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

Investing in our securities involves a high degree of risk. Before making any investment decision, you should consider carefully the following risks and other information in this Report, including our consolidated financial statements and related notes. The risks and uncertainties we describe are not the only ones facing us. Additional risks and uncertainties that we are unaware of or that we believe are not material at the time could also materially adversely affect our business, financial condition or results of operations. In any case, the value of our Common Stock could decline, and you could lose all or part of your investment. Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business and Industry

Our business is highly dependent on macroeconomic and U.S. residential real estate market conditions, including those affecting the broader mortgage market. Deterioration of such conditions may have a negative impact on our rate of growth and potential to achieve or maintain profitability.

Our success depends largely on the health of the U.S. residential real estate industry, which is seasonal, cyclical, and affected by changes in general economic conditions beyond our control. Any of the following macroeconomic factors could adversely affect demand for residential real estate, result in falling home prices, and harm our business:

We may not achieve or maintain profitability in the future.

We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business. Additionally, we may incur significant losses in the future for a number of reasons, including:

Accordingly, we may not be able to achieve or maintain profitability and we may continue to incur significant losses in the future.

Our business is concentrated in certain geographic markets. Failing to grow in those markets or any disruptions in those markets could harm our business.

For 2024 and 2025, a substantial majority of our real estate revenue, respectively, was derived from our top markets, which consists primarily of major metropolitan areas in California. These markets are primarily major metropolitan areas, where home prices and transaction volumes are generally higher than other markets. Local and regional economic conditions in these markets differ materially from prevailing conditions in other parts of the United States. In addition, due to the higher home prices in these markets, our real estate revenue and gross margin is generally higher in these markets than in our smaller markets. Any overall or disproportionate downturn in demand or economic conditions in any of our largest markets, particularly if we are not able to increase revenue from our other markets, could result in a decline in our revenue and harm our business.

Our future market share gains may take longer than planned and cause us to incur significant costs.

We represent people buying and selling homes in California, in the future, we plan to expand to more markets in the United States. We have a limited operating history in many of these markets. Expanding our services in existing and new markets and increasing the depth and breadth of our presence imposes significant burdens on our marketing, compliance, and other administrative and managerial resources. Our plan to expand and deepen our market share in our existing markets and possibly expand into additional markets is subject to a variety of risks and challenges. These risks and challenges include the varying economic and demographic conditions of each market, competition from local and regional residential brokerage firms, variations in transaction dynamics, and pricing pressures. Additionally, our earlier markets typically have higher mean home prices than our more recent markets. In addition, many valuable markets have established residential brokerages with superior local referral networks, name recognition, and perceived local knowledge and expertise. If we cannot manage our expansion efforts efficiently, our market share gains could take longer than planned and our related costs could exceed our expectations. In addition, we could incur significant costs to seek to expand our market share, and still not succeed in attracting sufficient customers to offset such costs.

We expect our revenue and results of operations to fluctuate on a quarterly and annual basis.

Our revenue and results of operations are likely to vary significantly from period to period and may fail to match expectations as a result of a variety of factors, many of which are outside our control. The other risk factors discussed in this “Risk Factors” section may contribute to the variability of our quarterly and annual results. In addition, our revenue and results may fluctuate as a result of:

As a result of potential variations in our revenue and results of operations, period-to-period comparisons may not be meaningful and the results of any one period should not be relied on as an indication of future performance. In addition, our results of operations may not meet the expectations of investors or public market analysts who follow us, which may adversely affect our stock price.

Our business model and growth strategy depend on our ability to attract homebuyers and home sellers to our website and mobile application in a cost-effective manner.

Our success depends on our ability to attract homebuyers and home sellers to our website and mobile application in a cost-effective manner. Our website and mobile application are our primary channels for meeting customers. We rely on organic traffic generated from search engines and other unpaid sources to meet customers. We use a variety of media in our marketing efforts, including online and television advertising and social media, to drive traffic. We intend to continue to invest resources in our marketing efforts.

We are heavily dependent on digital marketing initiatives such as search engine optimization to improve our website’s search result ranking and generate new customer leads. We also rely on other marketing methods such as social media marketing, paid search advertising, and targeted email communications. Advertising platforms, such as Facebook, Google, and others, may raise their rates significantly, and we may choose to use alternative and less expensive channels, which may not be as effective at attracting homebuyers and home sellers to our website and mobile application. We also use video advertising, which may have significantly higher costs than other methods. In addition, we may be required to expand into or continue to invest in more expensive channels than those we are currently in, which could harm our business.

These marketing efforts may not succeed for a variety of reasons, including changes to search engine algorithms, ineffective campaigns across marketing channels, and limited experience in certain marketing channels like television. External factors beyond our control may also affect the success of our marketing initiatives, such as filtering of our targeted communications by email servers, homebuyers and home sellers failing to respond to our marketing initiatives, and competition from third parties. Any of these factors could reduce the number of homebuyers and home sellers to our website and mobile application. We also anticipate that our marketing efforts will become increasingly expensive as competition increases and we seek to expand our business in existing markets. Generating a meaningful return on our marketing initiatives may be difficult. If our strategies do not attract homebuyers and home sellers efficiently, our business and growth would be harmed. Even if we successfully increase revenue as a result of these efforts, that additional revenue may not offset the related expenses we incur.

We rely heavily on internet search engines and mobile application stores to direct traffic to our website and our mobile application, respectively.

We rely on Internet search engines, such as Google, Bing and Yahoo!, to drive traffic to our website and on mobile application stores, such as Apple iTunes Store and the Android Play Store, for downloads of our mobile application. The number of visitors to our website and mobile application downloads depends in large part on how and where our website and mobile application rank in Internet search results and mobile application stores, respectively. For example, when a user types a property address into an Internet search engine, we rely on that search engine to rank our webpages in the search results and to direct a user to the listing on our website. While we use search engine optimization to help our webpages rank highly in search results, maintaining our search result rankings is not within our control. Internet search engines frequently update and change their ranking algorithms, referral methodologies, or design layouts, which determine the placement and display of a user’s search results. In some instances, Internet search engines may change these rankings in order to promote their own competing services or the services of one or more of our competitors. Similarly, mobile application stores can change how they display searches and how mobile applications are featured. For instance, editors at the Apple iTunes Store can feature prominently editor-curated mobile applications and cause the mobile application to appear larger than other applications or more visibly on a featured list. Listings on our website and mobile application have experienced fluctuations in search result and mobile application rankings in the past, and we anticipate fluctuations in the future. If our website or listings on our website fail to rank prominently in Internet search results, our website traffic could decline. Likewise, a decline in our website and mobile application traffic could reduce the number of customers for our services.

Cyber-attacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition.

Threats to network and data security are constantly evolving and becoming increasingly diverse and sophisticated. Our products and services, as well as our servers and computer systems and those of third parties that we rely on, are subject to cybersecurity risks inherent to companies that process personal data. An increasing number of organizations have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks.

To that end, we employ robust security to defend against intrusion and attack of our systems, to protect our data and to resolve and mitigate the impact of any incidents. We also regularly educate our employees on these risks, and provide training to them to learn how to identify and respond to the same. Like most companies today, despite these efforts there is no way to fully remove the possibility of a cybersecurity incident from occurring and we, and third parties that we rely on, will likely experience cyber incidents in the future. Thus, in addition to the identified risk above, any additional future cyber incidents and resulting data breaches could result in substantial liability, regulatory actions, financial penalties, significant out of pocket costs, damage to our data and ability to do business, and reputational harm.

We and third parties that we rely on may experience cybersecurity incidents due to human error, malfeasance, system errors or vulnerabilities, or other issues. Actual or perceived cybersecurity incidents relating to our data or confidential information could subject us to regulatory investigations and orders, litigation, indemnity obligations, damages, penalties, fines and other costs in connection with actual and alleged contractual breaches, violations of applicable laws and regulations and other liabilities. Any such incident could also materially damage our reputation and harm our business, results of operations and financial condition. We maintain errors, omissions, and cyber liability insurance policies covering certain security and privacy damages. However, we cannot be certain that our coverage will always be adequate for the liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all, especially depending on the facts of the situation and method of incident.

We may not be able to obtain and maintain accurate, comprehensive, or reliable data, because data suppliers may withdraw data that we have previously collected or withhold data from us in the future or we may fail to maintain and improve our methods and technologies, or anticipate new methods or technologies, for data collection, organization, and cleansing. As a result, we may experience reduced demand for our products and services and loss of customer confidence.

Our success depends on our users’ confidence in the depth, breadth, and accuracy of our data. The task of establishing and maintaining accurate data is challenging and expensive. The depth, breadth, and accuracy of our data differentiates us from our competitors. If our data, including the data we obtain from third parties and our data extraction, cleaning, and insights, are not current, accurate, comprehensive, or reliable, it would increase the likelihood of negative user experiences, which in turn would reduce the likelihood of users utilizing our app or website and harm our reputation, making it more difficult to obtain new users, which could have an adverse effect on our business, results of operations, and financial condition.

If we cannot obtain and provide to our customers comprehensive and accurate real estate listings quickly, or at all, our business will suffer.

Our ability to attract consumers to our website and mobile application is heavily dependent on our timely access to comprehensive and accurate real estate listings data. We get listings data primarily from MLS in the markets we serve. We also source listings data from public records, other third-party listing providers, and individual homeowners and brokers. Many of our competitors and other real estate websites also have access to MLS and other listings data, including proprietary data, and may be able to source listings data or other real estate information faster or more efficiently than we can. Since MLS participation is voluntary, brokers and homeowners may decline to post their listings data to their local MLS or may seek to change or limit the way that data is distributed. A competitor or another industry participant could also create an alternative listings data service, which may reduce the relevancy and comprehensive nature of the MLS. If MLS cease to be the predominant source of listings data in the markets that we serve, we may be unable to get access to comprehensive listings data on commercially reasonable terms, or at all, and we may be unable to provide timely listings to our customers.

If we do not comply with the rules, terms of service and policies of the MLS, our access to and use of listings data may be restricted or terminated and harm our business.

We must comply with the MLS’s rules, terms of service and policies to access and use its listings data. Each MLS that we belong to has adopted its own rules, terms of service, and policies governing, among other things, how MLS data may be used, and listings data must be displayed on our website and mobile application. These rules typically do not contemplate multi-jurisdictional online brokerages like ours and vary widely among markets. They also are in some cases inconsistent with the rules of other MLS such that we are required to customize our website, mobile application, or service to accommodate differences between MLS rules. Complying with the rules of each MLS requires significant investment, including personnel, technology and development resources, other resources, and the exercise of considerable judgment. If we are deemed to be noncompliant with an MLS’s rules, we may face disciplinary sanctions in that MLS, which could include monetary fines, restricting or terminating our access to that MLS’s data, or other disciplinary measures. The loss or degradation of this listings data could materially and adversely affect traffic to our website and mobile application, making us less relevant to consumers and restricting our ability to attract customers. It also could reduce agent and customer confidence in our services and harm our business.

Competition in the residential brokerage industry is intense and if we cannot compete effectively, our business will be harmed.

We face intense competition in each of the markets we serve. We compete primarily against other residential brokerages, which include operations affiliated with national or local brands and small independent brokerages. We also compete with a growing number of AI-based residential brokerages and others who operate with non-traditional real estate business models. Competition with brokerages is particularly intense in some of the densely populated metropolitan markets we serve. To capture and retain market share, we must compete successfully against other brokerages, not only for customers, but also for high-performing agents and other critical employees.

The residential brokerage industry has low barriers to entry for new participants, including other technology-driven brokerages that offer lower commissions than the traditional pricing model. We may change our pricing strategies in response to a number of factors, including competitive pressures or in response to transaction volume fluctuations in particular markets we serve. As competitors introduce new offerings that compete with ours or reduce their commission rates, we may need to change our pricing strategies to compete effectively. Any such changes, particularly in the top markets we serve, may affect our ability to compete successfully and harm our business.

Many of our brokerage competitors have substantial competitive advantages, such as longer operating histories, greater financial resources, stronger brand recognition, more management, sales, marketing and other resources, and extensive relationships with participants in the residential real estate industry, including third-party data providers such as MLS. Consequently, these brokerages may have an advantage in recruiting and retaining agents, attracting consumers, acquiring customers, and growing their businesses. They may be able to provide consumers with offerings that are different from or superior to those we provide. They may also be acquired by third parties with greater resources than ours, which would further strengthen and enable them to compete more vigorously or broadly with us. The success of our competitors could result in our loss of market share and harm our business.

Our revenue may not continue to grow at its recent pace, or at all.

Our revenue may not continue to grow at the same pace as it has over the past several years. We believe that our future revenue growth will depend, among other factors, on our ability to:

We may not be successful in our efforts to do any of the foregoing, and any failure to be successful in these matters could adversely affect our revenue growth. You should not consider our past revenue growth to be indicative of our future growth.

If we’re not able to deliver a rewarding experience on mobile devices, whether through our mobile website or mobile application, we may be unable to attract and retain customers.

Developing and supporting a mobile website and mobile application across multiple operating systems and devices requires substantial time and resources. We may not be able to consistently provide a rewarding customer experience on mobile devices and, as a result, customers we meet through our mobile website or mobile application may not choose to use our brokerage services, or those of our partner agents, at the same rate as customers we meet through our website.

As new mobile devices and mobile operating systems are released, we may encounter problems in developing or supporting our mobile website or mobile application for them. Developing or supporting our mobile website or mobile application for new devices and their operating systems may require substantial time and resources. The success of our mobile website and mobile application could also be harmed by factors outside our control, such as:

Adverse developments in economic conditions could harm our business.

Our business is sensitive to general economic conditions that are outside our control. These conditions include interest rates, inflation, fluctuations in consumer confidence, fluctuations in equity and debt capital markets, availability of credit, and the strength of financial institutions, which are sensitive to changes in the general macroeconomic environment. A host of factors beyond our control could cause fluctuations in these conditions, including the political environment, disruptions in an economically significant geographic region, or equity or debt markets, acts or threats of war, or terrorism, any of which could harm our business.

Our growth may be limited due to historically low home inventory levels.

Traditionally, a “balanced” residential real estate industry requires enough homes on the market to satisfy six months of homebuyer demand. In recent years, home inventory has remained at historically low levels in many parts of the United States. Low inventory levels can harm our ability to attract customers, inflate home prices, increase competition for homes, increase our operating expenses because of home touring and offer-writing activities that do not result in closed home purchases, and reduce transaction volumes. As a result, our customers may be unable to complete a sufficient number of real estate transactions to sustain or grow our transaction volume and revenue.

We are, and expect in the future to become, subject to an increasing variety of federal, state and local laws and regulations, many of which are continuously evolving, which increases our compliance costs and could subject us to claims or otherwise harm our business.

We are currently subject to a variety of, and may in the future become subject to, additional, federal, state, and local laws that are continuously changing, including laws related to: the real estate, brokerage, title, and mortgage industries; mobile- and Internet-based businesses; and data security, advertising, privacy and consumer protection laws. For instance, we are subject to federal laws such as the Fair Housing Act of 1968, or FHA, and the Real Estate Settlement Procedures Act of 1974. These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations.

In some cases, it is unclear as to how such laws and regulations affect us based on our business model that is unlike traditional brokerages, and the fact that those laws and regulations were created for traditional real estate brokerages. If we are unable to comply with and become liable for violations of these laws or regulations, or if unfavorable regulations or interpretations of existing regulations by courts or regulatory bodies are implemented, we could be directly harmed and forced to implement new measures to reduce our liability exposure. It could cause our operations in affected markets to become overly expensive, time consuming, or even impossible. This may require us to expend significant time, capital, managerial, and other resources to modify or discontinue certain operations, limiting our ability to execute our business strategies, deepen our presence in our existing markets, or expand into new markets. In addition, any negative exposure or liability could harm our brand and reputation. Any costs incurred as a result of this potential liability could harm our business.

Further, due to the geographic scope of our operations and the nature of the services we provide, we may be required to obtain and maintain additional real estate brokerage, title insurance agency, and mortgage broker licenses in certain states where we operate. Additionally, if we enter new markets, we may be required to comply with new laws, regulations, and licensing requirements. As part of licensing requirements, we are typically required to designate individual licensees of record. We cannot assure you that we are, and will remain at all times, in full compliance with all real estate, title insurance, and mortgage licensing laws and regulations, and we may be subject to fines or penalties, including license revocation, for any non-compliance. If in the future a state agency were to determine that we are required to obtain additional licenses in that state in order to transact business, or if we lose an existing license or are otherwise found to be in violation of a law or regulation, our business operations in that state may be suspended until we obtain the license or otherwise remedy the compliance issue.

Our failure to comply with the requirements governing the licensing and conduct of real estate brokerage and brokerage-related businesses in the jurisdictions in which we operate could adversely affect our business.

Linkhome, as a licensed real estate brokerage firm, and our agents are required to comply with the requirements governing the licensing and conduct of real estate brokerage and brokerage-related businesses in the markets where we operate. These laws and regulations contain general standards for and limitations on the conduct of real estate brokerages and agents, including those relating to licensing of brokerages and agents, fiduciary and agency duties, administration of trust funds, collection of commissions, advertising, and consumer disclosures. Under applicable laws and regulations, our agents, managing brokers, designated brokers, and other individual licensees have certain duties and are responsible for the conduct of real estate brokerage activities. If we or our agents fail to obtain or maintain the licenses and permits for conducting our brokerage business required by law or fail to conduct ourselves in accordance with the associated regulations, the relevant government authorities may order us to suspend relevant operations or impose fines or other penalties. There is no assurance that we will be able to obtain or renew these licenses in a timely manner, or at all.

Our fee-based service offerings may require additional real estate, mortgage, title, insurance, or other licenses, and failure to obtain or maintain such licenses could limit our growth, subject us to penalties, or force us to discontinue certain services.

We currently derive revenue from, and intend to expand, fee-based services such as mortgage referral, property management, title-related facilitation and other ancillary products. Many of these activities are governed by complex and continuously evolving federal, state and local laws, including licensing regimes administered by real estate commissions, departments of insurance and financial services regulators. We are not presently licensed to offer title insurance or certain other regulated services in any jurisdiction, and there is no assurance that we will be able to obtain or maintain the required approvals on a timely basis or at all. Operating without the appropriate licenses, or failing to comply with associated conduct requirements, could result in civil or criminal penalties, monetary fines, cease-and-desist orders, rescission of contracts, restitution to customers, reputational damage and the suspension or revocation of existing licenses. Any of these outcomes could impair our ability to grow our fee-based revenue streams and could materially and adversely affect our business and financial performance.

We are subject to certain risks related to litigation filed by or against us, and adverse results may harm our business and financial condition.

We are from time to time involved in, and may in the future be subject to, claims, suits, government investigations, and proceedings arising from our business. We cannot predict with certainty the cost of defense, the cost of prosecution, insurance coverage, or the ultimate outcome of litigation and other proceedings filed by or against us, including remedies, damage awards, and penalties. Regardless of outcome, any such claims or actions could require significant time, money, managerial and other resources, result in negative publicity, and harm our business and financial condition. Such litigation and other proceedings may relate to:

In addition, class action lawsuits, can often be particularly vexatious litigation given the breadth of claims, the large potential damages claimed, and the significant costs of defense. The risks of litigation become magnified and the costs of settlement increase in class actions in which the courts grant partial or full certification of a large class. Also, insurance coverage may be unavailable for certain types of claims and, even where available, insurance carriers may dispute coverage for various reasons, including the cost of defense. Further, such insurance may not be sufficient to cover the losses we incur.

Any failure to maintain, protect, and enhance our brand could hurt our ability to grow our business, particularly in markets where we have limited brand recognition.

Maintaining, protecting, and enhancing our brand is critical to growing our business, particularly in markets where we have limited brand recognition and compete with well-known traditional brokerages with longer histories and established community presence. This will partially depend on our ability to continue to provide high-value, customer-oriented, and differentiated services, and we may not be able to do so effectively. Enhancing and maintaining the quality of our brand may require us to make substantial investments, such as in marketing and advertising, technology, and agent training. If we do not successfully build and maintain a strong brand, our business could be harmed. In addition, despite these investments, our brand could be damaged from other events that are or may be beyond our control, such as litigation and claims, our failure to comply with local laws and regulations, and illegal activity such as phishing scams or cybersecurity attacks targeted at us, our customers, or others.

We are subject to an array of employment-related laws and regulations and failure to comply with these obligations could harm our business.

Our relationship with our employees is subject to various tax, wage and hour, unemployment, workers’ compensation, right to organize, anti-discrimination, workplace safety, and other employment-related laws. Each state has its own unique wage and hour laws, which have been the subject of growing litigation nationwide. In addition, federal and state regulatory authorities have increasingly challenged the classification of workers as independent contractors rather than as employees. Legislators have also proposed legislation to make it easier to reclassify independent contractors as employees, including legislation to increase recordkeeping requirements for employers of independent contractors, and to abolish safe harbors allowing certain individuals to be treated as independent contractors. Federal agencies and each state have their own rules and tests for determining the classification of workers, as well as whether employees meet exemptions from minimum wages and overtime laws. These tests consider many factors that also vary from state to state and have evolved based on case law, regulations, and legislative changes and frequently involve factual analysis as well. We may face significant penalties and damages if we are found to be noncompliant with any of these laws and regulations.

If our technology and development efforts are not successful, our business may be harmed.

Headquartered in Irvine, California, the Company currently focuses on the California markets and is gradually expanding its operations into additional markets across the United States.

Linkhome is developing an artificial intelligence–enabled real estate services platform designed to improve the efficiency, transparency and accessibility of residential real estate transactions. Our platform integrates traditional real estate brokerage services with technology-driven tools that streamline property search, transaction coordination and related services for homebuyers and sellers.

Through our operating subsidiary, Linkhome Realty, we provide a range of real estate-related services, including residential real estate brokerage services, fintech-enabled services, property management services and mortgage advisory services. Our objective is to provide clients with a comprehensive service ecosystem that supports multiple stages of the real estate transaction lifecycle.

In addition, as part of our fintech initiatives, we operate a Cash Offer program designed to help homebuyers compete more effectively in competitive real estate markets by enabling them to present all-cash offers on properties. Under this program, the Company may temporarily acquire residential properties using its own capital and subsequently transfer those properties to the end buyer within a short period of time. We believe this program enhances our ability to attract clients and facilitates more efficient real estate transactions.

Historically, funding for the Cash Offer program primarily came from investments made by our Chief Executive Officer and other shareholders. Following our initial public offering in 2025, we expect to continue expanding the program using a combination of available capital, operating cash flows and other financing sources.

Our long-term strategy is to continue developing a technology-driven real estate platform that integrates artificial intelligence with real estate and financial services, enabling us to improve transaction efficiency, expand our service capabilities and support the long-term growth of our business.

Technology and AI Platform Strategy

We are developing an artificial intelligence–enabled real estate platform designed to enhance the efficiency, transparency and accessibility of residential real estate transactions. Our technology strategy focuses on integrating data, artificial intelligence and digital tools into the real estate transaction process to improve property discovery, transaction coordination and client engagement.

Our platform is designed to support multiple stages of the real estate transaction lifecycle, including property search, client matching, transaction management and related financial services. By leveraging artificial intelligence and data analytics, we aim to provide users with more relevant property information, improve transaction efficiency and enhance the overall customer experience.

Over time, we intend to expand the capabilities of our platform to include additional technology-enabled services, such as automated property analysis, intelligent client matching and digital transaction management tools. We believe that integrating technology with traditional real estate services will enable us to scale our operations more efficiently and strengthen our competitive position in the real estate market.

Our long-term objective is to build a technology-driven real estate platform that connects property search, brokerage services and financial services within a unified ecosystem. We believe this approach will enable us to create a more streamlined and transparent path to homeownership while supporting the long-term growth of our business.

Fintech-Enabled Cash Offer Program

In competitive housing markets, sellers often prefer offers that are not contingent on mortgage financing. As part of our fintech-enabled services, we operate a Cash Offer program designed to help clients present all-cash offers on residential properties, which may increase the likelihood that their offers are accepted.

Under this program, the Company may temporarily acquire a residential property using its own capital and subsequently transfer the property to the client once the client’s financing is finalized. These transactions are typically completed within a short time frame.

We believe our Cash Offer program represents a fintech-enabled solution within the residential real estate transaction process, providing several strategic benefits:

For the year ended December 31, 2025, the Company provided real estate agency services to Na Li, assisting with the sale of one property. The Company earned $126,000 in real estate agency commission from Na Li but paid a referral fee of $28,440 to Haiyan Ma for introducing the buyer, resulting in net revenue of $97,560 recognized by the Company.

For the years ended December 31, 2025 and 2024, we completed 20 and 6 property transactions, respectively, through the Cash Offer program. The increase in revenue was primarily driven by the higher number of transactions and increased transaction volume. The average transaction price was approximately $1.02 million and $1.08 million for the years ended December 31, 2025 and 2024, respectively.

Revenue from home renovation services decreased by $162,457, or 66.25%, from $245,226 for the year ended December 31, 2024 to $82,769 for the year ended December 31, 2025. The decrease was primarily attributable to a lower number of renovation projects. We completed three renovation projects in 2025, compared to 15 renovation projects in 2024.

Revenue from mortgage referral services increased by $60,204, or 1,486.52%, from $4,050 for the year ended December 31, 2024 to $64,254 for the year ended December 31, 2025. The increase was primarily driven by an increase in the number of mortgage referrals. We assisted 12 clients in securing mortgage loans in 2025, compared to one client in 2024.

Revenue from property management services increased by $18,872, or 115.95%, from $16,276 for the year ended December 31, 2024 to $35,148 for the year ended December 31, 2025. The increase was primarily attributable to growth in tenant placement services and the number of properties under ongoing property management. We completed 10 tenant placements in 2025, compared to nine tenant placements in 2024. In addition, the number of properties under ongoing property management increased to six properties as of December 31, 2025, compared to three properties as of December 31, 2024.

Gross profit from property purchases and sales through the Cash Offer program decreased to $149,465 in 2025, compared to $639,539 in 2024, primarily due to lower margins on these transactions. Gross profit from real estate services decreased from $830,842 in 2024 to $623,552 in 2025, primarily due to lower home renovation service revenue and lower real estate agency commission revenue.

Legal and accounting expenses increased by $118,887, primarily due to additional costs associated with regulatory compliance, legal, accounting and other professional services following the Company’s initial public offering. Rent expenses increased by $61,998, primarily due to the Company relocating to a new office in 2025 with higher lease costs, as well as additional technology-related lease arrangements. Payroll and payroll tax expenses increased by $31,252, primarily due to the hiring of additional employees. Depreciation and amortization expenses increased by $28,240, primarily due to purchases of furniture, leasehold improvements, and the capitalization and amortization of internally developed software, including the Company’s website and mobile application. Other general and administrative expenses increased by $56,860, primarily due to higher administrative and operational costs associated with the expansion of the Company’s business activities.

Other Income (Expenses), Net

Other income (expenses), net was income of $49,775 for the year ended December 31, 2025, compared to expense of $1,832 for the year ended December 31, 2024. Other income in 2025 primarily consisted of interest income and other miscellaneous income, partially offset by interest expense and realized loss on trading securities. Other expenses in 2024 primarily consisted of interest expense, partially offset by credit card rebates and bank rewards.

Income Tax Expense

Income tax expense for the years ended December 31, 2025 and 2024 were $51,333 and $309,352, respectively, representing a decrease of $258,019, or 83.41%. The decrease in income tax expense was primarily attributable to lower net income before income taxes in 2025.

Revenue from property purchases and sales through our Cash Offer program accounted for 97.68% and 96.68% of net revenues for the six months ended June 30, 2026 and 2025, respectively. Revenue from this program decreased by $79,790, or 0.79%, from $10,159,990 for the six months ended June 30, 2025 to $10,080,200 for the six months ended June 30, 2026.

For the six months ended June 30, 2026 and 2025, we completed nine and thirteen property transactions, respectively, through the Cash Offer program. The decrease in the number of transactions was substantially offset by an increase in average transaction price from approximately $0.78 million for the six months ended June 30, 2025 to approximately $1.12 million for the six months ended June 30, 2026. Management believes the lower transaction count was primarily attributable to elevated interest rates and softer residential real estate market activity, while the higher average transaction price primarily reflected the mix of properties transacted during the period.

Revenue from mortgage referral services decreased by $11,483, or 56.56%, from $20,303 for the three months ended June 30, 2025 to $8,820 for the three months ended June 30, 2026. We assisted three clients in securing mortgage loans during each period. The decrease was primarily attributable to lower average referral fees earned per completed loan transaction. Referral fees vary depending on factors such as the amount and terms of the underlying mortgage loan and the applicable referral arrangement with the mortgage service provider.

Real estate service revenue accounted for 2.32% and 3.32% of net revenues for the six months ended June 30, 2026 and 2025, respectively. Real estate service revenue decreased by $109,945, or 31.50%, from $348,992 for the six months ended June 30, 2025 to $239,047 for the six months ended June 30, 2026. The decrease was primarily attributable to decreases in real estate agency commission revenue and mortgage referral revenue, partially offset by increases in property management and home renovation service revenues.

Real estate agency commission revenue decreased by $142,236, or 60.25%, from $236,086 for the six months ended June 30, 2025 to $93,850 for the six months ended June 30, 2026. The decrease was primarily attributable to fewer real estate transactions and lower total transaction volume, partially offset by a higher average transaction price. For the six months ended June 30, 2026 and 2025, we completed six and ten real estate transactions, respectively, with total transaction volume of approximately $6.3 million and $9.2 million, respectively. The average transaction price increased from approximately $0.92 million for the six months ended June 30, 2025 to approximately $1.05 million for the six months ended June 30, 2026.

Revenue from property management services increased by $6,230, or 176.29%, from $3,534 for the six months ended June 30, 2025 to $9,764 for the six months ended June 30, 2026. The increase was primarily attributable to growth in tenant placement services and ongoing property management activities. We completed two tenant placements during the six months ended June 30, 2026, compared to no tenant placements during the same period in 2025. In addition, the number of properties under ongoing property management increased to five properties as of June 30, 2026, compared to three properties as of June 30, 2025.

Revenue from home renovation services increased by $30,731, or 37.13%, from $82,769 for the six months ended June 30, 2025 to $113,500 for the six months ended June 30, 2026. We completed two and three home renovation projects during the six months ended June 30, 2026 and 2025, respectively. Despite completing fewer projects, revenue increased primarily due to differences in project mix and scope of work, as the projects completed during the six months ended June 30, 2026 involved higher-value renovation work on average than those completed during the same period in 2025.

Revenue from mortgage referral services decreased by $4,670, or 17.55%, from $26,603 for the six months ended June 30, 2025 to $21,933 for the six months ended June 30, 2026. We assisted six clients in securing mortgage loans during each period. The decrease was primarily attributable to lower average referral fees earned per completed loan transaction. Referral fees vary depending on factors such as the amount and terms of the underlying mortgage loan and the applicable referral arrangement with the mortgage service provider.

Cost of real estate services increased by $18,910, or 30.39%, from $62,224 for the three months ended June 30, 2025 to $81,134 for the three months ended June 30, 2026. Cost of real estate services during both periods consisted primarily of costs associated with home renovation services. The increase was primarily attributable to differences in the mix and scope of renovation projects completed during the respective periods, as the projects completed during the three months ended June 30, 2026 involved higher-value renovation work than those completed during the same period in 2025.

Cost of property purchases and sales through Cash Offer decreased by $208,928, or 2.08%, from $10,065,714 for the six months ended June 30, 2025 to $9,856,786 for the six months ended June 30, 2026. The decrease was primarily attributable to fewer Cash Offer transactions completed during the six months ended June 30, 2026. We completed nine Cash Offer transactions during the six months ended June 30, 2026, compared to thirteen during the same period in 2025. The impact of the lower transaction count was substantially offset by higher average transaction values, as the properties transacted during the six months ended June 30, 2026 were higher-priced on average than those transacted during the same period in 2025.

Cost of revenues for the three months ended June 30, 2026 and 2025 was $5,253,058 and $4,690,014, respectively, representing an increase of $563,044, or 12.01%. The increase was primarily driven by a $544,134 increase in costs associated with property purchases and sales through the Cash Offer program and an $18,910 increase in costs associated with real estate services. The increase in Cash Offer costs primarily reflected the higher average cost of properties sold during the period, while the increase in real estate service costs was primarily attributable to higher home renovation service costs associated with differences in the mix and scope of renovation projects completed during the three months ended June 30, 2026.

The following table summarizes our consolidated results of operations for the six months ended June 30, 2026 and 2025:

Net revenues for the six months ended June 30, 2026 and 2025 were $10,319,247 and $10,508,982, respectively, representing a decrease of $189,735, or 1.81%. The decrease was primarily driven by a $79,790 decrease in revenue from property purchases and sales through the Cash Offer program and a $109,945 decrease in real estate service revenue. The decrease in Cash Offer revenue was primarily attributable to fewer transactions, substantially offset by higher average transaction prices, while the decrease in real estate service revenue was primarily attributable to lower real estate agency commission and mortgage referral revenues, partially offset by higher property management and home renovation revenues.

Cost of revenues for the six months ended June 30, 2026 and 2025 was $9,974,500 and $10,137,523, respectively, representing a decrease of $163,023, or 1.61%. The decrease was primarily driven by a $208,928 decrease in costs associated with property purchases and sales through the Cash Offer program, partially offset by a $45,905 increase in costs associated with real estate services. The decrease in Cash Offer costs primarily reflected fewer transactions completed during the six months ended June 30, 2026, partially offset by the higher average cost of properties sold. The increase in real estate service costs was primarily attributable to higher real estate agency service costs associated with commission splits paid to cooperating external agents and higher home renovation service costs.

Gross Profit and Gross Margin

Gross profit for the six months ended June 30, 2026 and 2025 was $344,747 and $371,459, respectively, representing a decrease of $26,712, or 7.19%. Gross margin decreased to 3.34% for the six months ended June 30, 2026 from 3.53% for the same period in 2025. The decrease in gross profit and gross margin was primarily attributable to lower gross profit from real estate services, partially offset by higher gross profit from property purchases and sales through the Cash Offer program.

Gross profit from property purchases and sales through the Cash Offer program increased by $129,138, from $94,276 for the six months ended June 30, 2025 to $223,414 for the six months ended June 30, 2026, primarily due to more favorable margins on Cash Offer transactions completed during the six months ended June 30, 2026.

Gross profit from real estate services decreased by $155,850, from $277,183 for the six months ended June 30, 2025 to $121,333 for the six months ended June 30, 2026. The decrease was primarily attributable to lower gross profit from real estate agency services, reflecting lower real estate agency commission revenue and higher costs associated with commission splits paid to cooperating external agents, partially offset by stronger gross profit from home renovation services.

Selling Expenses

Selling expenses for the six months ended June 30, 2026 and 2025 were $24,153 and $24,796, respectively, representing a decrease of $643, or 2.59%. The decrease was primarily attributable to lower advertising and marketing expenditures, partially offset by higher staging expenses during the six months ended June 30, 2026 compared to the same period in 2025.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2026 and 2025:

General and administrative expenses for the six months ended June 30, 2026 and 2025 were $732,201 and $209,567, respectively, representing an increase of $522,634, or 249.39%. The increase was primarily driven by higher legal and professional fees, rent expense, and depreciation and amortization expenses, together with increases in payroll and payroll tax expenses and other general and administrative expenses.

Legal and professional fees increased by $232,111, primarily due to higher legal, accounting, audit, SEC reporting and other professional service costs associated with operating as a public company. In addition, certain professional fees incurred during the six months ended June 30, 2025 were capitalized as deferred offering costs in connection with the Company’s IPO rather than recognized as general and administrative expenses, which impacted the period-over-period comparison. Rent expense increased by $100,152, primarily due to higher office lease costs and additional technology-related lease arrangements. Depreciation and amortization expenses increased by $84,879, primarily due to amortization of internally developed software placed in service in December 2025, as well as depreciation associated with leasehold improvements and other fixed assets. Payroll and payroll tax expenses increased by $32,876, primarily due to increases in employee compensation. Other general and administrative expenses increased by $72,616, primarily due to higher office expenses, insurance expenses and travel expenses during the six months ended June 30, 2026.

Other Income (Expenses), Net

Other income, net was $80,982 for the six months ended June 30, 2026, compared to other expenses, net of $4,159 for the six months ended June 30, 2025. Other income during the six months ended June 30, 2026 primarily consisted of interest income, realized gains on trading securities and other miscellaneous income, partially offset by unrealized losses on trading securities and interest expense. Other expenses during the six months ended June 30, 2025 primarily consisted of realized losses on trading securities, interest expense and other expenses.

Income Tax (Benefit) Expense

Income tax benefit for the six months ended June 30, 2026 was $67,450, compared to income tax expense of $37,890 for the six months ended June 30, 2025. The income tax benefit during the six months ended June 30, 2026 was primarily attributable to the Company’s loss before income taxes and the recognition of deferred tax assets related to net operating loss carryforwards and unrealized losses on trading securities. Income tax expense during the six months ended June 30, 2025 was primarily attributable to taxable income generated during the period.

Net (Loss) Income