Note 8 — Stockholders’ Equity

The Company is authorized to issue two classes of stock consisting of 250,000,000 shares of Common Stock, $0.0001 par value per share, and 50,000,000 shares of preferred stock, $0.0001 par value per share. On July 22, 2021, the Company issued 6,000,000 shares of Common Stock and 2,000 shares of Series X Super Voting Preferred Stock to Mr. La Rosa as compensation for services and the founding of the Company.

Common Stock

On April 17, 2023, the Company effected a 2-for-1 forward stock split of its Common Stock issued and outstanding (including adjustments for fractional shares). As a result, all share information in the accompanying financial statements has been adjusted as if the reverse stock split and forward stock split happened on the earliest date presented. The par value of the Common Stock was not impacted by either of the splits.

Initial Public Offering

On October 12, 2023 the Company completed its IPO and sold 1,000,000 shares of its Common Stock at a price to the public of $5.00 per share, resulting in gross proceeds of $5,000,000. The Company received net proceeds of $4,360,000 after underwriter discounts, commissions, and expenses. The Company also incurred other offering expenses of $2,544,459 and issued 1,393,618 common shares to service providers related to the IPO. These expenses were recorded against the proceeds received from the IPO.

The Company used the proceeds to repay existing debt and accrued interest of approximately $375,000, related party debt of approximately $150,000, existing accounts payable of $1,000,000, and $550,000 toward the purchase of two franchised La Rosa offices. See Note 3 — Business Combinations for additional information.

Common Stock Issuances for IPO Services

On May 12, 2021, the Company entered into a capital market advisory agreement with a consultant. During 2022, the parties amended the agreement, and in addition to other compensation, the amended agreement required the Company to issue 400,000 shares, as adjusted for the stock splits, when the Company’s Common Stock starts trading on a senior exchange. The Company issued the shares on October 9, 2023 valued at the IPO price of $5.00 a share.

On January 10, 2022, the Company entered into an investment banking agreement with a consultant. In addition to other compensation, the agreement required the issuance of Common Stock of the Company equal to 4.0% of the Company. Such shares were to be held in book entry at the transfer agent and were not eligible to be sold until the Company trades on a senior exchange. The consultant was granted anti-dilution protection such that they retained 4.0% of the Company’s fully diluted shares outstanding after the senior exchange listing. The Company evaluated the agreement and determined that the performance condition was satisfied on July 31, 2023. As such, the Company issued 250,168 shares of Common Stock on July 31, 2023, valued at the then expected IPO price of $5.00 a share. Upon the completion of the Company’s IPO on October 12, 2023, the Company issued 228,656 shares of Common Stock, valued at the IPO price of $5.00 a share, representing the remaining shares to be issued to the consultant.

Upon the closing of the Company’s IPO, the Company issued 514,794 shares of Common Stock valued at the IPO price of $5.00 a share to certain third-party service providers in accordance with the respective contractual agreements who directly worked on the IPO process. A portion of the value of the shares extinguished $157,856 of existing accounts payable.

Additional Common Stock Issuances

On August 28, 2023, the Company repaid an OID Note and, in accordance with the terms of the original note, the Company issued 30,000 shares of Common Stock to the lender, valued at the expected IPO price of $5.00 a share.

On October 12, 2023, the Company completed its IPO and, in accordance with the debt agreement the Company executed in December 2022 with the Company’s CEO, the Company issued 60,000 shares of unregistered, restricted Common Stock to the Company’s CEO with a value of $5.00 per share.

On October 12, 2023, upon the repayment of a note payable to one of the Company’s lenders, the Company issued 5,000 shares of unregistered, restricted Common Stock with a value of $5.00 per share in accordance with the debt agreement.

In September 2023, the Company executed a consulting agreement with a service provider to supply certain investor relations services post-IPO. As part of the agreement, the Company issued 125,000 shares of the Company’s unregistered, restricted Common Stock, which were issued on October 13, 2023 and valued at $3.00 per share.

In December 2023, the Company executed a consulting agreement with a service provider to supply certain investor relations services. As part of the agreement, the Company issued 100,000 shares of the Company’s unregistered, restricted Common Stock, which were issued on December 18, 2023 and valued at $1.98 per share.

In the fourth quarter of 2023, the Company acquired controlling interests in four of its franchisees and full control of two of its franchisees. As part of the purchase consideration of all six of the acquisitions, the Company issued 2,750,114 of the Company’s unregistered, restricted Common Stock. Each of the selling members entered into lock-up/leak out agreements with the Company. Pursuant to these agreements, the selling members are restricted from selling more than one-twelfth of the shares they received per calendar month during the one-year period commencing after the six-month holding period under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to applicable securities laws. See Note 3 — Business Combinations for additional information regarding the acquisitions.

On February 20, 2024, April 1, 2024, and July 15, 2024, the Company entered into securities purchase agreements with the same accredited investor for the issuance of senior secured promissory notes. As part of these transactions, the Company issued 67,000 shares, 50,000 shares, and 29,800 shares respectively, of the Company’s common stock as commitment fees. The value of the shares was allocated to the debt discount.

In February 2024, the Company executed a service agreement with a service provider for efforts to initiate the Company’s brokerage business in Texas. The Company issued 5,000 shares of the Company’s unregistered, restricted common stock to the service provider, which were issued on February 22, 2024 and valued at $1.32 per share resulting in $6,589 of stock-based compensation expense.

In September 2023, the Company executed a consulting agreement with a service provider to supply certain investor relations services post-IPO. The Company extended the agreement in March 2024 and issued 225,000 shares of the Company’s unregistered, restricted common stock, which were issued on March 13, 2024 and valued at $1.76 per share resulting in $396,000 of stock-based compensation expense.

In May 2024, the Company executed three consulting agreements with service providers to supply certain investor relations services post-IPO. As part of these agreements, the Company issued an aggregate of 260,000 shares of the Company’s unregistered, restricted common stock, which were issued on May 17, 2024 and valued at $1.20 per share resulting in $312,000 of stock-based compensation expense.

During 2024, $891,064 worth of principal and interest related to the first and second senior secured promissory notes were paid down through the issuance of 934,230 restricted common stock. Additionally, $150,000 worth of accounts payable was paid down through the issuance of 230,202 shares of restricted common stock.

During 2024, the Company issued 761,689 shares of restricted common stock and 509,498 in prefunded warrants in order to raise capital. The pre-funded warrants were exercised by quarter end. The restricted shares were granted at $0.59 per share and the pre-funded warrants were issued at $0.65 per share.

In September 2024, the Company executed a consulting agreement to receive certain investor relations services. As part of the agreement, the Company issued 230,769 shares of unregistered, restricted commons stock, which were issued on September 23, 2024 and valued at $0.65 per share.

During 2024, the Company purchased seven entities. A portion of the purchase price for all of the entities were settled by the issuance of an aggregate of 1,618,630 unregistered, restricted shares of the Company’s common stock. See Note 3— Business Combinations for additional information.

Debt Conversion to Common Stock

Upon the first day of trading of the Company’s Common Stock on the Nasdaq stock exchange on October 10, 2023, one remaining convertible note with a principal balance plus accrued interest of $26,265 was converted into 6,566 shares of the Company’s unregistered, restricted Common Stock based on the IPO price of $5.00.

Series X Super Voting Preferred Stock

On July 29, 2021, the Company filed an Amended and Restated Articles of Incorporation with the Secretary of State of Nevada authorizing 50,000,000 shares of “blank check” preferred stock. The Company designated 2,000 shares of the authorized preferred stock as Series X Super Voting Preferred Stock and issued 100% of the Super X Super Voting Preferred Stock to the Company’s CEO. Each share of the Series X Super Voting Preferred Stock entitles its holder to 10,000 votes per share and votes with the Company’s Common Stock as a single class on all matters to be voted or consented upon by the stockholders. The Series X Super Voting Preferred Stock is not convertible into Common Stock or any other securities of the Company. The holders of the Series X Super Voting Preferred Stock are not entitled to any dividend rights or any liquidation preference and have no subscription, redemption or conversion privileges.

Series A Preferred Stock

On February 13, 2023, the Company designated 11,000 shares of the authorized preferred stock as series A preferred stock. The holders of the series A preferred stock do not have voting rights, redemption rights, dividend rights, anti-dilution rights, nor liquidation rights. Each share of the series A preferred stock will automatically convert into shares of the Company’s Common Stock upon the earlier of the closing date of the Company’s IPO or upon a change in control of the Company. Upon the Company’s IPO, the value of each share is converted to common stock at a 30% discount of the IPO price. The discount is accounted for as a deemed dividend that increases the basic net loss per share for common stockholders. 

During 2023, the Company issued 1,523 shares of its series A preferred stock to 77 investors in a private placement pursuant to Regulation D under the Securities Act, raising $1,523,000. The Company also exchanged convertible debt with an outstanding balance of $598,836, including accrued interest of $87,836, for 591 shares of series A preferred stock. On March 27, 2023, the Company exchanged a portion of its related party debt with an outstanding gross balance of $1,324,631, excluding debt discount of $469,785, and including accrued interest of $28,101, for 1,321 shares of series A preferred stock. On December 31, 2022, a loan of $556,268 from Celebration Office Condos LLC, a company owned by the Company’s CEO, was forgiven for one share of series A preferred stock which was issued in March 2023.

Upon the first day of trading of the Company’s Common Stock on the Nasdaq stock exchange on October 10, 2023, the 3,436 shares of Series A Preferred Stock outstanding automatically converted into 981,676 shares of the Company’s Common Stock based on the IPO price of $5.00. The 30% discount from the IPO price resulted in an aggregate discount of $1,472,514, which was accounted for as a deemed dividend that increased the basic net loss per share for common stockholders.