Our rental properties generate consistent recurring income in Florida’s high-demand beach communities. While rental revenue accounts for approximately 20% of our overall business model, it provides meaningful cash flow that supports our ongoing reinvestment into new construction.

A typical income and expense breakdown for our rental operations, based on gross rental income after rent stabilization, is as follows:

This analysis excludes interest expense, as we are using the proceeds from this offering to pay off $70 million in debt, thereby eliminating future interest costs and significantly increasing net cash flow.

After expenses, the net cash flow margin on rent-stabilized properties ranges from 60–70%.

While rentals provide reliable recurring income, rental income is not our primary driver of value; it serves as a cash flow engine to reinvest into high-ROI construction projects, which generate substantially greater returns.

Most short-term rental property management companies charge between 15% and 25% of gross revenue solely for property management services.

At Equisource, all senior management—Todd Knight, Ethan Knight, and Christian Knight—have their total combined compensation capped at 15% of gross rental revenue.

This single percentage covers not only full property management, but also acquisition, development, oversight, and company-wide operations.

This structure ensures that:

1. Management costs remain well below industry averages, and

2. Executive incentives are fully aligned with shareholders.

Because management compensation is tied to performance—not salaries or bonuses—the company’s management (which are the largest shareholders) is primarily focused on growing net asset value, just like our investors.

Our current rent-to-value ratio may appear artificially low due to the rapid pace of our growth. In 2024 alone, we completed construction on 14 new properties, many of which are still in their rent stabilization phase.

These homes are typically 8+ bedrooms and designed for large group and multi-family vacations, which require significant advance planning. As a result, the average booking window is 6 to 12 months, meaning that it can take up to a year for rental income to fully stabilize.

Once stabilized, our designer-furnished, newly built homes consistently produce above-market rent-to-value ratios, especially when compared to older properties.

In brief, based on our historic rental average if we paused portfolio growth for approximately one year, our rent-to-value ratio would likely surpass our market—but doing so would come at the expense of our higher-margin new construction, which is the key driver of our long-term compounding growth strategy.

Equisource is built on proven systems and a replicable business model. The successful completion of our $70 million capital raise will dramatically improve margins, creating a powerful opportunity to accelerate our growth trajectory.

From 2017 to 2020, we grew our asset base from 1 million to over 10 million—a 10x increase in just four years.

From 2020 to 2024, we grew our asset base from $10 million to over $100 million—another 10x increase in just four years.

By using the margin unlocked from this raise, we believe we’re well-positioned to deliver our next 10x growth cycle.

*Forward-looking statements about future growth are subject to significant uncertainty, including market conditions and capital availability.

At this time, we do not pay dividends. Instead, we are reinvesting cash flow into new construction projects that generate an average 89% return within 12 months, followed by substantial long-term cash flow thereafter.

We believe we can deliver significantly stronger value to investors by compounding equity through our proven, replicable development model—rather than distributing lower-margin rental income.

This strategy prioritizes rapid asset growth which we believe will provide a significantly better return to the shareholder than dividends.

Equisource is a 9-year-old company with a strong performance record and over $100 million in coastal real estate assets.

• Coastal real estate (which has a supply that can never be increased) makes up less than 1% of the U.S. continental landmass.
• The U.S. population has grown nearly every year since the country’s founding.
• Throughout history, the ocean has consistently drawn people.

Although all investments have risk, this combination of fixed supply and increasing demand makes it highly unlikely that coastal real estate—the primary driver of our stock value—would ever lose all of its value.

Equisource’s offering provides the security of real estate with the liquidity of stock.

*All investments carry risk. There is no guarantee of perpetual value retention.

Our properties are covered by comprehensive hurricane insurance, which reimburses for replacement costs, as well as rent loss insurance, which covers any lost income during the rebuild period. As a result, there is typically no financial loss in the event of a storm.

In some cases, a rebuild can actually result in substantial equity creation.

For example:
Our property at 108 Pelican has an appraised value of $2,100,000, a replacement cost of $850,000, and a mortgage balance of $1,490,000.

If it were destroyed in a hurricane, insurance would cover the $850,000 replacement cost. By adding just $500,000 in capital for a total of $1,350,000 in construction costs, we could rebuild the home as a $4,000,000 property.

In doing so, our net asset value would rise from $610,000 to $2,510,000—a $1.9 million increase in equity—with only a $500,000 additional investment by Equisource.

While we never hope for a disaster, rebuilding after a disaster will often create the opportunity to increase   shareholder value per share.

*Insurance coverage is subject to limitations, exclusions, caps, deductibles, and potential claim delays. Rebuild-to-higher-value outcomes are not guaranteed.

Many areas across the country are imposing stricter regulations—or even outright bans—on short-term rentals (STRs).

However, the Emerald Coast of Florida—where all of Equisource’s properties are currently located—offers a uniquely supportive regulatory environment for STRs. To preserve the region’s iconic coastal views, local governments enforce strict building height restrictions, typically limiting structures to four stories or fewer. As a result, over 90% of accommodations in the area are vacation rentals rather than hotels, making STRs the economic engine of the local tourism economy.

Unlike many destinations facing mounting opposition, the Emerald Coast embraces vacation rentals, with STR-friendly regulations designed to support—not suppress—their role in regional tourism.

This combination of regulatory stability and sustained demand makes the Emerald Coast one of the most investor-friendly short-term rental markets in the U.S.

As we consider expansion into new regions, we carefully evaluate each market’s STR regulatory climate, ensuring we operate only in jurisdictions aligned with long-term short-term rental investment.

*STR regulations are subject to change.

At Equisource, we are long-term hold investors focused on building and retaining high-quality, income-producing real estate. Because we are not reliant on short-term asset sales, temporary market dips do not pose a significant risk to our strategy.

In fact, market corrections often create opportunistic buying environments, allowing us to acquire land or construction at better prices—which can further improve project-level returns.

Coastal real estate in Florida has consistently appreciated over time. Given the region’s limited supply, ongoing population growth, and sustained tourism demand, we feel confident that long-term appreciation will continue

*This response contains forward-looking statements that involve risks and uncertainties. Past performance is not a guarantee of future results, and market conditions may change.

There is currently some geographical concentration risk. However, Florida’s Emerald Coast partially offsets this with exceptional fundamentals, including: year-round tourism demand, supportive short-term rental regulations, limited hotel competition due to strict height restrictions, and strong historical property appreciation.

However, with the unlocked margins from this capital raise, we now have the ability to outsource property management in other markets, allowing us to expand into new regions without the logistical constraints of in-house management.

This evolution in our model will help us mitigate geographic concentration risk and scale across multiple markets in the near future.

Equisource has taken proactive steps to ensure long-term operational continuity. Both Christian Knight and Ethan Knight have been groomed for succession, having risen through the organization and developed a deep, hands-on understanding of all operational functions. Today, they each oversee key areas of the business and are responsible for its day-to-day execution.

Additionally, we are in the process of establishing an independent board of directors, which will enhance oversight and provide additional strategic continuity.

In the event that Todd Knight were to become incapacitated, the company is well-positioned to continue executing its business plan without disruption.

Yes — shareholders who invest $50,000 or more receive complimentary stays of up to seven consecutive nights at any of our properties. It’s equity with perks.

Stays must be booked no more than two weeks in advance and are subject to availability. For property details and availability, visit:  https://legacybeachhomes.com

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