed or modified in future legislation. In addition, it is uncertain if, and to what extent, various states will conform to the OBBBA or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net operating losses, and other deferred tax assets relating to the Company’s operations, the taxation of foreign earnings, and the deductibility of expenses under the OBBBA or future reform legislation could have a material impact on the value of the Company’s deferred tax assets and could increase its future U.S. tax expense.

Tax incentives tied to homeownership, such as the deductibility of mortgage interest and property taxes, influence the affordability and attractiveness of buying a home. These benefits are subject to provincial, federal, and state limitations and could be eliminated, restricted, or otherwise reduced through changes in tax law. Any reduction in these incentives would increase the after-tax cost of homeownership, which could decrease buyer demand, slow residential real estate activity, and, in turn, adversely affect the Company’s business, financial condition, and results of operations.

The Company may be unable to effectively and efficiently manage growth in its business.

The Company may struggle to manage growth in its business efficiently. Failing to scale the Company’s operations to meet the increasing demands of its real estate professionals could negatively impact the Company’s performance. As the Company onboards more real estate professionals, the need to enhance the Company’s systems, integrate third-party systems, and maintain infrastructure becomes vital. Any delay in these upgrades can lead to system issues and reduced satisfaction among the Company’s real estate professionals. This could deter existing and potential professionals from associating with the Company. Expanding the Company’s systems efficiently may be challenging and also poses inherent risks, and the Company cannot guarantee timely and effective implementation. Such efforts might lead to decreased revenues and margins, impacting the Company’s financial results.

The Company may not successfully complete or integrate acquisitions or joint ventures.

The Company regularly evaluates potential acquisitions, joint ventures, and other strategic opportunities as part of its growth strategy. These activities involve risks, including the Company’s ability to identify and complete transactions on favorable terms, successfully integrate acquired businesses or joint ventures into its operations, and realize anticipated synergies or efficiencies within expected timeframes. Such transactions may also divert management’s attention, increase costs, cause shareholder dilution, or expose the Company to unforeseen liabilities. If the Company is unable to complete or effectively integrate acquisitions or joint ventures, the Company’s business, financial condition, and results of operations could be materially and adversely affected.

The Company’s international operations are subject to risks not generally experienced by its U.S. operations.

The Company has operations throughout the Americas, Europe, the Middle East, Asia-Pacific, and South Africa. The Company’s international operations are subject to risks not generally experienced by its U.S. operations. The risks involved in the Company’s international operations and relationships that could result in losses against which it is not insured and, therefore, affect the Company’s profitability include:

In addition, activities of agents and brokers outside of the U.S. are more difficult and more expensive to monitor and improper activities or mismanagement may be more difficult to detect. Negligent or improper activities involving the Company’s agents and brokers may result in reputational damage to the Company and may lead to direct claims against the Company based on theories of vicarious liability, negligence, joint operations and joint employer liability which, if determined adversely, could increase costs and subject the Company to incremental liability for their actions.

The Company is actively developing, and intends to continue to develop, new products and services complementary to its brokerage business and the Company’s failure to accurately predict their demand or growth could have an adverse effect on its business.

The Company is actively investing and intends to continue to invest resources in developing new technology, services, products and other offerings complementary to the Company’s brokerage business. New business initiatives are inherently risky and may involve unproven business strategies and markets with which the Company has limited or no prior development or operating experience. Risks from these new initiatives include those associated with potential defects in the design, ongoing development and maintenance of technologies, reliance on data or user inputs that may prove inadequate or unavailable, failure to design products and services in a way that is more effective or affordable than competing third-party products and services and failure to scale businesses as they grow, among others. As a result of these risks, the Company could experience increased legal claims, reputational damage, financial loss or other adverse effects, which could be material. The Company can provide no assurance that it will be able to efficiently or effectively develop, commercialize and achieve market acceptance of new products and services. Additionally, the human and financial capital committed to develop new products and services may either be insufficient or result in expenses that exceed the revenue actually originated from these new products and services. In addition, the Company’s efforts to develop new products and services could distract management from current operations and could divert capital and other resources from the Company’s existing business, including its brokerage business. Failure to achieve the expected benefits of the Company’s investments may occur and could harm its business.

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report. This Item generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. All dollar amounts presented below are in USD thousands except share amounts and per share data and as otherwise noted.

2025 Business Developments

The Company announces new agent offerings, markets, and business updates at various times during the year. Significant announcements during the year ended December 31, 2025 included the following:

First Quarter 2025:

Second Quarter 2025:

Third Quarter 2025:

Fourth Quarter 2025:

Our performance is closely tied to housing market activity, which is influenced by economic conditions such as employment, consumer confidence, mortgage availability, interest rates, and the balance of supply and demand. Periods of economic growth and lower interest rates generally support higher home sales activity, while rising rates, affordability constraints, or broader economic slowdowns may reduce transaction volumes and pricing. Regulatory developments, geopolitical events, and shifts in consumer sentiment can also affect housing demand.

In 2025, U.S. home sales were relatively flat compared to 2024, and home sales prices increased 1.7%, according to the NAR. Inventory levels remain constrained, and new housing construction activity decreased during the year. These conditions may continue to limit transaction volumes in the near term.

Despite these challenges, we believe the Company is positioned for growth with a strong base of agents, an efficient cloud-based operating model, and low fixed costs. This structure allows us to adapt quickly to market changes while supporting long-term productivity and retention.

Certain provisions of our certificate of formation and bylaws could delay or prevent a change of control of the Company, which could deprive our shareholders of the opportunity to receive a premium for their shares.

Our certificate of formation authorizes our board of directors to issue shares of preferred stock in one or more series, and to fix the designations, powers, preferences and rights of each series, without further shareholder approval. Our certificate of formation also does not permit cumulative voting in the election of directors. Our bylaws provide that special meetings of shareholders may be called only by the board, the chairperson of the board, our Chief Executive Officer or president, or by holders of at least 50% of our outstanding voting stock, and our certificate of formation and bylaws require the written consent of holders of at least 55% of our outstanding capital stock for shareholders to act without a meeting. Our bylaws also impose detailed advance notice requirements on shareholders wishing to nominate directors or bring other business before a meeting. Each of these provisions could have the effect of delaying, deterring or preventing a change of control that our board of directors determines is not in the best interests of the Company and its shareholders, even if some or a majority of our shareholders might consider such a change of control to be beneficial, which could limit shareholders’ opportunity to receive a premium for their shares.

These provisions operate alongside, rather than through, Section 21.606 of the Texas Business Organizations Code (Texas’s default anti-takeover statute), our certificate of formation affirmatively elects not to be governed by Section 21.606 of the Texas Business Organizations Code (the “TBOC”), which would otherwise restrict certain business combinations with interested shareholders. In addition, our bylaws and certificate of formation adopt a majority-outstanding vote (rather than supermajority) standard for the removal of directors and for shareholder approval of mergers, asset sales and dissolutions and adopted a majority-cast vote standard for the election of directors, which is generally less protective of incumbent management than provisions found in some other companies’ governing documents. The overall effect of our organizational documents on any particular change-of-control transaction will depend on the specific facts and circumstances at the time.

The TBOC and our bylaws include provisions that may limit the venues in which certain shareholder claims may be brought and require that certain claims be resolved without a jury trial, impose an ownership threshold on derivative litigation, and provides for presumption of the business judgment rule each of which could make it more difficult or costly for shareholders to pursue claims against us.

Our bylaws provide that, unless we consent in writing to an alternative forum, the Texas Business Court (Eleventh Division), or specified Texas federal or state courts if the Business Court lacks jurisdiction, will be the exclusive forum for the following: (a) any derivative action or proceeding brought on behalf of the Company; (b) any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director, shareholder, officer or other employee of the Company to the Company or the Company’s shareholders; (c) any action asserting a claim against the Company or any current or former director, officer or other employee of the Company arising pursuant to any provision of the TBOC or the certificate of formation or the bylaws; (d) any action asserting an “internal entity claim” (as defined in Section 2.115 of the TBOC); or (e) any other action or proceeding in which the Texas Business Court has jurisdiction, subject to certain exceptions (each an “Internal Dispute”). Except to the extent that the Company consents in writing, or a court of competent jurisdiction determines in a final and unappealable judgment, that an Internal Dispute is not subject to the sole and exclusive venue and forum or jurisdiction of the Business Court, a shareholder will not be permitted to litigate an Internal Dispute in federal court or in any state court other than the Business Court, and will not be able to avail itself of any potential advantages or procedural protections of such other forums (subject to the provisions of the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act discussed below). Our bylaws separately provide that federal district courts will be the exclusive forum for claims arising under the Securities Act or the Exchange Act. Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock will be deemed to have notice of and to have consented to these provisions and our bylaws further include that any person or entity purchasing or otherwise acquiring or holding any interest in shares of stock of the Company shall be deemed to have irrevocably and unconditionally waived any right it may have to a trial by jury in any Internal Dispute. This will prevent a shareholder from requesting that a jury decide disputed issues of fact and may discourage lawsuits against us and our directors, officers, other managerial officials, and other employees.

In addition, our bylaws prohibit a shareholder from instituting or maintaining a derivative proceeding on our behalf unless that shareholder beneficially owns at least 3% of our outstanding shares at the time the proceeding is instituted. A similar ownership threshold provision based on this 2025 TBOC provision has already been challenged in court proceedings involving another Texas corporation and, although the federal district court found the provision enforceable in that case, its enforceability or governing documents containing its provisions could be subject to further challenges or interpretation. The TBOC also permits corporations to request a court, at the start of a transaction (including a related party transaction) or inquiry into a derivative claim, to determine the independence and disinterestedness of directors serving on a special committee reviewing the transaction or directors or other individuals on panels reviewing derivative claims. Subsequent challenges to independence or disinterestedness would require new facts.

In addition, Section 21.419 of the TBOC sets forth certain presumptions concerning compliance by directors and officers with respect to their duties to a corporation, including the duty of care and duty of loyalty. Specifically, in taking or declining to take any action on any matters of a corporation’s business, Section 21.419, which applies to us, provides that a director or officer is presumed to have acted (i) in good faith, (ii) on an informed basis, (iii) in furtherance of the interests of the corporation and (iv) in obedience to the law and the corporation’s governing documents. These provisions are described as codifying the “business judgment rule.” In order to succeed in a cause of action against a director or officer, the Company or a shareholder pursuing such an action must rebut one or more of the foregoing presumptions and prove with particularity the director or officer’s act or omission constituted a breach of duty as a director or officer and that such breach involved fraud, intentional misconduct, an ultra vires act or a knowing violation of law.

These provisions may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable, may increase the cost of bringing a claim, may discourage lawsuits against us and our directors and officers, and may result in less favorable outcomes to shareholders than would result from a jury trial or from litigation in a forum other than the one designated in our bylaws and may result in shareholders and the company incurring additional costs or delays associated with resolving such actions, including in other jurisdictions. Shareholders will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder as a result of these provisions.

The Company utilizes aNPS as a metric to measure agent satisfaction. aNPS is calculated based on responses to a periodic survey in which agents are asked, on a scale of 0 to 10, how likely they are to recommend our company to a fellow real estate professional.

Litigation Contingency

For the three and six months ended June 30, 2026, we recorded a litigation contingency expense reflecting a new accrual recorded in connection with the Tuccori Settlement based on the preliminary court approval granted in May 2026. Litigation contingency expense represents accruals for probable and estimable losses related to ongoing legal matters. See Note 11 – Commitments and Contingencies to the unaudited condensed consolidated financial statements for additional information regarding the Tuccori Settlement

Legal Costs non-recurring

For both the three months and six months ended June 30, 2026, we incurred legal costs of $4,485 driven by non-recurring costs incurred in connection with strategic corporate development initiatives. These costs are non-recurring in nature and not reflective of ongoing core operations and we did not incur such costs in 2025.

The Company’s provision for income tax expense (benefit) amounted to $1.4 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively, which represented effective tax rates of (23%) and (19%), respectively. The effective tax rate differs from our statutory rates in both periods primarily due to foreign and domestic mix of earnings, and stock-based compensation.

For the six months ended June 30, 2026, cash used in investing activities decreased due to lower cash used for investments in affiliates and purchases of property and equipment, partially offset by increased cash used for the purchase of a business compared to the same period in 2025.

For the six months ended June 30, 2026, net cash flows used in financing activities decreased compared to the same period in 2025, due to no stock repurchases in the first half of 2026 compared to $29.9 million of stock repurchases for the same period in 2025.