v3.26.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2025
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

Note 16 — Commitments and Contingencies

 

The Company has entered into indemnification agreements with the Company’s officers and directors for certain events or occurrences. The Company maintains a directors and officers insurance policy to provide coverage in the event of a claim against an officer or director.

 

Nasdaq Listing Rule

 

On October 10, 2024, the Company received a letter from Nasdaq notifying the Company that it was no longer in compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq under the Bid Price Rule. Nasdaq has granted the Company 180 calendar days, or until April 8, 2025, to regain compliance with the Bid Price Rule. On April 9, 2025, Nasdaq notified the Company that Nasdaq’s Staff has determined that the Company is eligible for an additional 180 calendar day period, or until October 6, 2025, to regain compliance. The Company implemented an 80-for-1 reverse stock split effective July 7, 2025, which increased the trading price of its common stock. Following the reverse split, the Company regained compliance with the Nasdaq Bid Price Rule by maintaining a closing bid price of at least $1.00 per share for the required ten consecutive trading days. Nasdaq formally confirmed that the Company had regained compliance on July 21, 2025.

 

Legal Proceedings

 

From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, brokerage or real estate disputes, or other consumer protection statutes, ordinary-course brokerage disputes like the failure to disclose property defects, commission disputes, and vicarious liability based upon conduct of individuals or entities outside of the Company’s control, including agents and third-party contractor agents. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur.

   

On February 13, 2023, Mr. Mark Gracy, who served as our Chief Operating Officer from November 18, 2021 to November 15, 2022, filed a civil lawsuit in the Circuit Court of Osceola County, Florida, seeking a jury trial and claiming that the Company breached his employment agreement by reducing his salary and failing to pay him his full severance payments and is looking for payment of his alleged severance of $249,000. Original mediation was scheduled for August 25, 2025, with a second mediation set for April 28, 2026. Discovery is proceeding and the trial is set for October 2026. The Company denies the merits of the claims and intends on vigorously defending the litigation.

 

On March 5, 2025, Joshua Epstein, our former employee and Chief Strategy Officer, filed a civil lawsuit in Osceola County, Florida Circuit Court alleging claims for breach of contract, promissory estoppel, conversion, unjust enrichment, breach of good faith and fair dealings, fraud in the inducement, and to recover alleged unpaid compensation in the amount of $100,000 from the Company. The Company strongly opposed and denied these claims. Original partial mediation occurred on September 5, 2025. A second mediation is expected to be set in the near future. The case trial is scheduled for April 2027. The Company denies the merits of the claims and intends on vigorously defending the litigation.

 

On June 5, 2025, an employee, who served as our Senior Human Resources and Payroll Specialist from July 10, 2024 to August 19, 2024, filed a civil lawsuit against the Company in the Circuit Court of Osceola County, Florida. The employee is seeking a jury trial claiming $50,000 in damages and that the Company terminated her employment in violation of SS 448.102(3). On July 9, 2025, the Company responded to the complaint with its answer and affirmative defenses, effectively denying all of the plaintiff’s claims. In March of 2026 discovery and depositions began. The case remains pending.

On January 13, 2026, Martin Scott CFO Consulting Services, Inc. filed a civil lawsuit against the Company and La Rosa Realty, LLC, in the Circuit Court of Palm Beach County for breach of contract, open account, account stated, and unjust enrichment. The plaintiff stated that he had a contract with the defendants and is owed unpaid fees of approximately $29,000 and legal expenses. The Company settled this lawsuit on April 20, 2026 for the amount of $22,000.

 

On January 30, 2026, La Rosa Holdings Corp. and La Rosa Realty Orlando LLC filed a civil lawsuit against Reinaldo Zapata and Viviana Figueroa in the Circuit Court of Orange County. The case involved an action for dissolution of La Rosa Realty Orlando, action for conversion against Reinaldo Zapata, and an action for damage for breach of employment agreement against Reinaldo Zapata. The case was settled on April 4, 2026.

 

On February 1, 2026, Stacy-Ann Blair and Delroxry Blair filed a civil lawsuit against La Rosa Realty CW Properties, et. al. in the Circuit Court of Orange County, Florida, stating that La Rosa CW Properties failed to disclose a family relationship with one or more of its sellers, creating a material conflict of interest. The plaintiffs claim breach of contract, unjust enrichment, fraudulent and negligent misrepresentation, and civil theft and seeking damages of approximately $9,600. The Company filed a motion to dismiss, which was further amended. A case management conference is being scheduled for July-August 2026 and the mediation is set for July 2026. The Company denies the merits of the claims and intends on vigorously defending the litigation.

 

The Company believes that the above claims are without merit, and it will vigorously defend against such claims. Moreover, these claims, in the aggregate, would not have a material adverse effect on the Company’s financial condition, business, or results of operations, should the Company’s defense not be successful in whole or in part. Except as stated herein, there is no other action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers, threatened against or affecting our Company or our officers or directors in their capacities as such.