UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to
___________________
Commission file number: 001-42652
Linkhome Holdings Inc.
(Exact name of registrant as specified in its charter)
17901 Von Karman Ave, Ste 450
Irvine, CA92614
(Address of principal executive offices)
Telephone: (800)680-9158
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Common Stock LHAI The Nasdaq Capital Market
Securities registered pursuant to Section 12(g)
of the Act:
None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of March 26, 2026, Linkhome Holdings Inc. had
16,230,000 shares of outstanding Common Stock, par value $0.001 per share.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 26
Item 1C Cybersecurity 26
Item 2. Properties 26
Item 3. Legal Proceedings 26
Item 4. Mine Safety Disclosures 26
PART II
Item 6. Reserved 27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 43
Item 8. Financial Statements and Supplementary Data 43
Item 9A. Controls and Procedures 43
Item 9B. Other Information 44
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 44
PART III
Item 10. Directors, Executive Officers and Corporate Governance 45
Item 11. Executive Compensation 48
Item 14. Principal Accounting Fees and Services 52
PART IV
Item 15. Exhibits and Financial Statement Schedules 53
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E
of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this annual report, including in the following
sections: Item 1-“Business” and Item 7-“Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties
that may cause actual results to differ materially. When used in this annual report, the words “anticipate,” “believe,”
“estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these
terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements include, but
are not limited to, statements contained in this annual report relating to our business strategy, our future operating results, and our
liquidity and capital-resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our
business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent
uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those
contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance.
We caution you, therefore, against relying on any of these forward-looking statements. Important factors that could cause actual results
to differ materially from those in the forward-looking statements include, without limitation:
● our ability to effectively operate our business;
Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.
Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity,
performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend
to update any of the forward-looking statements to conform these statements to actual results.
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PART I
References in this report to “Linkhome,” “we,”
“us” or the “Company” refer to Linkhome Holdings Inc. References to our “management” or our “management
team” refer to our officers and directors. References to “year” or “Fiscal Year” means the year ending December
31, 2025. All dollar or $ references, when used in this Annual Report, refer to the United States dollar. References to our “Common
Stock” shall mean, shares of the Company’s common stock, par value $0.001 per share.
Item 1. Business.
Overview
Linkhome is an artificial
intelligence-driven property technology company. By using HomeGPT, a Linkhome-developed real estate artificial intelligence model, combined
with financial innovation and in conjunction with our dedicated team of agents, we have made significant and cost-effective improvements
to the business model of buying and selling homes. Through our subsidiaries, we operate an artificial intelligence real estate platform
with the goal of providing customers with end-to-end real estate solutions and services, initially comprising real estate brokerage services,
Cash Offer, and mortgage service. Our mission is to redefine the real estate experience to be efficient and affordable for all consumers
through artificial intelligence. Our vision is to help everyone own their home and achieve the dream of homeownership.
Since the formation of our
subsidiary, Linkhome Realty, in 2021 and the commencement of our operational endeavors, our platform has facilitated an aggregate gross
total value of more than $180 million of agent brokerage transactions as of December 31, 2025. Our platform supports a growing network
of users who list and search for properties online, obtain information related to property transactions, and access a variety of value-added
services through the comprehensive property-related solutions available on our platform. Over the past three years, customers have shown
their desire for our artificial intelligence, financial innovation and real estate solutions. As of Dec 31, 2025, our platform, which
aggregates listings from Multiple Listing Service (the “MLS”), boasted more than 1 million active listings for residential
properties available for sale or rent. Users obtain home-buying information from our platform and consult with our AI tool, HomeGPT, for
interactive home-buying advice. We aim to provide a platform that supports users throughout the real
estate transaction process and encourages continued engagement.
More importantly, we believe
that we have just scratched the surface in the potential development of artificial intelligence as used in real estate and we believe
artificial intelligence will transform the real estate market. Over the coming years, we plan on vigorously developing the artificial
intelligence real estate model HomeGPT, increasing our market share, launching our platform in dozens of cities, and expanding our products
and services in order to leverage artificial intelligence so that it becomes a one-stop shop for buyers and sellers of residential real
estate. Our goal is to build the largest, most trusted platform for residential real estate and empower millions of Americans with the
freedom to more easily purchase homes.
We have developed our artificial
intelligence and integrated it with fintech to expand beyond the traditional real estate search and transaction process through our Cash
Offer product. Cash Offer integrates fintech to help users buy and sell properties more efficiently, by analyzing market trends, property
valuations and buyer preferences, our AI tools can help users find matching properties more quickly and provide purchase recommendations.
We think our Cash Offer product can help users make an offer of their ideal properties more efficiently, significantly enhancing the success
rate of home purchases. Cash Offer is a tool that was developed to help address our customers’ needs. In the Southern California
market that we serve, there is often intense competition, buyers are in the painful process of competing for homes, and we have developed
Cash Offer to offer a solution by providing full cash payments, helping to make offers more attractive and stand out among numerous competitors.
Linkhome accomplishes this by purchasing the target property for cash, assuming ownership of the property, and then selling the property
to the customer after the customer has secured the necessary financing from their lender.
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Initial Public Offering
On July 23, 2025, the Securities
and Exchange Commission (the “SEC”) declared effective our Registration Statement on Form S-1 (File No. 333-280379) relating
to our initial public offering (the “IPO”). On July 23, 2025, we priced the IPO of 1,500,000 shares of our common stock at
a public offering price of $4.00 per share. We granted the underwriter a 45-day option to purchase up to an additional 225,000 shares
of our common stock at the public offering price, less underwriting discounts, solely to cover over-allotments, if any. On July 24, 2025,
the underwriter fully exercised the over-allotment option, which closed simultaneously with the closing of the IPO. Our common stock commenced
trading on the Nasdaq Capital Market on July 24, 2025 under the symbol “LHAI,” and the IPO closed on July 25, 2025. The total
gross proceeds from the IPO, including the full exercise of the over-allotment option, were approximately $6.9 million, before deducting
underwriting discounts and other offering expenses payable by us.
Artificial Intelligence Technological Revolution
& Opportunities
Residential real estate is
a massive offline market characterized by low efficiency, high labor consumption, and time-intensive processes. We believe the real estate
sector is set to transition online and begin leveraging artificial intelligence. Consumers are shifting their spending online and demanding
experiences powered by AI to enhance efficiency, certainty and speed. We believe consumers are increasingly becoming accustomed to the
high efficiency of AI-generated services and now also expect to receive similar experiences in the realm of real estate.
AI has become a key force driving
the development of modern technology. AI demonstrates immense potential in solving complex problems and is leading a new industrial revolution.
Based on work by the McKinsey Global Institute, as reported in Our Insights — Real estate can use generative AI to
turn the industry’s data into treasure in seven steps, we believe that generative AI could generate $110 billion to $180 billion
or more in value for the real estate industry, making AI technology one of the most exciting innovations of our era. It is not only changing
our way of life but also reshaping how various industries operate.
The Problem
We must also recognize that
real estate is not accessible to everyone. Housing issues, especially in urban areas, have become a global challenge.
Structural Inefficiencies
In the modern information era,
we believe that potential homebuyers in the United States are overwhelmed with an abundance of property data, including listings, market
trends, and historical sales information. However, this data is often scattered across different platforms and formats, making it difficult
to navigate and analyze effectively. Additionally, we are of the opinion that there is a lack of uniformity in real estate brokerage services,
meaning the quality and type of service can vary greatly from one broker to another. This inconsistency complicates the process for buyers
who can benefit from comprehensive, personalized advice and data-driven insights to make informed decisions. Accordingly, we believe that
the industry urgently requires sophisticated data analysis capabilities and personalized customer services that can filter and present
information in a clear, actionable manner tailored to individual buyer needs.
Home Buying & Selling Difficulties
The conventional process of
purchasing a home involves numerous challenges that can make the experience frustrating and often unsuccessful. Key among these is the
competitive nature of bidding, where multiple buyers may vie for the same property, driving up prices and creating a high-pressure situation.
Additionally, the home-buying process is often hampered by lengthy loan processing times. Delays in securing financing can result in buyers
missing out on purchasing their desired properties, as sellers may opt for buyers with quicker, more reliable financing options. This
uncertainty and time sensitivity can add significant stress and disappointment to the home-buying experience.
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Poor Experiences
The journey to home ownership
involves multiple stages, including dealing with brokers, securing loans, property appraisals, purchasing home insurance, undertaking
renovations, and organizing the move. Currently, each of these stages is typically handled by different service providers who operate
in isolation from each other. This fragmentation means there is no centralized process or communication, leading to inefficiencies, misunderstandings,
and a disjointed overall experience. We believe that the lack of a comprehensive, integrated solution makes it difficult for buyers to
navigate the process smoothly and can lead to increased costs, delays, and a lower-quality home-buying experience. Buyers are often left
to manage and coordinate these separate components on their own, which can be overwhelming, especially for first-time buyers or those
with limited time and resources.
Our Solution
Linkhome developed the real
estate AI technology platform HomeGPT. For home buyers, Linkhome has built an on-demand, seamless, and artificial intelligence-driven
home-buying experience. Unlike the traditional process mediated by real estate agents, Linkhome buyers can chat with our AI chatbot, HomeGPT,
at their convenience using our app or website to answer home-buying questions, search for homes, learn about the home-buying process,
book visits or virtual tours, calculate mortgage requirements and so on. We have also introduced AI-driven real estate solutions for our
agents, such as home price prediction, bidding recommendations, investment advice, and on-demand assistance in generating contracts and
processing documents for future real estate needs.
For buyers, our AI chatbot
offers an interactive experience directly through our app or website. HomeGPT can interpret and respond to complex real estate inquiries,
generating professional and precise answers that help our users gain deeper insights into the real estate buying process. The virtual
assistance feature of HomeGPT assists buyers by scheduling visits, providing virtual tours, and calculating mortgage payments. Our AI
tools can also be used to predict a competitive bid by using AI to generate accurate property valuations by quickly analyzing vast datasets,
to include historical pricing, market trends and property characteristics.
For sellers, our agents can
use HomeGPT to leverage our sophisticated AI algorithms to offer precise pricing advice, aiding home buyers in informed decision-making
for pricing, marketing, and negotiations. Additionally, our generative AI technology enhances seller experiences by automatically crafting
detailed property descriptions and introduction videos with minimal user input. For vacant properties, HomeGPT can simulate furnished
interiors, which can significantly elevate the property’s appeal. By making targeted promotion and presentation, HomeGPT can help
to ensure that listings reach the right buyers, leading to most of Linkhome’s sellers successfully closing deals within 45 days,
thereby selling their homes more effectively and at reduced costs. HomeGPT can assist agents with the drafting and generation of contracts,
reducing the time and effort required for administrative tasks increasing agent efficiency.
The goal of these technologies
is to support our clients and enhance our productivity. We believe this will lead to being able to continuously provide better customer
service at a lower cost. We are committed to constantly optimizing the performance and functionality of our technology to ensure that
it not only meets current market demands, but also anticipates and adapts to future trends.
Fintech: Financial Innovation
Cash Offer — Quick Home Purchase: We believe, as we grow, Linkhome’s fintech product,
Cash Offer, will significantly enhance the competitiveness of our clients’ offers, allowing them to secure their desired properties
without merely relying on price competition. Compared to loan-based offers, most sellers prefer all-cash offers, as this enables sales
to close more quickly. By offering Cash Offer, we believe our clients will be able to stand out among many offers, thus giving buyers
who use our product more negotiation power and a stronger likelihood of purchasing their desired home at the right price.
Flash sell — A
modern way to sell: By selling to Linkhome, homeowners can avoid the stress of open houses, home repairs,
overlapping mortgages, and the uncertainty that can come with listing a home on the open market. Using our mobile app and website, sellers
can receive a competitive cash offer online. Post offer, we conduct a preliminary interior home inspection and a contact-free exterior
assessment to verify the home data provided to the Company. If necessary, we will follow up with a licensed inspector for a more detailed
home inspection. Sellers can then select their preferred closing date and sell to Linkhome, closing quickly.
3
Buy Before
Sell: For customers who are both selling and purchasing a home, we offer a “Buy Before Sell” service that
enables them to purchase a new home before selling their existing property. Through collaboration with third-party financial
institutions, Linkhome provides or facilitates access to financing that enables clients to acquire the new home and subsequently
market and sell their prior property. This approach allows clients to avoid waiting for the sale of their existing home before
purchasing a new one. The Buy Before Sell model is designed to provide homeowners with greater flexibility during the transition
between homes, reduce the need for temporary housing and multiple moves, and allow clients to present stronger purchase offers when
competing for desired properties.
Currently, our front-end platforms,
such as the website and app, are intended only to receive customer information. Our back-end software then generates a plan for the user,
after which we establish a relationship with the user by having one of our agents communicate the plan to the user. We are working to
develop a front-end data platform that will provide such information to customers in real-time.
One-stop seamless experience
We understand the complexity
of real estate transactions; therefore, Linkhome aims to provide a one-stop solution, offering tailored financing through our Cash Offer
service, bespoke renovation services, comprehensive property management, and extensive insurance options. Designed to simplify and expedite
the home-buying journey, our integrated approach ensures clients navigate property transactions with ease, from initial purchase to ongoing
management. By merging clarity, efficiency, and personalized support, Linkhome aims to transform real estate transactions into transparent,
stress-free experiences, allowing clients to focus on the joy of finding their dream home.
Advantages and Competitive Edge
Our business model is
designed to improve and streamline certain aspects of traditional real estate transactions. Linkhome’s main goal is to rapidly
expand property sales by focusing on providing AI technology for house hunting and helping customers with investment analysis. Since
our founding in 2021, we have been developing and leveraging the following key advantages of our platform, which we believe provide
significant competitive advantages.
A purpose-built artificial intelligence housing
search platform.
Our platform combines a comprehensive
AI-powered home-finding experience with financial innovation, allowing us to control all key operational and transactional elements and
promote a fast, simple, and consistent user experience.
A differentiated home buying experience.
We have developed a cash offer
home purchase model to use cash to help customers compete for target properties faster and more cost-effectively. This gives people the
confidence and trust they need to buy properties on our platform.
For buyers, our Cash Offer
program is intended to improve the competitiveness of purchase offers by reducing financing-related contingencies. We typically charge
a platform usage fee ranging from approximately 1% to 2% of the transaction value. In certain market conditions, this approach may help
buyers compete more effectively and potentially reduce the need for higher bid prices.
For sellers, traditional home
selling services require expenses such as repairs, renovations, listing fees, and 4 – 5% agent fees. These expenses can
be substantial for sellers, and the waiting period to sell the home is uncertain. Using the Flash Sell, the home can be sold immediately,
reducing the costs of repairs, renovations, and 4 – 5% listing agent fees, which can amount to 8 – 12%
of the home’s price. We only charge a 5% service fee, saving sellers both time and money.
Currently, our funding for
Cash Offer comes primarily from investments made by our CEO and shareholders. Following our initial public offering, we used, and may
continue to use, a portion of the net proceeds from that offering to support the expansion of our Cash Offer program. We believe that
these initiatives may contribute to revenue growth and improved profitability over time.
4
Proprietary financing technology.
We plan to offer
differentiated financing solutions to enable clients to select their preferred financing method from hundreds of pre-approved down
payment and monthly payment combinations and enable us to generate property finance receivables, often sold at a premium to
third-party financing partners.
An efficient and engaging home selling experience.
Our proprietary APP software
and artificial intelligence quick quotation system allow us to quote prices for users selling their homes predictably and efficiently.
Customers do not need to wait several days and can quickly sell their properties to Linkhome. We believe we provide our customers with
a unique home-selling experience. We believe this sets us apart from our competitors.
Large-scale real estate transaction infrastructure.
We believe we are a leading
property technology company that provides a comprehensive suite of end-to-end property solutions and services through a single, integrated
platform. Our platform functions as a one-stop-shop solution to serve all of our customers’ property-related needs. We believe this
provides us with a strong competitive edge as compared to our peers, who may only provide services related to one segment of the property
transaction.
Highly scalable business model.
Currently, our operations are
primarily focused in California. Over time, we intend to expand the scope of our business into additional geographic markets. We believe
we have a highly scalable business model and can adapt our service offerings to cater to prevailing market and technology trends to maintain
our competitive edge. Our business is predominantly generated through our online website and mobile application platforms, which allows
us to expand rapidly into new markets in a quick and cost-efficient manner.
Our Growth Strategy
Our growth strategy is to innovate and execute
on the following key strategic focuses:
Marketing
Our marketing strategy employs
a multi-channel approach aimed at efficient and low-cost growth while expanding our market footprint. We leverage AI algorithms to deploy
ads targeting customer interests, significantly enhancing the precision of our customer targeting. This optimization of our marketing
strategy includes advanced audience segmentation methodologies, improved targeting, and attribution. Additionally, we’ve incorporated
broad-reach channels to responsibly scale our brand awareness.
5
Our marketing focus extends to several areas:
Competitor Analysis
As a company dedicated to artificial
intelligence real estate technology, we operate in the highly competitive and fragmented U.S. housing market, with over five million
residential real estate transactions annually. Our main competitors include traditional offline real estate brokers and agents; these
include franchise operations associated with national or local brands as well as small independent brokerages. We also face increasing
competition from a growing number of internet-based brokerages and companies operating with new business models.
Our industry has rapidly evolved
in recent years due to technological advances, changes in consumer preferences, and the introduction of new products. We anticipate
that competition will intensify further with the emergence of new brokerage firms with AI-driven business models, as well as traditional
brokerages adopting or developing new technologies or business strategies to enhance their offerings.
We believe we primarily compete
based on:
● Efficient AI online agent and chat capabilities;
● Traffic to our website and mobile application;
● The cost of our services and the price to consumers;
● Innovation in artificial intelligence technology.
We believe that our customer-centric
values and artificial intelligence technology, along with the application of financial innovations, set us apart from our competitors
and give us a competitive edge in all of the above areas. Our provision of AI-driven home searches, data-driven decision-making support,
and financial innovation in assisting users to purchase homes with cash offers further strengthen our position in the competitive landscape.
Government Regulation
We are subject to a wide variety
of laws, rules, and regulations enforced by both governments and private organizations. Many of these rules and regulations are constantly
evolving. If we are unable to comply with them, we could be subject to civil and criminal liabilities, revocation, or suspension of our
licenses or other adverse actions. We may also be required to modify or discontinue some or all of our offerings, and our ability to grow
our business and our reputation may be harmed.
6
ITEM 1A. Risk Factors
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:
● increased interest rates;
● increased unemployment rates or stagnant or declining wages;
● slow economic growth or recessionary conditions;
● weak credit markets;
● fluctuations in local and regional home inventory levels;
● strength of financial institutions;
7
● high levels of foreclosure activity in particular markets;
● a decrease in home ownership rates;
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:
● our inability to grow market share;
● increased competition in the U.S. residential real estate industry;
● changes in our commission rates;
● failure to execute our growth strategies;
● declines in the U.S. residential real estate industry; and
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.
8
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:
● cyclical periods of slowdowns or recessions in the U.S. real estate market;
● our ability to increase market share;
● fluctuations in sale prices and transaction volumes in our top markets;
● the price of homes bought or sold by Linkhome homebuyers and home sellers;
● price competition;
● volume of transactions in markets with a higher than average mean home price;
● mix of transactions;
● impairment charges associated with goodwill and other intangible assets;
● the timing and success of new offerings by us and our competitors;
● changes in local market conditions;
● changes in interest rates and the mortgage and credit markets;
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.
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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.
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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.
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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:
● successfully expand and deepen our business and market share;
● compete with the pricing and offerings of our competitors;
● attract more customers to our website and mobile application;
● successfully invest in developing technology, tools, features, and products;
● maintain high levels of customer service;
● maximize our agents’ productivity;
● attract and retain high-quality agents;
● successfully contract with high-quality partner agents; and
● increase our brand awareness.
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.
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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,