[10-Q] La Rosa Holdings Corp. Quarterly Earnings Report
La Rosa Holdings Corp. reported higher revenue but deeper losses in its latest quarter. For the three months ended September 30, 2025, revenue was $20.2 million versus $19.6 million a year ago, while net loss attributable to common stockholders widened to $5.5 million from $3.4 million, driven by higher general and administrative costs and stock-based compensation. For the nine-month period, revenue rose to $60.9 million from $51.7 million, but net loss attributable to common stockholders increased to $23.1 million from $10.5 million, reflecting significant fair-value related gains and losses tied to a senior secured convertible note and warrant transactions. The company ended September 30, 2025 with $3.99 million of cash, $6.44 million of cash and restricted cash combined, positive working capital of $1.24 million, and total debt of $9.47 million. Management states there is substantial doubt about the company’s ability to continue as a going concern over the next 12 months without additional capital, and is pursuing further financing, including a senior secured convertible note issued in February 2025, preferred stock and equity issuances, and a large equity purchase facility.
- None.
- Substantial doubt about going concern: management states existing cash, working capital, and operating cash flows are not expected to cover projected expenses for at least the next twelve months, and the business depends on raising additional capital.
- Persistent and increasing losses: nine‑month net loss attributable to common stockholders expanded to
$23.1 million from$10.5 million , with operating loss of$12.1 million driven by higher overhead and stock-based compensation. - Higher leverage and complex financing: notes payable increased to
$9.47 million , including a senior secured convertible note measured at fair value, creating exposure to mandatory redemption premiums and potential dilution through equity-linked features.
Insights
Rising revenue is outweighed by large losses, leverage, and going-concern risk.
La Rosa Holdings is growing the top line, with revenue of
Below operating income, results are heavily influenced by complex financing structures. A senior secured convertible note with a fair value of
Cash and restricted cash totaled
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | 1 |
| ITEM 1. | FINANCIAL STATEMENTS | 1 |
| CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 | 1 | |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED) | 2 | |
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED) | 3 | |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED) | 7 | |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 8 | |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 39 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 58 |
| ITEM 4. | CONTROLS AND PROCEDURES | 58 |
| PART II. | OTHER INFORMATION | 59 |
| ITEM 1. | LEGAL PROCEEDINGS | 59 |
| ITEM 1A. | RISK FACTORS | 60 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES | 60 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 60 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 60 |
| ITEM 5. | OTHER INFORMATION | 60 |
| ITEM 6. | EXHIBITS | 61 |
| SIGNATURES | 65 |
i
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
| September 30, 2025 | December 31, 2024 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net of allowance for credit losses of $ | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets: | ||||||||
| Restricted cash, net of current | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use asset, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Other long-term assets | ||||||||
| Total noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Contract liabilities | ||||||||
| Security deposits and escrow payable | ||||||||
| Line of credit | — | |||||||
| Derivative liability | — | |||||||
| Advances on future receipts | — | |||||||
| Accrued acquisition cash consideration | ||||||||
| Notes payable, current | ||||||||
| Lease liability, current | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Note payable, net of current | ||||||||
| Security deposits and escrow payable, net of current | ||||||||
| Lease liability, noncurrent | ||||||||
| Other liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - $ | — | — | ||||||
| Preferred stock - $ | — | |||||||
| Common stock - $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity – La Rosa Holdings Corp. shareholders | ||||||||
| Noncontrolling interest in subsidiaries | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to the consolidated financial statements.
1
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation — general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) on extinguishment of debt | — | ( | ) | ( | ) | |||||||||||
| Amortization of debt discount | — | ( | ) | ( | ) | ( | ) | |||||||||
| Change in fair value of derivative liability | — | |||||||||||||||
| Loss on issuance of senior secured convertible note and warrants | — | — | ( | ) | — | |||||||||||
| Change on fair value of convertible note and warrants | ( | ) | — | — | ||||||||||||
| Gain on settlement of incremental warrants | — | — | — | |||||||||||||
| Other income, net | ||||||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit from income taxes | — | — | — | — | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Net income (loss) attributable to noncontrolling interests in subsidiaries | ( | ) | ||||||||||||||
| Net loss after noncontrolling interest in subsidiaries | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Deemed dividend | — | |||||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share of common stock attributable to common stockholders | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares used in computing net loss per share of common stock attributable to common stockholders | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See notes to the consolidated financial statements.
2
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
| Preferred Stock | Preferred Stock | Additional | Total | Noncontrolling | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Series X | Series B | Common Stock | Paid-In | Accumulated | Stockholders’ | Interest In | Total | ||||||||||||||||||||||||||||||||||||
| September 30, 2025 | Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Deficit | Equity | Subsidiaries | Equity | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | — | $ | | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock for consulting work | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of liabilities into common stock | ||||||||||||||||||||||||||||||||||||||||||||
| Equity awards issued with debt issuance | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Proceeds from new investors, S-3 and impact of reverse split | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series B Preferred Stock | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock-based compensation equity awards, net of shares withheld for taxes | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||
See notes to the consolidated financial statements.
3
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
| Preferred Stock | Preferred Stock | Additional | Total | Noncontrolling | ||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended | Series X | Series B | Common Stock | Paid-In | Accumulated | Stockholders’ | Interest In | Total | ||||||||||||||||||||||||||||||||||||
| September 30, 2025 | Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Deficit | Equity | Subsidiaries | Equity | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | — | — | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for consulting work | $ | |||||||||||||||||||||||||||||||||||||||||||
| Conversion of liabilities into common stock | $ | |||||||||||||||||||||||||||||||||||||||||||
| Equity awards issued with debt issuance | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | $ | |||||||||||||||||||||||||||||||||||||||||||
| Proceeds from new investors, S-3 and impact of reverse split | $ | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series B Preferred Stock | — | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock-based compensation equity awards, net of shares withheld for taxes | $ | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | — | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
See notes to the consolidated financial statements.
4
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
| Additional | Total | Noncontrolling | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Preferred Stock Series X | Common Stock | Paid-In | Accumulated | Stockholders’ | Interest In | Total | |||||||||||||||||||||||||||||
| September 30, 2024 | Shares | Par Value | Shares | Amount | Capital | Deficit | Equity | Subsidiaries | Equity | |||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for acquisitions | — | |||||||||||||||||||||||||||||||||||
| Equity awards issued with debt issuance | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity awards, net of shares withheld for taxes | ||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||
See notes to the consolidated financial statements.
5
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
| Additional | Total | Noncontrolling | ||||||||||||||||||||||||||||||||||
| Nine Months Ended | Preferred Stock Series X | Common Stock | Paid-In | Accumulated | Stockholders’ | Interest In | Total | |||||||||||||||||||||||||||||
| September 30, 2024 | Shares | Par Value | Shares | Amount | Capital | Deficit | Equity | Subsidiaries | Equity | |||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | — | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for acquisitions | ||||||||||||||||||||||||||||||||||||
| Equity awards issued with debt issuance | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity awards, net of shares withheld for taxes | ||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | — | ( | ) | ||||||||||||||||||||||||||||||||
See notes to the consolidated financial statements.
6
La Rosa Holdings Corp. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Loss on issuance of senior secured convertible note and warrants | — | |||||||
| Change on fair value of convertible note and warrants | ( | ) | — | |||||
| Gain on settlement of incremental warrants | ( | ) | — | |||||
| Amortization and depreciation | ||||||||
| Amortization of right-of-use assets | ||||||||
| Change in fair value of derivatives | ( | ) | ( | ) | ||||
| Amortization of debt discount and financing fees | ||||||||
| (Gain) loss on extinguishment of debt | ( | ) | ||||||
| Non-cash interest expense | ( | ) | ||||||
| Allowance for credit losses | ( | ) | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Contract liabilities | ||||||||
| Security deposits and escrow payable | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property plant and equipment | — | ( | ) | |||||
| Cash acquired through acquisition of businesses | — | |||||||
| Net Cash Provided by Investing Activities | — | |||||||
| Cash Flows from Financing Activities: | ||||||||
| Borrowings on bank line of credit | ||||||||
| Payments on bank line of credit | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Payments deferred debt issuance costs | ( | ) | ( | ) | ||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from advances on future receipts | — | |||||||
| Payments on advances on future receipts | ( | ) | ( | ) | ||||
| Payments on post-acquisition consideration | ( | ) | ( | ) | ||||
| Repurchase of derivative instruments issued | ( | ) | — | |||||
| Proceeds from issuance of common stock | ||||||||
| Withholding tax paid on behalf of employees on stock-based awards | — | ( | ) | |||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Increase in Cash and Restricted Cash | ||||||||
| Cash and Restricted Cash at Beginning of Period | ||||||||
| Cash and Restricted Cash at End of Period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash Paid During the Period for: | ||||||||
| Interest | $ | $ | ||||||
| Non-Cash Activities: | ||||||||
| Issuance of Series B in exchange of incremental warrants | $ | $ | — | |||||
| Issuance of new convertible note | $ | $ | — | |||||
| Issuance of | $ | $ | — | |||||
| Issuance of | $ | $ | — | |||||
| Issuance of | $ | $ | — | |||||
| Office leases acquired under operating lease obligations | $ | $ | ||||||
| Derivative liability embedded in debt instruments | $ | — | $ | |||||
| Issuance of | $ | — | $ | |||||
| Issuance of | $ | — | $ | |||||
| Issuance of | $ | — | $ | |||||
| Issuance of | $ | — | $ | |||||
| Reconciliation of Cash and Restricted Cash | ||||||||
| Cash | $ | $ | ||||||
| Restricted Cash | ||||||||
| Cash and Restricted Cash | $ | $ | ||||||
See notes to the consolidated financial statements.
7
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Note 1 — Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements of La Rosa Holdings Corp. (the “Company”) have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The Company has made estimates and judgements affecting the amounts reported in the Company’s condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited and reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented, which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to the Company’s going concern assessment. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values.
The unaudited condensed consolidated financial statements include the financial statements of the Company, all entities that are wholly-owned by the Company, and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. Business combinations consummated during the reporting period are reflected in the Company’s results effective from the date of acquisition through the end of the reporting period.
Results of the three month and nine month periods ended September 30, 2025, are not necessarily indicative of the results to be expected for the full year ending December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the Company as of and for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K. The condensed consolidated balance sheet as of December 31, 2024 was derived from the Company’s audited financial statements referred to above.
Reclassifications of Prior Year Presentation
During the preparation of the financial statements for the quarter ended September 30, 2025, the Company reclassified certain restricted cash balances at December 31, 2024 related to tenant deposits and escrow payable that had associated restrictions and obligations that extended beyond twelve months to restricted cash, net of current. Further, the Company reclassified certain non-current security deposits and escrow payable at December 31, 2024 to current security deposits and escrow payable. These reclassification were made to conform with current period presentation and have not changed the results of operations of prior periods nor affected the cash flows previously reported.
Stock Split
On
July 7, 2025, the Company effected a 1-for-80 reverse stock split of the shares of the Company’s common stock, par value
$
As a result of the Reverse Stock Split, all historical share and per share amounts disclosed in the unaudited condensed consolidated financial statements have been converted to the post-split share amounts.
Accounts Receivable and Allowance for Credit Losses
The
Company’s trade accounts receivable consist of balances due from agents, tenants, franchisees, and commissions for closings and
are presented on the consolidated balance sheets net of the allowance for credit losses. Management determines the allowance for expected
credit losses based upon historical experiences as well as current conditions that affect the collectability of the reported amount and
regularly evaluates individual customer receivables and considering financial condition, credit history, current economic conditions
and other relevant factors, in setting specific reserves for certain accounts. Receivables are written off once they are deemed uncollectible,
which may arise when the debtor is deemed unable to pay the amounts owed to the Company. The allowance for credit losses was $
The activity for the allowance for credit losses during the nine months ended September 30, 2025 and 2024 is set forth in the table below:
| Balance at | Deductions | Balance at | ||||||||||||||
| Beginning of | Charged to | from the | End of | |||||||||||||
| Period | Expenses | Allowance | Period | |||||||||||||
| Nine Months ended September 30, 2025 Allowance for Credit Losses | $ | $ | $ | ( | ) | $ | ||||||||||
| Nine Months ended September 30, 2024 Allowance for Credit Losses | $ | $ | $ | ( | ) | $ | ||||||||||
Liquidity – Going Concern and Management’s Plans
On September 30, 2025, the Company had a cash
balance of $
On February 4, 2025 (the “Closing Date”),
the Company entered into a Securities Purchase Agreement (the “SPA”), with an institutional investor (the “Investor”)
in which the Company obtained gross proceeds of $
8
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, the Company will require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Until such time that the Company fully implements its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead and costs of being a public company. As such, the Company anticipates that its existing working capital, including cash on hand, and cash generated from operations, will not be sufficient to meet projected operating expenses through at least the next twelve months from the issuance of these condensed consolidated financial statements. The Company will be required to raise additional capital to service its debt and to fund ongoing operations.
The Company has incurred recurring net losses, and the Company’s operations have not provided net-positive cash flows. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company plans on continuing to expand via acquisitions, which will help achieve future profitability. Additionally, the Company has plans to raise capital from outside investors, as it has done in the past, to fund operating losses and to provide capital for further business acquisitions. There can be no assurance the Company can successfully raise the capital needed.
Fair Value Option of Accounting
The Company has elected the fair value option under Accounting Standards Codification 825-10, Financial Instruments (“ASC 825”), to measure its Senior Secured Convertible Note and Incremental Warrants (until the Incremental Warrants conversion to Series B Preferred Stock, See Note 5 – Borrowings for further discussion) issued during the first quarter. The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. When the fair value option is elected for an instrument, unrealized gains and losses for such instrument are reported in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred.
Recently Adopted Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU, No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification 280, Segment Reporting, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU No. 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments. The Company adopted ASU No. 2023-07 effective December 31, 2024.
Recently Issued Accounting Standards Not Yet Adopted
In September 2025, the FASB issued ASU 2025-7, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). The amendments in this Update exclude from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. However, this scope exception does not apply to (1) variables based on a market rate, market price, or market index, (2) variables based on the price or performance of a financial asset or financial liability of one of the parties to the contract, (3) contracts (or features) involving the issuer’s own equity that are evaluated under the guidance in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and (4) call options and put options on debt instruments. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.
9
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40). The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to complete recognition threshold”). The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326). The amendments in this Update provide (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The amendments in this Update require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements. A Variable Interest Entity (VIE) is a legal entity in which an investor holds a controlling interest that is not based on majority voting rights.
In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)- Clarifying the Effective Date. The amendment in this Update amends the effective date of Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. This update aims to enhance the transparency and usefulness of income tax disclosures for investors. The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid. Public business entities (PBEs) will be required to disclose a detailed effective tax rate reconciliation, while private companies may choose to present a qualitative disclosure instead of a quantitative reconciliation. The ASU introduces requirements for all entities to disclose income taxes paid to individual jurisdictions exceeding a specified threshold and updates disclosures about unrecognized tax benefits (UTB) and undistributed earnings by federal, state, and foreign jurisdictions. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. The Company plans to adopt this standard prospectively.
Note 2 — Business Combinations
The Company completed a number of acquisitions during the nine months ended September 30, 2024 and plans to acquire additional businesses in the future. The results of businesses acquired in a business combination are included in the Company’s condensed consolidated financial statements from the date of acquisition. The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity, or a combination of the two, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies.
10
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
To date, the assets acquired and liabilities assumed in the Company’s business combinations have primarily consisted of goodwill and finite-lived intangible assets, consisting primarily of franchise agreements, agent relationships, real estate listings, non-compete agreements, and right-of-use assets. The estimated fair values and useful lives of identifiable intangible assets are based on many factors, including estimates and assumptions of future operating performance and cash flows of the acquired business, the nature of the business acquired, and the specific characteristics of the identified intangible assets. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition. In connection with the determination of fair values, the Company engages independent appraisal firms to assist with the valuation of intangible assets acquired and certain assumed obligations.
Transaction costs associated with business combinations are expensed as incurred.
During
the first nine months of 2024, the Company acquired majority ownership of the following franchisees of the Company: La Rosa Realty Georgia
LLC (“Georgia”), La Rosa Realty California (“California”), La Rosa Realty Lakeland LLC (“Lakeland”),
La Rosa Realty Success LLC (“Success”) and
The following table summarizes the purchase consideration and the purchase price allocation to the estimated fair values of the identifiable assets acquired and liabilities assumed for the seven acquisitions.
| Winter Garden | Georgia | California | Lakeland | Success | BF Prime | Nona Title | Total | |||||||||||||||||||||||||
| Acquired ownership | % | % | % | % | % | % | % | |||||||||||||||||||||||||
| Acquisition date | ||||||||||||||||||||||||||||||||
| Common stock issued | ||||||||||||||||||||||||||||||||
| Cash consideration | $ | — | $ | — | $ | — | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Equity consideration | $ | |||||||||||||||||||||||||||||||
| Total purchase price | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Noncontrolling interest | — | — | — | |||||||||||||||||||||||||||||
| Acquisition date fair value | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Purchase price allocation | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Less fair value of net assets acquired: | ||||||||||||||||||||||||||||||||
| Cash | $ | |||||||||||||||||||||||||||||||
| Working capital (less cash) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | $ | ( | ) | |||||||||||||||
| Intangible assets | $ | |||||||||||||||||||||||||||||||
| Long-term assets | — | — | $ | |||||||||||||||||||||||||||||
| Long-term liabilities | — | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | — | ( | ) | ||||||||||||||||||
| Net assets acquired | ||||||||||||||||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
11
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Goodwill generated from the acquisition was primarily attributable to expected synergies from future growth and strategic advantages provided through expansion and was not expected to be deductible for income tax purposes.
During
the year ended December 31, 2024, after an impairment evaluation, the Company recognized an impairment charge of $
The classes of intangible identifiable assets acquired and the estimated useful life of each class is presented in the table below for the seven acquisitions:
| Winter Garden | Georgia | California | Lakeland | Success | BF Prime | Nona Title | Total | |||||||||||||||||||||||||
| Franchise agreement (10 to 11 years) | $ | $ | $ | $ | $ | $ | $ | — | $ | |||||||||||||||||||||||
| Agent relationships (8 to 11 years) | — | — | — | |||||||||||||||||||||||||||||
| Real estate listings (1 year) | — | |||||||||||||||||||||||||||||||
| Non-compete agreements (4 years) | — | |||||||||||||||||||||||||||||||
| Total identifiable intangible assets acquired | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The amounts of revenue, cost of revenue, gross profit, and loss from operations before income taxes of the seven acquisitions included in the Company’s condensed consolidated statement of operations from the date of the acquisition for the three- and nine month periods ended September 30, 2024 is as follows:
| Three Months | Nine Months | |||||||
| Ended | Ended | |||||||
| September 30, | September 30, | |||||||
| 2024 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | $ | $ | ||||||
| Gross profit | $ | $ | ||||||
| Loss before provision for income taxes | $ | $ | ||||||
12
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The following unaudited pro forma financial information presents the combined operating results of the Company, Winter Garden, Georgia, California, Lakeland, Success, BF Prime and FPG Title as if each acquisition had occurred as of January 1, 2024. The unaudited pro forma financial information includes the accounting effects of the business combinations, including adjustments to the amortization of intangible assets. The unaudited pro forma information does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of the Company’s future consolidated results.
The unaudited pro forma financial information is presented in the table below for the nine month period ended September 30, 2024:
| Nine Months Ended | ||||
| September 30, | ||||
| 2024 | ||||
| Revenue | $ | |||
| Cost of revenue | $ | |||
| Gross profit | $ | |||
| Loss before provision for income taxes | $ | ( | ) | |
| Loss per share of common stock attributable to common stockholders, basic and diluted | $ | ( | ) | |
| Weighted average shares used in computing net loss per share of common stock attributable to common stockholders | ||||
Note 3 — Goodwill and Intangible Assets
Goodwill
The
gross carrying amount of goodwill as of both September 30, 2025 and December 31, 2024 was $
Intangible Assets
Intangible assets consist of franchise agreements, agent relationships, real estate listings, and non-compete agreements, and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or amortized on a straight-line basis if such pattern cannot be reliably determined. The Company continues to assess potential triggering events related to the value of its intangible assets and concluded that there was no impairment during the nine months ended September 30, 2025.
13
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The components of purchased intangible assets were as follows:
| Weighted Average | ||||||||||||||
| Remaining | ||||||||||||||
| Amortization | September 30, 2025 | |||||||||||||
| Period | Gross | Accumulated | Net | |||||||||||
| (in years) | Carrying Amount | Amortization | Amount | |||||||||||
| Franchise agreement | $ | $ | $ | |||||||||||
| Agent relationships | ||||||||||||||
| Real estate listings | ||||||||||||||
| Non-compete agreements | ||||||||||||||
| Total | $ | $ | $ | |||||||||||
| Weighted Average | ||||||||||||||
| Remaining | ||||||||||||||
| Amortization | December 31, 2024 | |||||||||||||
| Period | Gross | Accumulated | Net | |||||||||||
| (in years) | Carrying Amount | Amortization | Amount | |||||||||||
| Franchise agreement | $ | $ | $ | |||||||||||
| Agent relationships | ||||||||||||||
| Real estate listings | ||||||||||||||
| Non-compete agreements | ||||||||||||||
| Total | $ | $ | $ | |||||||||||
For the three months and nine months ended September
30, 2025, amortization expense was $
| 30-Sep-25 | ||||
| 2025 - remainder of the year | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
14
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Note 4 — Fair Value Measurements and Other Liabilities
Fair Value Measurements
Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company classified certain liabilities based on the following fair value hierarchy:
| ● | Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; |
| ● | Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and |
| ● | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.
The carrying amounts of financial instruments, including cash, restricted cash, accounts receivable, accounts payable, and accrued expenses reflected in the condensed consolidated financial statements approximate fair value due to their short-term maturities.
The Company determined that on December 31, 2024, certain instruments qualified as derivative liabilities and were recorded at fair value on the date of issuance and re-measured at fair value for each subsequent reporting period with the change reported in earnings. There were no derivative liabilities recorded as of September 30, 2025. See Note 7 – Equity Shares and Warrants for more information.
Securities Purchase Agreement
On
15
La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The
purchase price paid by the Investor under the SPA for the Convertible Note and Incremental Warrants was $
As a result of applying the fair value option, direct costs and fees related to the Convertible Note were expensed as incurred and were not deferred.
On June 18, 2025, with the prior approval by the
Company’s Board of Directors, the Company and the Investor entered into, and closed the transactions contemplated by, that certain
Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which (among other things) the Investor surrendered
and exchanged all of its Incremental Warrants in exchange for (the “Exchange”)
Pursuant
to the terms of the Exchange Agreement, conversion of the Series B Preferred Stock into shares of common stock of the Company, par value
$
The
Company determined the Exchange met the criteria for liability derecognition of the Incremental Warrants as the Exchange represented
settlement of the liability through delivery of other financial assets. As the warrant was an equity contract classified as a liability
at issuance, upon settlement, the equity contract was required to be marked to market. The Company recognized a change in fair value
of $
| June 18, | ||||
| 2025 | ||||
| Stated Value | $ | |||
| Dividend Rate | % | |||
| Conversion Price | $ | |||
| Alternate Conversion Amount | $ | |||
| Required Premium | % | |||
| Stock Price | $ | |||
| VWAP | $ | |||
At
the closing of the Exchange, the Company recognized a gain on settlement of the Incremental Warrants of $
The following tables provide the fair value and contractual principal balance outstanding on the Convertible Note and the Incremental Warrants accounted for under the fair value option as of September 30, June 30 and June 18, 2025 or June 26, 2025, respectively:
| As of | As of | As of | ||||||||||
| September 30, | June 30, | June 26, | ||||||||||
| 2025 | 2025 | 2025 | ||||||||||
| Convertible Note fair value | ||||||||||||
| Convertible Note, contractual principal outstanding | ||||||||||||
16
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
| As of | As of | As of | ||||||||||
| September 30, | June 30, | June 18, | ||||||||||
| 2025 | 2025 | 2025 | ||||||||||
| Incremental Warrants | - | - | ||||||||||
The fair value of the Convertible Note was calculated using a fair value analysis considering the following factors and assumptions:
| September 30, | June 30, | June 26, 2025 Post | June 26, 2025 | March 31, | ||||||||||||||||
| 2025 | 2025 | Amendment(2) | Pre-Amendment(2) | 2025(1) | ||||||||||||||||
| Stock Price | $ | $ | $ | $ | $ | |||||||||||||||
| Conversion Price | $ | $ | $ | $ | $ | |||||||||||||||
| Alternate Conversion Price | $ | $ | $ | $ | $ | |||||||||||||||
| Alternate Conversion Premium | % | % | % | % | % | |||||||||||||||
| Redemption Premium | % | % | % | % | % | |||||||||||||||
| Interest Rate | % | % | % | % | % | |||||||||||||||
| (1) |
| (2) |
The fair value of the Incremental Warrants were calculated using the Monte Carlo simulation with the following factors, assumptions and methodologies for the prior quarter ended March 31, 2025 and right before the exchange on June 18, 2025:
| June 18, | March 31, | |||||||
| 2025(1) | 2025(1) | |||||||
| Face Value | $ | $ | ||||||
| Exercise Price | $ | $ | ||||||
| Stock Price | $ | $ | ||||||
| Exercise Threshold | ||||||||
| Valuation per Incremental Warrant upon exercise | $ | $ | ||||||
| Discount Rate | % | % | ||||||
| Risk Free Rate | % | % | ||||||
| Annualized Volatility | % | % | ||||||
| Forecast horizon (years) | ||||||||
| (1) |
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows:
| As of September 30, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | - | $ | - | $ | - | $ | - | ||||||||
| Convertible note | $ | - | $ | - | $ | $ | ||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | - | $ | - | $ | $ | ||||||||||
17
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
At
December 31, 2024, the estimated fair value of the derivative liability tied to the three vested warrants held by an institutional investor
and remeasured on a recurring basis amounted to $
As of September 30, 2025, warrants held by an
institutional investor were eliminated through exercising and a redemption and cancellation agreement for $
The following tables provide a summary of changes in fair value associated with the Level 3 liabilities for the nine months periods ended September 30, 2025 and 2024:
Derivative liabilities
| 2025 | 2024 | |||||||
| Balance – January 1, | $ | $ | - | |||||
| Issuance of derivative liability | ||||||||
| Cash paid to settle derivative liability | ( | ) | - | |||||
| Issuance of cashless shares for exercising warrants | ( | ) | - | |||||
| Extinguishment of derivative liability | ( | ) | - | |||||
| Change in fair market value - extinguished warrants | ( | ) | ||||||
| Change in fair market value - new warrants | ( | ) | - | |||||
| Balance – March 31, | $ | $ | ||||||
| Issuance of derivative liability | - | |||||||
| Extinguishment of derivative liability | ( | ) | - | |||||
| Change in fair market value - extinguished warrants | ||||||||
| Balance – June 30, | $ | - | $ | |||||
| Issuance of derivative liability | - | |||||||
| Change in fair market value - extinguished warrants | - | ( | ) | |||||
| Balance – September 30, | $ | - | $ | |||||
Convertible Note
| Balance – January 1, 2025 | $ | - | ||
| Issuance of Convertible Note(1) | ||||
| Change in fair value of Convertible Note | ( | ) | ||
| Balance – March 31, 2025 | ||||
| Change in fair value of Convertible Note | ( | ) | ||
| Convertible Note Extinguished(2) | ||||
| Issuance of Convertible Note(2) | ||||
| Change in fair value of Convertible Note | ( | ) | ||
| Balance – June 30, 2025 | ||||
| Change in fair value of Convertible Note | ||||
| Balance – September 30, 2025 | $ |
18
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The
fair value of the derivative liability related to the three eliminated Warrants, was computed using the Black-Scholes model both when
issued and on the balance sheet date. To determine the fair value, the Company incorporated transaction details such as the price of
the Company’s common stock, contractual terms, maturity, and risk-free rates, as well as assumptions about future financings, volatility,
probability of contingencies, and holder behavior.
| December 31, | ||||
| 2024 | ||||
| Weighted average fair value | $ | |||
| Dividend yield | — | |||
| Expected volatility factor | % | |||
| Risk-free interest rate | % | |||
| Expected life (in years) | ||||
Contract Liabilities and Performance Obligations
Contract
liabilities consist of unsatisfied performance obligations related to annual dues received at the start of the calendar year. As of September
30, 2025, the Company has approximately $
Note 5 — Borrowings
Line of Credit
The Company has a line of credit with Regions
Bank that allows for advances up to $
Security Purchase Agreement
On
February 4, 2025, the Company and an Investor entered into the SPA, pursuant to which the Company issued to the Investor on such date:
(i) a Senior Secured Convertible Note in the original principal amount of $
The Initial Note accrues interest at a rate of
In connection with the closing of the Initial Note, the Company entered into a Registration Rights Agreement dated February 4, 2025, obligating the Company to file and maintain the effectiveness of one or more registration statements with the SEC covering the resale of the shares of common stock issuable upon conversion of the Notes and related instruments. The Company was required to file an initial registration statement with the SEC within 30 calendar days of the closing date and have it declared effective within 90 calendar days (or 120 days if subject to full SEC review). The Company successfully filed the registration statement on time per the agreed terms for the Initial Note. The Company is also subject to certain limitations on entering into conflicting registration rights agreements through the applicable date and must allocate available registration capacity pro rata among holders.
The
Notes may be prepaid by the Company, in whole or in part, at its option with at least 30 calendar days’ notice to the holder, provided
no Event of Default has occurred and is continuing. Voluntary prepayments are subject to a redemption premium equal to
Certain
mandatory redemptions, including those triggered by Events of Default, Bankruptcy Events, or Change of Control transactions, are contractually
deemed voluntary prepayments and are also subject to the
19
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Other
redemptions, such as those triggered by subsequent placements or asset sales, are payable at
On May 23, 2025, the Company and the Investor holding the Initial Note and Incremental Warrants entered into a waiver agreement pursuant to which, effective as of May 20, 2025, through May 30, 2025, the holder waived all rights to default-related penalties, default interest, and acceleration of any amounts due under the Initial Note, as well as any other rights arising from an event of default under the SPA, the Initial Note, the Incremental Warrants, and the related transaction documents, specifically with respect to the Company’s untimely filing of its Quarterly Report on Form 10-Q. In addition, the Investor waived the requirement under the related Registration Rights Agreement to register for resale the shares of common stock issuable upon conversion of the Notes (other than the Initial Note) in the initial registration statement filed by the Company with the SEC on February 14, 2025, and all related rights to receive any Registration Delay Payments (as defined in the Registration Agreement). The Company agreed to file subsequent registration statements within thirty (30) calendar days following the issuance of any Incremental Notes pursuant to the exercise or call of an Incremental Warrant, registering for resale by the Investor all shares issuable upon the conversion of such notes.
On June 18, 2025, the Company and the Investor
entered into an Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which (among other things) the Investor
surrendered and exchanged all of its Incremental Warrants in exchange for (the “Exchange”)
On June 26, 2025, the Company and the Investor
entered into an Amendment No. 1 to the Initial Note to correct the maturity date to February 4, 2027 and amend the Alternate Conversion
Price to be the greater of (i)
Upon the modification on June 26, 2025, the Company
evaluated the debt modification guidance, including the troubled debt restructuring guidance, determining that the modification of this
instrument for which the Company made a fair value option election pursuant to Subtopic 825-10 at inception, is not a troubled debt restructuring
and rather, an extinguishment of the existing Initial Note. The Company recorded a gain on debt extinguishment of $
Cash Advance Agreements
On February 5, 2025, the Company paid off their
Standard Merchant Cash Advance Agreement (the “Cash Advance”) with Cedar Advance LLC (“Cedar”) in the amount of
$
20
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Notes Payable-Senior Secured Promissory Notes
During the first quarter of 2025, the Company repaid in full all outstanding senior secured promissory notes issued in 2024 to an accredited investor. On February 5, 2025, in connection with the execution of the SPA, the Company paid the remaining principal and accrued interest on the third and final outstanding note, thereby fully extinguishing the Company’s debt obligations to the investor under the 2024 note issuances.
In
addition, the accredited investor elected to convert an aggregate principal and interest amount of $
On January 8, 2025, the Company and the accredited investor entered into that certain Waiver, waiving the Event of Default (as defined) under these senior secured promissory notes. The waiver included, among other provisions, waiving the rights to all default penalties, default interest, the acceleration of any amounts and waiving the restriction for the Company to enter into a variable rate transaction, of which the consummation could be considered an event of default, provided the proceeds from such financing are used to repay, in full, the notes described above.
On
January 22, 2025, the Company and the Holder signed an amendment No. 1 to the Waiver. Pursuant to the Amendment, the Company shall pay
The interest expense incurred for these senior
secured promissory notes was $
Notes Payable-Promissory Note
On
September 27, 2024, the Company entered into a promissory note payable whereby the Company borrowed $
Acquisition Settlement Agreement
In
October 2024, the Company entered into an acquisition settlement agreement with the former owner of an acquired business. Under the terms
of the agreement, the Company agreed to pay $
21
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Economic Injury Disaster Loans
During 2024, the Company acquired franchises that
had outstanding Economic Injury Disaster Loans (the “EIDL Loans”) in the aggregate of $
Future maturities of EIDL term debt as of September 30, 2025, were as follows:
| September 30, | ||||
| Economic Injury Disaster Loans-Future Maturities | 2025 | |||
| 2025 - remainder of the year | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
Total Notes Payable as of September 30, 2025 and December 31, 2024 were as follows:
| September 30, | December 31, | |||||||
| Notes Payable | 2025 | 2024 | ||||||
| Senior secured promissory note (“SSPN”) #1 | $ | - | $ | |||||
| SSPN #2 | - | |||||||
| SSPN #3 | - | |||||||
| Promissory note payable | ||||||||
| Economic injury disaster loans (EIDL) | ||||||||
| Acquisition Settlement Agreement | ||||||||
| Total | $ | $ | ||||||
| Current portion: | ||||||||
| Less: current portion-SSPNs | - | ( | ) | |||||
| Less: current portion-Promissory note payable | - | ( | ) | |||||
| Less: current portion-EIDL | ( | ) | ( | ) | ||||
| Acquisition Settlement Agreement | ( | ) | ( | ) | ||||
| Notes payable, net of current | $ | $ | ||||||
22
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Note 6 — Commitments and Contingencies
Leases
The
Company has operating leases for office space in several states. Lease terms are negotiated on an individual basis. Generally, the leases
have initial terms ranging from
The Company leases its corporate office from an entity controlled by the Company’s CEO. In addition, some of the entities acquired lease their offices from their former owners, who now hold a minority interest in those entities.
During
January 2025, the Company entered into a new lease for office space in Orlando, FL. The Orlando lease requires monthly payments of $
During
July 2025, the Company renewed its lease of the corporate office space in Celebration, FL, which is owned by an entity controlled by
our CEO. The Celebration lease requires monthly payments of $
During
August 2025, the Company entered into a new lease for office space in Puerto Rico. The Puerto Rico lease requires monthly payments of
$
Lease costs for the three month periods ended
September 30, 2025 and 2024 were $
Supplemental cash flow information related to leases is as follows:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Right-of-use assets obtained in exchange for lease liabilities | ||||||||
Supplemental balance sheet information related to leases is as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Lease liability, current | $ | $ | ||||||
| Lease liability, noncurrent | ||||||||
| $ | $ | |||||||
The
Company’s leases do not provide a readily determinable implicit discount rate. The Company estimates its incremental borrowing
rate as the discount rate based on the information available at lease commencement. The weighted average discount rate is
23
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Future maturities on lease liabilities as of September 30, 2025, are as follows:
| September 30, | ||||
| 2025 | ||||
| 2025 – remainder of year | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease obligations | ||||
| Less: current portion | ( | ) | ||
| Long-term portion of lease obligations | $ | |||
There were no leases with residual value guarantees.
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 $
On January 3, 2024, Ms. Sarah Palmer filed a putative national class action complaint against La Rosa Realty, LLC in the United States District Court, Middle District of Florida, Orlando Division. Ms. Palmer alleges that she received two (2) brief pre-recorded calls one week apart to her cell phone from La Rosa Realty, LLC presenting her an employment opportunity as a real estate agent. Ms. Palmer seeks an undisclosed amount of monetary damages from La Rosa Realty, LLC for the alleged would-be injurious, isolated and opportunistic employment gestures to her through a purported nationwide class action. Ms. Palmer claims that the defendant violated her privacy, annoyed and harassed her, constituted a nuisance, and occupied her telephone line. On March 12, 2024, La Rosa Realty, LLC filed a motion to dismiss the case with prejudice. The action settled at mediation and was dismissed on May 20, 2025 without prejudice pending completion of the settlement terms.
On March 5, 2025, Joshua Epstein filed an action 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 from the defendant, La Rosa Holdings Corp. Original partial mediation occurred on September 5, 2025, then was reset for December 2, 2025. The Company denies the merits of the claims and intends on vigorously defending the litigation.
24
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
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 $
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.
Note 7 — Equity Shares and Warrants
July 2025 Warrant Exchange Agreements
During
July 2025, the Company entered into two warrant exchange agreements (the “Exchange Agreements”) with two holders of previously
issued equity-classified warrants to purchase shares of the Company’s Common Stock (one Exchange Agreement was entered into with
the Company’s Chief Executive Officer. The terms of the Exchange Agreement provided each holder with
Upon
the respective settlement dates in July 2025, the Company measured the fair value of the newly issued shares of the Company’s Common
Stock issued as consideration to be approximately $
As the difference between the
fair value of the Warrants settled ($
Warrants
are issued to consultants as compensation or as part of certain capital raises which entitle the holder to purchase shares of the Company’s
common stock at a fixed price. As of September 30, 2025, the Company’s stock price was $
During the first half of 2025, the Company settled
all vested and outstanding warrants previously held by the accredited investor holding the three senior secured notes payable from 2024.
Two of the three warrants were exercised on a cashless basis for a total of
Warrants
issued to two investors who loaned money to the Company, Emmis Capital II, LLC and the Company’s CEO, Joseph La Rosa, on November
14, 2022 and December 2, 2022, respectively, included full ratchet antidilutive protections. The original warrants each covered
At September 30, 2025, warrants outstanding that have vested and are expected to vest are as follows:
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | |||||||||||||||
| Number | Average | Contractual | Aggregate | |||||||||||||
| of | Exercise | Life | Intrinsic | |||||||||||||
| Shares | Price(1) | (in years) | Value(1) | |||||||||||||
| Vested | $ | — | ||||||||||||||
| Expected to vest | — | — | — | — | ||||||||||||
| Total | $ | — | ||||||||||||||
25
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Additional information with respect to warrant activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Exercise | |||||||
| Shares | Price | |||||||
| Balance — December 31, 2024 | $ | |||||||
| Granted/Increase to existing warrants | ||||||||
| Exercised | ( | ) | ||||||
| Expired or forfeited | ( | ) | ||||||
| Balance — March 31, 2025 | $ | |||||||
| Granted | ||||||||
| Grants pursuant to a ratchet provision | — | — | ||||||
| Balance — June 30, 2025 | $ | |||||||
| Granted | — | — | ||||||
| Grants cancelled pursuant to warrant exchange | ( | ) | ||||||
| Balance — September 30, 2025 | $ | |||||||
As of September 30, 2025 and December 31, 2024, there was no unrecognized expense related to warrants.
The valuation methodology used to determine the fair value of the warrants was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the warrant.
Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s estimated volatility is an average of the historical volatility of peer entities over the shorter of i) the period equal to the expected life of the award or ii) the period over which the peer company was publicly traded. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the award at the grant date.
The weighted average fair value of warrants granted for the period ended September 30, 2025 and December 31, 2024 and the assumptions used in the Black-Scholes model are set forth in the table below.
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | (audited) | |||||||
| Weighted average fair value | $ | $ | ||||||
| Dividend yield | — | — | ||||||
| Expected volatility factor | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
Note 8 — Stockholders’ Equity
Equity Purchase Facility Agreement
On
August 4, 2025, the Company and an institutional investor (the “Investor”) entered into an Equity Purchase Facility Agreement
(the “EPFA”), pursuant to which the Company has the right to issue and sell to the Investor up to $
On
September 18, 2025, the Company and the Investor entered into the Amended and Restated Equity Purchase Facility Agreement in order to
increase the Commitment Amount to $
26
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Under
the terms of the EPFA, the Company has the right (but not the obligation) to request that the Investor purchase shares of the Company’s
Common Stock, subject to certain conditions and limitations (an “Advance”). The purchase price of the shares to be sold under
an Advance is
The EPFA was determined to represent a combination
of a purchased put option on the Company’s common stock (prior to an Advance, the “EPFA Option”) as well a forward
contract to deliver the Company’s common stock (after an Advance, but prior to delivery of the shares). The EPFA Option was determined
to be a freestanding financial instrument which did not meet the criteria to be accounted for as a derivative instrument or to be recognized
within equity. Pursuant to ASC 815 Derivatives and Hedging (“ASC 815”), the Company will therefore recognize the EPFA
Option as an asset or liability, measured at fair value at the date of issuance and at each reporting period, with changes in fair value
recognized in earnings. The EPFA Option was determined to have a fair value of $
Second Amended 2022 Plan
On
July 9, 2025, our Compensation Committee, our Board of Directors, and the stockholders approved the Second Amended 2022 Plan. Pursuant
to the Second Amended 2022 Plan (i) the total number of shares of common stock subject to the plan was revised from
27
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Reverse Split
On July 2, 2025, the Company filed a Certificate
of Amendment to the Company’s Amended and Restated Articles of Incorporation, as amended (the “Articles of Incorporation”),
with the Secretary of State of Nevada to effect an
As
a result of the Reverse Stock Split, every eighty shares of issued and outstanding common stock were automatically combined into one
issued and outstanding share of common stock. No fractional shares were issued as a result of the Reverse Stock Split, fractional entitlements
were rounded up to the next whole number. The Reverse Stock Split reduced the number of shares of common stock outstanding from
Series B Preferred Stock
On
June 18, 2025, with the prior approval by the Company’s Board of Directors, the Company and the Investor entered into, and closed
the transactions contemplated by, that certain Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which
(among other things) the Investor surrendered and exchanged all of its Incremental Warrants in exchange for (the “Exchange”)
Pursuant to the terms of the Exchange Agreement,
conversion of the Series B Preferred Stock into shares of common stock of the Company in excess of
In
connection with the issuance of the Series B Preferred Stock, the Company incurred direct and incremental expenses of $
Convertible preferred stock consisted of the following as of September 30, 2025:
| September 30, 2025 | ||||||||||||||||||||||||
| Shares Authorized | Shares Issued and Outstanding | Carrying Value | Original Issue Price | Conversion Price | Common Shares Upon Conversion | |||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||
28
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Convertible preferred stock is classified within permanent equity and recorded on the accompanying consolidated balance sheet at its issuance date fair value. The holders of the Preferred Stock have the following rights and preferences:
Voting
Holders of shares of Series B Preferred Stock have no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of share of capital stock of the Company, and are not entitled to call a meeting of such holders for any purpose, nor are they entitled to participate in any meeting of the holders of common stock of the Company, except as provided in the Section 16 of the Certificate of Designation or as otherwise required by the Nevada Revised Statutes.
Conversion Rights
Subject to the Maximum Percentage, holders of
outstanding shares of Series B Preferred Stock are entitled to convert any portion of the outstanding and unpaid Conversion Amount (as
hereinafter defined) thereof into shares of common stock at the Conversion Rate (as hereinafter defined). For such purpose: (i) “Conversion
Amount” means the stated value thereof (or $
A
holder of Series B Preferred Stock does not have the right to convert any portion of their shares thereof to the extent that, after giving
effect to such conversion, the holder (together with its affiliates) would beneficially own in excess of the
Subject to certain exceptions outlined in the Certificate of Designation, including, but not limited to, equity issuances in connection with its equity incentive plan and certain strategic acquisitions, if the Company sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other disposition) any shares of common stock or any other securities that are at any time convertible into, or exercisable or exchangeable for, or otherwise entitle the holder thereof to receive, common stock, at an effective price per share less than the Conversion Price of the Series B Preferred Stock then in effect, the Conversion Price of the Series B Preferred Stock will be reduced to equal the effective price per share in such dilutive issuance.
Redemption
Under the Certificate of Designation, the Company has the right to redeem all, but not less than all, of the then outstanding shares of Series B Preferred Stock at a price equal to the greater of (i) the Conversion Amount being redeemed and (ii) the product of (1) the Conversion Rate with respect to the Conversion Amount being redeemed multiplied by (2) the greatest Closing Sale Price (as defined therein) of the common stock on any trading day during the period commencing on the date immediately preceding the date of the Company’s notice to the holder(s) of Series B Preferred Stock of such redemption and ending on the trading day immediately prior to the date the Company makes the entire redemption payment required to be made under the Certificate of Designation.
29
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Dividends
The Series B Preferred Stock bears no dividends.
Liquidation
In the event of a Liquidation Event (as defined
in the Certificate of Designation), the holders of the Series B Preferred Stock shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution to its stockholders, before any amount shall be paid
to the holders of any shares of common stock, but pari passu with any parity stock then outstanding, an amount per share of Series B Preferred
stock equal to the greater of (A)
Share Repurchase Program
On
April 23, 2025, the Company’s Board of Directors approved a new Share Repurchase Program, which authorizes the Company to purchase
up to an aggregate of $
Common Stock Issuances
On
January 17, 2025, the Company issued
On February 5, 2025, the Company issued the CEO
an aggregate of
30
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
On February 20, 2025, the Company issued shares
pursuant a consulting agreement entered into on January 1, 2025 in which the Company agreed to issue
On February 20 and 24, 2025, the Company entered
into marketing agreements pursuant to which the Company agreed to issue
On March 10, 2025, the Company issued
On March 10, 2025, the Company entered into a
marketing agreement pursuant to which the Company agreed to issue
On April 21, 2025, the Company issued the CEO
an aggregate of
On July 7, 2025, the Company issued
On July 8, 2025, the Company issued the remaining
amount of common stock of
On July 14, 2025, the Company entered into an
exchange agreement with certain holder (the “Holder”) of a common stock purchase warrant to purchase
On July 14, 2025, the Company entered into a consulting
agreement pursuant to which the Company agreed to issue
On July 17, 2025, the Company entered into an
exchange agreement with Joseph La Rosa, its Chief Executive Officer and holder of a common stock purchase warrant to purchase
31
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
On August 11, 2025, the Company issued its directors,
officers, certain employees an aggregate
On August 28, 2025, the Company issued
On September 26, 2025, the Company issued
For the nine months ended September 30, 2025,
the holder of our Senior Secured promissory notes converted
For the three months and nine months ended September
30, 2025, the Company utilized their ATM and sold a total of
For the three months and nine months ending September
30, 2025, the Company issued
Stock Option Awards
For the three month and nine months periods ending
September 30, 2025, the Company recorded stock-based compensation for employees’ and directors’ awards of $
At September 30, 2025, options outstanding that have vested and are expected to vest are as follows:
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | |||||||||||||||
| Number | Average | Contractual | Aggregate | |||||||||||||
| of | Exercise | Life | Intrinsic | |||||||||||||
| Shares | Price | (in years) | Value | |||||||||||||
| Vested | $ | $ | - | |||||||||||||
| Expected to vest | - | |||||||||||||||
| Total | $ | $ | - | |||||||||||||
32
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Additional information with respect to stock option activity:
| Weighted | ||||||||
| Number | Average | |||||||
| of | Exercise | |||||||
| Shares | Price | |||||||
| Balance — December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Expired or forfeited | — | — | ||||||
| Balance — March 31, 2025 | $ | |||||||
| Granted | ||||||||
| Expired or forfeited | — | — | ||||||
| Balance — June 30, 2025 | $ | |||||||
| Granted | ||||||||
| Expired or forfeited | — | — | ||||||
| Balance — September 30, 2025 | $ | |||||||
During the nine months ended September 30, 2025,
the Company issued an aggregate of
The weighted average fair value of stock options granted in the quarters ended September 30, 2025 and 2024 and the assumptions used in the Black-Scholes model are set forth in the table below.
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| Weighted average fair value | $ | $ | | |||||
| Dividend yield | — | — | ||||||
| Expected volatility factor | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
As of September 30, 2025, unrecognized compensation
expense related to stock option awards totaled $
Restricted Stock Units
| Weighted | ||||||||
| Number | Average | |||||||
| of | Exercise | |||||||
| Shares | Price | |||||||
| Balance — December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Expired or forfeited | ( | ) | ||||||
| Balance — March 31, 2025 | $ | |||||||
| Granted | ||||||||
| Expired or forfeited | ( | ) | ||||||
| Balance — June 30, 2025 | $ | |||||||
| Granted | — | — | ||||||
| Expired or forfeited | ( | ) | ||||||
| Balance — September 30, 2025 | $ | |||||||
On
February 1, 2025, a Restricted Stock Unit (“RSU”) covering
33
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
During the nine months period ending September
30, 2025, the Company issued
For the three month periods ending September 30,
2025 and 2024, the Company recorded $
Note 9 — Earnings Per Share
Basic loss per share of common stock attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share of common stock attributable to common stockholders is computed by giving effect to all potential shares of common stock, including those related to the Company’s outstanding warrants, options and RSUs, to the extent dilutive. For all periods presented, these potential shares were excluded from the calculation of diluted loss per share because their inclusion would be anti-dilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.
The following tables set forth common stock equivalents that have been excluded from the computation of dilutive weighted average shares outstanding as their inclusion would have been antidilutive:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
| Options | ||||||||
| Restricted stock units | ||||||||
| Total | ||||||||
Note 10 — Segments
The
Company’s business is organized into
| 1) | Real Estate Brokerage Services (Residential) |
| 2) | Franchising Services |
| 3) | Coaching Services |
| 4) | Property Management |
| 5) | Real Estate Brokerage Services (Commercial) |
| 6) | Title Settlement and Insurance |
34
La Rosa Holdings Corp.
and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The reporting segments follow the same accounting
policies used in the preparation of the Company’s condensed consolidated financial statements. T
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue by segment | ||||||||||||||||
| Real estate brokerage services (residential) | $ | $ | $ | $ | ||||||||||||
| Franchising services | ||||||||||||||||
| Coaching services | ||||||||||||||||
| Property management | ||||||||||||||||
| Real estate brokerage services (commercial) | ||||||||||||||||
| Title Settlement and Insurance | — | — | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cost of goods sold by segment | ||||||||||||||||
| Real estate brokerage services (residential) | $ | $ | $ | $ | ||||||||||||
| Franchising services | ||||||||||||||||
| Coaching services | ||||||||||||||||
| Property management | ||||||||||||||||
| Real estate brokerage services (commercial) | ||||||||||||||||
| Title Settlement and Insurance | — | — | — | — | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Gross profit by segment | ||||||||||||||||
| Real estate brokerage services (residential) | $ | $ | $ | $ | ||||||||||||
| Franchising services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Coaching services | ||||||||||||||||
| Property management | ||||||||||||||||
| Real estate brokerage services (commercial) | ||||||||||||||||
| Title Settlement and Insurance | — | — | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| G&A by segment | ||||||||||||||||
| Real Estate Brokerage Services (Residential) | $ | $ | $ | $ | ||||||||||||
| Franchising Services | ||||||||||||||||
| Coaching Services | ||||||||||||||||
| Property Management | ||||||||||||||||
| Real Estate Brokerage Services (Commercial) | ||||||||||||||||
| Title Settlement and Insurance | — | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
35
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
In addition to the expenses from these segments,
corporate other expenses, net were $
The following table disaggregates the Company’s revenue based on the type of sale or service and the timing of satisfaction of performance obligations for the three months and nine months ended September 30, 2025 and 2024, respectively.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Performance obligations satisfied at a point in time | $ | $ | $ | $ | ||||||||||||
| Performance obligations satisfied over time | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
Note 11 — Subsequent Events
Equity Issuances
Subsequent to September 30, 2025, the Company
issued an additional
On November 13, 2025, the holder of the Senior
Secured Convertible Note, dated February 4, 2025, converted $
On November 13, 2025, the Company utilized its
EPFA selling
On November 17, 2025, the holder of the Senior
Secured Convertible Note, dated February 4, 2025, converted $
On November 18, 2025, the holder of the Senior
Secured Convertible Note, dated February 4, 2025, converted $
Waiver of Interest Payments and Default
On November 7, 2025, the Company entered into a waiver agreement with the holder of the Company’s Senior Secured Convertible Note, dated February 4, 2025. Under this waiver, the Holder agreed to waive all default penalties, default interest, and any acceleration rights arising from the Company’s failure to make required cash interest payments due July 1, 2025 and October 1, 2025 on the note.
The waiver requires the Company to remit all unpaid cash interest no later than December 31, 2025, unless such note is fully converted before that date. Other than the specific waivers described above, all terms of the note, and other related transaction documents pursuant to which the note was issued remain unchanged. The waiver is effective as of July 1, 2025.
Securities Purchase Agreement
On November 12, 2025, the Company entered into a Securities Purchase
Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which
the Company agreed to issue and sell, and the Investors agreed to purchase, in multiple closings, a new series of senior secured convertible
notes of the Company in an aggregate original principal amount of up to $
The Company expects to issue an initial Note in
an aggregate principal amount of $
The Notes will be convertible into shares (the
“Conversion Shares”) of the Company’s common stock, par value $
36
La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
Pursuant to the Purchase Agreement, on November
12, 2025, the Company issued a Token Right (the “Token Right”) to certain Investors, pursuant to which the holder will be
entitled to receive upon exercise of the Token Right and for no further consideration an aggregate number of Right Tokens (as defined
therein) equal to the sum of (i) fifty percent (
In connection with the Purchase Agreement, on November 12, 2025, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to file a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) to register the resale of all of the Conversion Shares and shares of common stock otherwise issuable pursuant to the Notes within 20 calendar days after the Initial Closing Date and to have such registration statement be declared effective by the SEC within 60 calendar days of the Initial Closing Date. Pursuant to the terms of the Registration Rights Agreement, the Company must also file one or more additional registration statements for the resale of the Registrable Securities (as defined in the Registration Rights Agreement), if necessary.
Pursuant to the Purchase Agreement, the Company
must use the net proceeds from the sale of the securities as follows: (A) at the Initial Closing, (i) $
A.G.P./Alliance Global Partners served as placement
agent in connection with the offering and will receive cash compensation not exceeding
Redemption Agreement
In connection with the Purchase Agreement, on November 12, 2025, the
Company and Mr. La Rosa entered into a redemption agreement (“Redemption Agreement”), pursuant to which, on the Initial Closing
Date the Company will redeem and immediately cancel and return to the status of “blank check” preferred stock of the Company,
a number of Mr. La Rosa’s shares of Series X Preferred Stock such that, immediately after such redemption, he will own shares of
Series X Preferred Stock representing not less than
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La
Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
The parties also agreed that in the event that the Company receives any notice from a prospective investor (including the Investors) that such prospective investor would provide, or commit to provide, equity or debt financing to the Company but for the existence of any then outstanding shares of Series X Preferred Stock, the Company will, within twenty-four (24) hours following receipt of such notice, redeem all remaining issued and outstanding shares of Series X Preferred Stock for no additional consideration.
In addition, under the Redemption Agreement, Mr. La Rosa agreed, subject to certain customary exceptions, not to sell, offer to sell, contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any of his shares of the Series X Preferred Stock during the term of the Redemption Agreement, without the consent of the Lead Buyer (as defined in the Purchase Agreement).
Amended Employment Agreement
On November 12, 2025, following the approval of the Board, the Company and Mr. La Rosa, entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”), which amends and restates that certain Amended and Restated Employment Agreement between the Company and Mr. La Rosa, dated April 29, 2022, as amended, in its entirety.
Pursuant to the terms of the Amended Employment Agreement, the Company
will pay Mr. La Rosa an annual base salary of $
The Amended Employment Agreement is for an initial term ending December
31, 2027, which term will be automatically extended, upon the same terms and conditions, for successive periods of
If Mr. La Rosa’s employment is terminated by his failure to renew his agreement, or by Mr. La Rosa without “good reason” (as defined in the Amended Employment Agreement), then he will be entitled to receive: (i) a sum equal to 60 days’ of base salary (“Lump Sum Payment”), paid in a lump sum no later than one week after the end of the Release Execution and Recission Period (as defined in the Amended Employment Agreement); (ii) any accrued but unpaid base salary and accrued but unused paid time off; (iii) reimbursement for unreimbursed business expenses properly incurred; and (iv) such equity compensation and employee benefits, if any, to which he may be entitled under the Company’s equity compensation and employee benefit plans as of the date of termination (items (ii) and (iv) are collectively referred to as the “Accrued Amounts”).
Amendment to Articles of Incorporation
On November 10, 2025, in connection with the entry into the Purchase Agreement, the Board approved (i) a Certificate of Amendment (the “Certificate of Amendment”) to the Articles of Incorporation to provide that the shares of the Series X Preferred Stock may be redeemed from time to time and at any time in whole or in part upon such terms and conditions as may be approved by the Board and agreed to by the holder(s) thereof, and (ii) an amendment to the Articles with respect to a reverse stock split of the issued and outstanding shares of common stock, at a ratio of any whole number in the range of one-for-five (1:5) to one-for-one-hundred (1:100) (the “Future Reverse Stock Split”) to be effected by the Board at any time within one (1) year from the date of the stockholders’ approval, with such timing and ratio to be determined in the discretion of the Board for all stockholders as of the date of the effectiveness of the Future Reverse Stock Split, with the right to abandon the Future Reverse Stock Split, if the Board, in its discretion, determines that it is no longer in the best interests of the Company or its stockholders (“Reverse Stock Split Amendment”).
On November 12, 2025, the stockholders holding a majority of the voting power of the Company approved the Certificate of Amendment and the Reverse Stock Split Amendment. Such approval will be effective 20 days after the Company files a definitive information statement on Schedule 14C and commences mailing such definitive information statement to the Company’s stockholders pursuant to Exchange Act. Once the stockholders’ approval is effective, the Company will file the Certificate of Amendment with the Secretary of State of the State of Nevada, and the amendment will be effective upon such filing.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis are intended to help investors understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Cautionary Statement Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | our expectations regarding consumer trends in residential real estate transactions; |
| ● | our expectations regarding overall economic and demographic trends, including the continued growth of the U.S. residential real estate market; |
| ● | our ability to grow our business organically in the various local markets that we serve; |
| ● | our ability to attract and retain additional qualified agents and other personnel; |
| ● | our ability to expand our franchises in both new and existing markets; |
| ● | our ability to increase the number of closed transactions sides and sides per agent; |
| ● | our ability to cross-sell our services among our subsidiaries; |
| ● | our ability to maintain compliance with the law and regulations of federal, state, foreign, county and local governmental authorities, or private associations and governing boards; |
| ● | our ability to expand, maintain and improve the information technologies and systems that we rely upon to operate; |
| ● | our ability to prevent security breaches, cybersecurity incidents and interruptions, delays and failures of our technology infrastructure; |
| ● | our ability to retain our founder and current executive officers and other key employees; |
| ● | our ability to identify quality potential acquisition candidates in order to accelerate our growth; |
| ● | our ability to manage our future growth and dependence on our agents; |
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| ● | our ability to maintain the strength of our brands; |
| ● | our ability to maintain and increase our financial performance; |
| ● | the market price for our common stock may be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and minimal profits, which could lead to wide fluctuations in our share price; |
| ● | there have recently been recent instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated to company performance following a number of recent initial public offerings, particularly among companies, like ours, that have had relatively smaller public floats; |
| ● | sales of our common stock by us or our stockholders, which may result in increased volatility in our stock price; and |
| ● | other factors, including the risks contained in the section entitled “Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the U.S. Securities Exchange Commission (“SEC” or “Commission”) on April 15, 2025, relating to our industry, our operations, and results of operations. |
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements.
Moreover, new risks regularly emerge, and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us on the date of this Quarterly Report on Form 10-Q. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Quarterly Report on Form 10-Q.
Business Overview
We are the holding company for six agent-centric, technology-integrated, cloud-based, multi-service real estate segments.
Our business was founded by Mr. Joseph La Rosa, a successful real estate developer, business and life coach, author, podcaster, and public speaker. Mr. La Rosa’s self-help book “Do It Now” is a roadmap to personal success and well-being based on his transformative theories of family, passion and growth. His philosophy, seminars and educational forums have attracted numerous successful realtors that have spurred the growth of our business.
In addition to providing person-to-person residential and commercial real estate brokerage services to the public, we cross-sell ancillary technology-based products and services primarily to our sales agents and the sales agents associated with our franchisees. Our business is organized based on the services we provide internally to our agents and to the public, which are residential and commercial real estate brokerage, franchising, real estate brokerage education and coaching, property management, and title services. Our real estate brokerage business operates primarily under the trade name La Rosa Realty. We have 25 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, North Carolina and Puerto Rico. The Company also has 5 La Rosa Realty franchised real estate brokerage offices and branches and 3 affiliated real estate brokerage offices, that pay us fees in 7 states in the United States and Puerto Rico. We also have LR Realty Spain, which is a full-service brokerage office located primarily in Malaga, Spain. Additionally, the Company has a full-service escrow settlement and title company in Florida.
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Our real estate brokerage offices, both corporate and franchised, are staffed with 3,116 licensed real estate brokers and sales associates as of September 30, 2025.
Our franchised offices are currently:
| Name | Location | |
| La Rosa Realty Internacional, LLC | Celebration, Florida | |
| La Rosa Realty Central Florida, LLC | Davenport, Florida | |
| La Rosa Realty Jacksonville, LLC | Jacksonville, Florida | |
| La Rosa Realty Kendall, LLC | Miami, Florida | |
| The Realty Experience Powered By LRR LLC | St. Cloud, Florida |
We have built our business by providing the home-buying public with well-trained, knowledgeable realtors who have access to our proprietary and third-party in-house technology tools and quality education and training, and valuable marketing that attracts some of the best local realtors who provide value-added services to our home buyers and sellers that are attracted to our brands. We give our real estate brokers and sales agents who are seeking financial independence a turnkey solution and support them in growing their brokerages while they fund their own businesses.
Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. They can then use these additional commissions to reinvest in their businesses or as take-home profit. We believe that this is a strong incentive for them to compete against the discount, flat fee and internet brokerages that have sprung up in the past several years. Instead of us taking a greater share of their income, our agents pay what we believe to be reduced rates for training and mentorship and our proprietary technology. Our franchise model has a similar pricing methodology, permitting the franchise owner the freedom to operate their business with minimal control and lower expense than other franchise offerings.
Moreover, we believe that our proprietary technology, training, and the support that we provide to our agents at a minimal cost to them is one of the best offered in the industry.
Our business stands on three pillars: Family, Passion, and Growth. We believe that our support and philosophy have attracted and will continue to attract and retain the highest producing realtors in our local markets. We believe that our focus on the interaction between our human agents and their clients is a strong weapon against internet-only commodity websites and the low touch discount brokerages. Our agent count continues to grow organically and through acquisition, we attribute our organic growth to the positive culture created in our Company and the competitive plans that we offer our agents. By creating a custom solution and a unique experience, we believe that our agents are able to guide their clients seamlessly through what may be their most expensive lifetime purchase.
On October 12, 2023, we consummated our IPO. Following our IPO, during the fiscal year ended December 31, 2023, we acquired majority ownership of the following franchisees of the Company: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.), Horeb Kissimmee Realty, LLC, La Rosa Realty Premier, LLC, La Rosa Realty Orlando, LLC, and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC and La Rosa Realty North Florida LLC. In December 2023, we also formed our majority owned subsidiary La Rosa Realty Texas LLC. During the fiscal year ended December 31, 2024, we acquired majority ownership of the following franchisees and affiliates of the Company: La Rosa Realty Georgia LLC, La Rosa Realty California, La Rosa Realty Lakeland LLC DBA La Rosa Realty Prestige, and La Rosa Realty Success LLC, and 100% ownership of La Rosa Realty Winter Garden LLC, BF Prime LLC, Nona Title Agency LLC, La Rosa Realty Beaches LLC, and Baxpi Holdings LLC. Additionally, we acquired the remaining non-controlling interest portions of Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) and La Rosa Realty Premier, LLC, making them both 100% owned entities.
In December 2024, the Company opened its first office and wholly owned subsidiary in North Carolina, La Rosa Realty NC LLC. In January 2025, the Company formed LR Luxury, LLC, engaged mostly in the residential real estate brokerage business. In April 2025, the Company formed LR Agent Advance, LLC, offering a commission advancement program exclusively for La Rosa agents. In 2025, we also formed LR Realty Spain, S.L., our wholly owned subsidiary in Spain.
We continuously search for potential acquisition targets. Management is in discussions with several franchisees and other entities; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.
On September 12, 2025, the Company dissolved one of its wholly owned subsidiaries, Baxpi Holdings LLC, which was non-operational, in an effort to simplify the Company’s corporate structure.
On November 12, 2025, the Company engaged with a special advisor in connection with the Company’s new strategy to leverage its real estate platform and access to new capital in order to expand into the AI ecosystem through strategic acquisitions, partnerships, and the development of next-generation data center facilities.
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Recent Developments
Convertible Note Facility
On November 12, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, and the Investors agreed to purchase, in multiple closings, a new series of senior secured convertible notes of the Company in an aggregate original principal amount of up to $250,000,000 (the “Notes”), subject to the satisfaction or waiver of certain closing conditions, including, inter alia, entering into the Redemption Agreement, and Amended Employment Agreement (as such terms are defined below), in each case between the Company and Mr. Joseph La Rosa, and the Company issuing to an Investor certain Token Rights (as defined in the Purchase Agreement).
Pursuant to the Purchase Agreement, on November 12, 2025, the Company issued a Token Right (the “Token Right”) to certain Investors, pursuant to which the holder will be entitled to receive upon exercise of the Token Right and for no further consideration an aggregate number of Right Tokens (as defined therein) equal to the sum of (i) fifty percent (50%) of any and all Tokens (as defined in the Token Right) purchased by the Company using the net proceeds of each Closing (as defined in the Notes) and (ii) twenty-five percent (25%) of any and all Tokens purchased by the Company using the net proceeds of any Other Financing (as defined therein). The Token Right can be exercised at any time beginning on the date that is the sixty (60) day anniversary of the issuance date of the Token Right and ending on the ten (10) year anniversary of the issuance date of the Token Right.
The Company has also agreed to use reasonable efforts to obtain stockholder approval (the “Stockholder Approval”) within thirty (30) days of the Initial Closing Date (as defined in the Notes) for the issuance of the shares of common stock issuable pursuant to the Notes in accordance with Nasdaq Listing Rules, the approval of an amendment to the Amended and Restated Articles of Incorporation of the Company, as amended (the “Articles of Incorporation”) to effect a reverse stock split at such later date and at ratio to be determined by the Company’s Board of Directors, and the approval of an amendment to the Articles of Incorporation to permit the redemption of the Company’s Series X Super Voting Preferred Stock, par value $0.0001 per share (the “Series X Preferred Stock”). On November 12, 2025, the stockholders holding majority of the voting power of the Company provided the Stockholder Approval by written consent in lieu of having a stockholders meeting. Such Stockholder Approval will become effective 20 days after the Company commences mailing of a definitive information statement on Schedule 14C to stockholders of record as of the close of business on November 12, 2025.
In connection with the Purchase Agreement, on November 12, 2025, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to file a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) to register the resale of all of the Conversion Shares and shares of common stock otherwise issuable pursuant to the Notes.
A.G.P./Alliance Global Partners served as placement agent in connection with the offering and will receive cash compensation not exceeding 7% of the gross proceeds of each Closing.
In connection with the Purchase Agreement, on November 12, 2025, the Company and Mr. La Rosa entered into a redemption agreement (“Redemption Agreement”), pursuant to which, on the Initial Closing Date the Company will redeem and immediately cancel and return to the status of “blank check” preferred stock of the Company, a number of Mr. La Rosa’s shares of Series X Preferred Stock such that, immediately after such redemption, he will own shares of Series X Preferred Stock representing not less than 80% of the total voting power of the Company for a redemption price of $2,000,000 payable on the Initial Closing Date, and $500,000 contingently payable upon the satisfaction by the Company of its SEC filing requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for four consecutive quarters and certain other four-quarter requirements set forth therein. Mr. La Rosa’s remaining shares of Series X Preferred Stock will be redeemed by the Company at a subsequent time determined by the Board or otherwise as set forth in the Redemption Agreement as described below, in each case for no additional consideration. These redemptions of the Series X Preferred Stock are conditioned upon stockholders’ approval and effectiveness of the Certificate of Amendment to the Articles of Incorporation, permitting the redemption of Series X Preferred Stock.
The parties also agreed that in the event that the Company receives any notice from a prospective investor (including the Investors) that such prospective investor would provide, or commit to provide, equity or debt financing to the Company but for the existence of any then outstanding shares of Series X Preferred Stock, the Company will, within twenty-four (24) hours following receipt of such notice, redeem all remaining issued and outstanding shares of Series X Preferred Stock for no additional consideration.
In addition, under the Redemption Agreement, Mr. La Rosa agreed to certain lock-up restrictions on his shares of the Series X Preferred Stock during the term of the Redemption Agreement.
On November 12, 2025, following the approval of the Board of Directors of the Company, the Company and Mr. La Rosa, entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”), which amends and restates that certain Amended and Restated Employment Agreement between the Company and Mr. La Rosa, dated April 29, 2022, as amended, in its entirety.
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ATM Offering
On November 22, 2024, the Company entered into a sales agreement (“ATM Agreement”) with A.G.P./Alliance Global Partners, as sales agent, relating to the sale of common stock. During the three month ended September 30, 2025, the Company issued an aggregate of 75,000 shares of common stock pursuant to the ATM Agreement for net proceeds of $838,390. The Company paid the sales agent compensation with respect to sale of such shares in the amount of $25,935.
Facility and Amended Facility Agreement
On August 4, 2025 (the “Original Agreement Date”), the Company entered into the Equity Purchase Facility Agreement (“Existing Facility Agreement”) with an institutional investor (“Facility Investor”), pursuant to which the Facility Investor committed to purchase, subject to certain conditions and limitations, up to $150,000,000 (the “Commitment Amount”) in newly issued shares of the common stock of the Company (the “Facility”). In connection with the Facility, on the Original Agreement Date the Company entered into a Registration Rights Agreement (the “Existing RRA”) with the Facility Investor.
Pursuant to the terms of the Existing Facility Agreement, the issuance of shares of common stock in excess of 19.99% of the Company’s outstanding shares of common stock was conditional upon obtaining the approval of the Company’s stockholders in accordance with the rules and regulations of the Nasdaq Capital Market. On August 6, 2025, the stockholders, holding approximately 96.3% of the votes of our outstanding voting stock approved the Existing Facility Agreement and Existing RRA, including, but not limited to the issuance of the shares of common stock in excess of 19.99% of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq Capital Market, in compliance with the rules and regulations of the Nasdaq Capital Market. On August 8, 2025, the Company filed a preliminary information statement on Schedule 14C with the SEC notifying stockholders of such approval. The Company filed a definitive information statement on Schedule 14C with the SEC and commenced mailing of the definitive information statement to stockholders of record on August 18, 2025. Such stockholders’ approval became effective on September 7, 2025. In accordance with the terms of the Existing RRA, on August 11, 2025, the Company filed with the SEC a Registration Statement on Form S-1 (Reg. No. 333-289503) to register up to 100,000,000 shares of common stock issuable pursuant to the Existing Facility Agreement. Such registration statement, as amended, was declared effective by the SEC on August 22, 2025.
On September 18, 2025 (“Amendment Date”), the Company and the Facility Investor entered into the Amended Facility Agreement, pursuant to which the parties agreed to increase the Commitment Amount under the Facility from $150 million to $1.0 billion in shares of common stock. The Amended Facility Agreement amends and restates the Existing Facility Agreement in its entirety. Except for the increase in the Commitment Amount, all material terms and conditions of the Amended Facility Agreement are substantially the same as those provided in the Existing Facility Agreement. In connection with the Amended Facility Agreement, on the Amendment Date, the Company also entered into an amended and restated registration rights agreement with the Facility Investor with respect to the resale of the shares of common stock issuable under the Amended Facility Agreement (the “Amended RRA”). The Amended RRA amends and restates the Existing RRA.
On September 19, 2025, stockholders, holding approximately 95.7% of the votes of our outstanding voting stock approved the Amended Facility Agreement and Amended RRA, including, but not limited to the issuance of the shares of common stock in excess of 19.99% of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq Capital Market, in compliance with the rules and regulations of the Nasdaq Capital Market. On September 19, 2025, the Company filed a preliminary information statement on Schedule 14C with the SEC notifying stockholders of such approval. On September 29, 2025, the Company filed a definitive information statement on Schedule 14C with the SEC and commenced mailing of the definitive information statement to stockholders of record on September 19, 2025. Such stockholders’ approval became effective on October 19, 2025. In accordance with the terms of the Amended RRA, on September 25, 2025, the Company filed with the SEC a Registration Statement on Form S-1 (Reg. No. 333-290510) to register up to 283,333,333 shares of common stock issuable pursuant to the Amended Facility Agreement. Such registration statement, as amended, was declared effective by the SEC on September 30, 2025.
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February 2025 Financing and June 2025 Exchange Agreement
On February 4, 2025 (“Closing Date”), the Company entered into the SPA with an institutional investor (“2025 Investor”) pursuant to which it agreed to issue and sell to the 2025 Investor upon the terms and conditions set forth in the SPA on such date: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on the two-year anniversary of the Closing Date (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (Incremental Notes and together with the Initial Note, the “Notes”). The Incremental Warrants and Initial Note were issued to 2025 Investor on the Closing Date. The purchase price paid by 2025 Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750, which was used by the Company to pay-off certain indebtedness, pay certain outstanding fees and expenses, acquisitions and general corporate purposes. The Company also granted 2025 Investor registration rights in the shares of common stock issuable pursuant to the SPA and conversion of the Notes. The Company and its subsidiaries also entered into a security agreement with or in favor of the 2025 Investor pursuant to which the Company and its subsidiaries granted the 2025 Investor a security interest in certain property of the Company and its subsidiaries to secure the Company’s obligations under the Notes. The Company also agreed to obtain stockholder approval for the issuance of more than 19.99% of the issued and outstanding common stock in this financing.
On the Closing Date, as required by the SPA, stockholders holding a majority of the voting power of the Company, approved (i) the issuance of the Initial Note, the Incremental Warrants and Incremental Notes, all Interest Shares and all of the Conversion Shares and Incremental Conversion Shares (each as defined in the SPA) in excess of 19.99% (without regard to any limitation on conversion or exercise thereof) of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq in accordance with Nasdaq Listing Rules 5635(b) and 5635(d); (ii) authorization to complete a reverse split of our common stock; and (iii) authorization to increase the number of authorized shares of our common stock to ensure that the Company has a sufficient number of authorized shares reserved for issuance to equal at least 200% of the maximum number of shares issuable upon conversion of the Notes, as determined under the Securities Purchase Agreement. Such approval was effective on March 27, 2025, or 20 days after commencement of mailing of the definitive information statement regarding this approval to the stockholders of the Company.
On June 18, 2025, with the prior approval by the Company’s Board of Directors, the Company and the 2025 Investor entered into, and closed the transactions contemplated by, that certain Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which (among other things) the 2025 Investor surrendered and exchanged all of its Incremental Warrants in exchange for (the “Exchange”) 6,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”). On the same date, the Company filed a Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada. The Initial Note remains outstanding post-Exchange.
Pursuant to the terms of the Exchange Agreement, conversion of the Series B Preferred Stock into shares of common stock of the Company in excess of 19.99% of the Company’s outstanding shares of common stock is conditional upon obtaining the approval of the Company’s stockholders in accordance with the rules and regulations of the Nasdaq Capital Market. On July 9, 2025, Joseph La Rosa and JLR-JCCLT1 Land Trust, controlled by Mr. La Rosa, approved such conversion and the terms of the Exchange Agreement in their capacity as stockholders of the Company holding a majority of the voting power of the Company by written consent in lieu of having a stockholders meeting. On July 11, 2025, the Company filed a preliminary information statement on Schedule 14C with the SEC notifying stockholders of such written consent. On July 21, 2025, the Company filed a definitive information statement on Schedule 14C with the SEC and commenced mailing the definitive information statement to stockholders of record as of the close of business on July 9, 2025. Such stockholders’ approval became effective on August 11, 2025.
On June 26, 2025, the Company and 2025 Investor signed Amendment No. 1 to the Initial Note to correct an administrative error in the definition of maturity date and alternate conversion price in the Initial Note.
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Letter of Intent with MiiX Financial
On September 12, 2025, the Company announced that it has entered into a non-binding Letter of Intent with MiiX Financial Holdings Trust (“MiiX’) to jointly implement and distribute MiiX’s proprietary residential financing solutions for all credit levels across La Rosa’s network of agents and all of its listings. The cooperation is intended to establish a long-term strategic alliance between the two companies, centered on MiiX’s groundbreaking platform that eliminates traditional credit requirements and provides accessible homeownership solutions for buyers of all income and credit levels. The platform also introduces advanced real estate monetization tools capable of enabling same-day property purchasing, trading, settlement, and recordings similar to the speed and efficiency of financial markets.
Increase of the Authorized Stock
On February 4, 2025, our Board of Directors, and the stockholders holding a majority of the voting power of the Company approved the Certificate of Amendment to the Company’s Amended and Restated Articles of Incorporation to increase the number of the Company’s authorized shares of common stock to two billion (2,000,000,000) shares of common stock, and to restate Sections 3.01 and 3.02 thereof to reflect such increase. Such an increase became effective on June 2, 2025.
Nasdaq Continued Listing Requirements
On October 10, 2024, the Company received a letter from the Nasdaq Listing Qualifications Department stating that, for the 30 consecutive business day period between August 28, 2024 through October 9, 2024, the Company’s common stock had not maintained a minimum closing bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). On July 21, 2025, the Company received a letter from Nasdaq confirming that the Nasdaq Listing Qualifications Department has determined that for the 10 consecutive business days, from July 7 through July 18, 2025, the closing bid price of the Company’s common stock was at $1.00 per share or greater. Accordingly, the Company regained compliance with the Bid Price Rule, and the matter is now closed.
On May 30, 2025, the Company received a letter from Nasdaq indicating that, because the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the period ended March 31, 2025 was $(83,377,044), the Company is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing. On August 21, 2025, the Company received a letter from Nasdaq confirming that the Nasdaq Listing Qualifications Department has determined that the Company complies with Nasdaq Listing Rule 5550(b)(1) based on the Company’s Form 10-Q for the period ended June 30, 2025, evidencing stockholders’ equity of $7,595,799, and the matter is now closed.
Second Amended and Restated 2022 La Rosa Holdings Corp. Equity Incentive Plan
On July 9, 2025, our Compensation Committee, our Board of Directors, and the stockholders holding a majority of the voting power of the Company (by written consent in lieu of a stockholders’ meeting) approved the Second Amended and Restated La Rosa Holdings 2022 Equity Incentive Plan (“Second Amended 2022 Plan”). Pursuant to the Second Amended 2022 Plan (i) the total number of shares of common stock subject to the plan was revised from 156,250 shares (as adjusted for the 80-for-1 reverse stock split effected by the Company on July 7, 2025) to 374,961 shares to ensure sufficient shares are available for future grants, and (ii) the term “Consultant” was clarified to include not only a person, including an advisor, engaged by the Company, its subsidiary or affiliate to render services to the Company or its subsidiary, but also a legal entity wholly-owned by such person. The Second Amended 2022 Plan will replace the Amended and Restated La Rosa Holdings 2022 Equity Incentive Plan adopted on November 19, 2024 by the stockholders of the Company, in its entirety. On July 11, 2025, the Company filed a preliminary information statement on Schedule 14C with the SEC notifying stockholders of such written consent. On July 21, 2025, the Company filed a definitive information statement on Schedule 14C with the SEC and commenced mailing the definitive information statement to stockholders of record as of the close of business on July 9, 2025. Such stockholders’ approval and the Second Amended 2022 Plan became effective on August 11, 2025.
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My Agent Account Version 4.0
On July 7, 2025, the Company announced the launch of My Agent Account (MAA) Version 4.0, a major enhancement to the Company’s proprietary agent platform. The new version, which went live on July 1, 2025, features a fully integrated Transaction Management module that is intended to deliver significant cost savings to the Company by improving efficiency, reducing manual processes, and eliminating reliance on expensive third-party systems. MAA, the Company’s proprietary platform, was designed to empower agents with a comprehensive suite of tools and resources. Serving as a centralized hub, it enables agents by streamlining daily operations, consolidating essential business tools, and reducing administrative workload. With the introduction of the new transaction module, the Company has significantly improved the platform’s ability to manage workflows. All La Rosa agents have access to MAA and are required to pay an annual subscription fee per agent for it.
Change in Controlled Company Status
As of December 31, 2024, the Company qualified as a “controlled company” because more than 50% of the voting power for the election of directors was held by Joseph La Rosa, our Chief Executive Officer and Chairman. As a result of certain sales under the Company’s previously announced at-the-market offering, as of April 16, 2025, Mr. La Rosa no longer held more than 50% of the voting power for the election of directors. As a result, the Company was no longer considered a “controlled company” for the purposes of the listing requirements of the Nasdaq Capital Market. Since the Company did not avail itself of certain of the controlled company exemptions afforded by Nasdaq to controlled companies, such change in the Company’s status did not result in any corporate governance changes for the Company. On July 7, 2025, the Company regained a “controlled company” status as a result of a Reverse Stock Split that provided Mr. Joseph La Rosa with possession of more than 50% of the voting power of the Company.
Reverse Stock Split
On July 2, 2025, the Company effected a 1-for-80 reverse stock split of the common stock, issued and outstanding, effective as of 12:01 a.m. (New York time) on July 7, 2025. On February 4, 2025, the Company’s stockholders holding a majority of the voting power of the Company by a written consent approved the amendment to the Company’s Amended and Restated Articles of Incorporation, as amended, to effect a reverse stock split of the Company’s common stock at a ratio in the range of 1-for-20 to 1-for-100, with such ratio to be determined by the Company’s Board of Directors. Such resolution became effective on March 28, 2025, or twenty (20) days after the Company filed with the SEC and mailed to its stockholders respective Information Statement on Schedule 14C on or approximately March 7, 2025. Following such stockholders’ approval, the Board of Directors determined to effect the reverse stock split at a ratio of 1-for-80 (“Reverse Stock Split”). As a result of the Reverse Stock Split, every eighty (80) shares of issued and outstanding common stock were automatically combined into one (1) issued and outstanding share of common stock. Unless noted otherwise, all share and the price per share information for all periods presented in this report have been retroactively adjusted for the Reverse Stock Split.
Description of Our Revenues
Our financial results are primarily driven by the total number of sales agents in our Company, the number of sales agents closing residential real estate transactions, the number of sales agents utilizing our coaching services, the number of agents who work with our franchisees, and the number of properties under management. We increased our agent count by 17.7%, from 2,647 at September 30, 2024 to 3,116 at September 30, 2025.
The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisees’ agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees, and our franchisees’ agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, (vii) fees generated from title services revenue and insurance and (viii) fees from our events and forums.
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The majority of our revenue is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest, taxes, depreciation and amortization (“EBITDA”). Historically, the number of agents in the residential real estate industry has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue comes from fees tied to the number and size of real estate transactions closed by our agents. While the Company was not named as a defendant in any of the recent class action lawsuits alleging antitrust violations, it is possible that it could be a litigant at some point in the future. Several of these lawsuits have been settled (see our Annual Report on Form 10-K for 2024 fiscal year “Risk Factors – Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results). These settlements will result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition and results of operations for the foreseeable future.
Key factors affecting our performance
As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.
Seasonality
Our business is affected by the seasons and weather. The spring and summer seasons, when school is out, have typically resulted in higher sales volumes compared to fall and winter seasons. With the slowdown in the later months, we have experienced slower listing activity, fewer transaction closings and lower revenues and have seen more agent turnover as well. Bad weather or natural disasters also negatively impact listings and sales which reduces our operating income, net income, operating margins and cash flow. While this pattern is fairly predictable, there can be no assurance that it will continue. Moreover, with the impact of climate change, we expect more business disruptions in the coming years, many of which could be unpredictable and extreme.
Our revenues and operating margins will fluctuate in successive quarters due to a wide variety of factors, including seasonality, weather, health exigencies, holidays, national or international emergencies, the school year calendar’s impact on timing of family relocations, and changes in mortgage interest rates. This fluctuation may make it difficult to compare or analyze our financial performance effectively across successive quarters.
Inflation and Market Interest Rates
The U.S. Federal Reserve continues to take action intended to address inflation. The Federal Reserve Board maintained the federal funds rate at 533 basis points from August of 2023 through mid-September 2024, when it was reduced to 483 basis points. In September 2025, the federal funds rate was 422 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and reached a peak of about 8% during the second half of 2023. That interest rate sat in between 6.62% and 6.85% during 2024 and fell to 6.30% by the end of September 2025. In September 2025, existing-home sales rose 1.5% month-over-month to a seasonally adjusted rate of 4.06 million. Year-over-year, sales rose 4.1%. Total homes for sale were 1.6 million, a rise of 14% over last year, with a median sales price of $415,200, a 2.1% rise over last year. According to NAR Chief Economist Lawrence Yun, “As anticipated, falling mortgage rates are lifting home sales. Improving housing affordability is also contributing to the increase in sales.”
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Recent Legal Challenges to Sales Agents’ Commission Structure
Recent developments in the real estate industry have seen increased scrutiny and legal challenges related to the structure of real estate agent commissions. Legal actions and regulatory inquiries have been initiated to examine the fairness, transparency, and potential anticompetitive practices associated with the traditional commission model. Courts and regulatory bodies may be increasingly focused on ensuring transparency in commission structures, potentially leading to reforms that impact the earnings and business models of real estate professionals. Changes in legislation or legal precedents could impact the standard practices of commission-sharing between listing agents and buyer’s agents and may adversely affect our business model and revenues. On October 31, 2023, a federal jury in Missouri found that NAR and certain companies conspired to artificially inflate brokerage commissions, which violates federal antitrust law. The judgment was appealed on October 31, 2023, while these and other plaintiffs have filed similar lawsuits against a number of other large real estate brokerage companies. We have not, as of the date hereof, been named as a defendant in any antitrust litigation. On or about March 15, 2024, NAR agreed to settle these lawsuits, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions. This settlement resolves claims against NAR and nearly every NAR member; all state, territorial and local REALTOR® associations; all association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below and is subject to court approval. Due to this litigation, there will be rule changes for the NAR. In the settlement, effective mid-July 2024, NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS, as well as adopt new rules requiring written agreements between buyers and buyers’ agents. However, the direct and indirect effects, if any, of the judgment upon the real estate industry are not yet entirely clear.
There could also be further changes in real estate industry practices. All of this has prompted discussion of changes to rules established by local or state real estate boards or multiple listing services. All of this may require changes to many brokers’ business models, including changes in agent and broker compensation. For example, we will likely have to develop mechanisms and a plan that enable buyers and sellers to negotiate commissions. The Company will continue to monitor ongoing and similar antitrust litigation against our competitors. However, the litigation and its ramifications could cause unforeseen turmoil in our industry, the impacts of which could have a negative effect on us as an industry participant.
Cybersecurity
Our business faces cybersecurity risks that could have a material adverse effect on our business operations, financial condition, and reputation. Key factors contributing to cybersecurity risks include, but are not limited to:
| ● | Constantly Evolving Threat Landscape: The landscape of cybersecurity threats is constantly evolving, with new attack vectors, malware, and vulnerabilities emerging regularly. We may not be able to anticipate or mitigate all potential threats effectively. |
| ● | Data Vulnerability: We collect, store, and process sensitive customer and corporate data, making us a target for cybercriminals seeking to steal or exploit this information. A data breach could lead to financial and legal liabilities, including regulatory fines and customer trust erosion. |
| ● | Third-Party Risks: Our reliance on third-party service providers exposes us to risks associated with their cybersecurity practices. A breach or security failure in a third-party system could impact our operations and data. |
| ● | Phishing and Social Engineering: Employees and individuals connected to our organization may be susceptible to phishing attacks or social engineering tactics that compromise security. Human error or manipulation can lead to breaches. |
| ● | Regulatory Compliance: We are subject to various data protection and privacy regulations, and non-compliance could result in legal and financial penalties. Adhering to these regulations requires ongoing efforts and resources. |
| ● | Business Interruption: A cyberattack or system breach may disrupt our operations, affecting our ability to serve customers, fulfill orders, and maintain revenue, resulting in financial losses. |
| ● | Reputation Damage: A publicized cybersecurity incident can significantly damage our brand and reputation, leading to customer churn and reduced market confidence. |
The SEC cybersecurity disclosure rules for public companies require disclosure regarding cybersecurity risk management (including the corporate board’s role in overseeing cybersecurity risks, management’s role and expertise in assessing and managing cybersecurity risks, and processes for assessing, identifying and managing cybersecurity risks) in annual reports. These cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K, generally within four days of determining an incident is material. We have included respective disclosures in our Annual Report on Form 10-K for fiscal year ended December 31, 2024 filed with the Commission on April 15, 2025.
We may at times fail (or be perceived to have failed) in our efforts to comply with our privacy and data security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely on may fail to comply with such obligations, which could negatively impact our business operations.
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Any failure or perceived failure by us or third parties upon whom we rely to comply with obligations, relating to privacy and data security may result in significant consequences including but not limited to governmental investigations and enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar), litigation, additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal information.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to loss of customers; interruptions or stoppages in our business operations; inability to process personal information; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Critical Accounting Estimates
A critical accounting estimate is one that is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. During the nine months ended September 30, 2025, the Company entered into a securities purchase agreement providing for the issuance of a convertible note and incremental warrants which required a fair value evaluation under ASC 825. This evaluation constituted an additional critical accounting estimate to the Company. See Note 4 Fair Value Measurements and Other Liabilities and Note 5 Borrowings to the accompanying condensed consolidated financial statements for more information. There have been no other material changes to the Company’s critical accounting estimates as compared to the estimates described in the Annual Report on Form 10-K as of December 31, 2024 which we believe are the most critical to our business and understanding of our results of operations and affect the more significant judgments and estimates that we use in preparation of our condensed consolidated financial statements. Other than the fair value evaluation mentioned above, there have been no other material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K as of December 31, 2024.
Results of Operations
Revenue
Three Months Ending September 30
| Three Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 16,770,173 | $ | 16,484,016 | $ | 286,157 | 2 | % | ||||||||
| Franchising Services | 27,947 | 65,713 | (37,766 | ) | -57 | % | ||||||||||
| Coaching Services | 152,764 | 125,262 | 27,502 | 22 | % | |||||||||||
| Property Management | 3,108,891 | 2,853,735 | 255,156 | 9 | % | |||||||||||
| Real Estate Brokerage Services (Commercial) | 103,833 | 64,310 | 39,523 | 61 | % | |||||||||||
| Title Settlement and Insurance | 52,535 | - | 52,535 | NM | ||||||||||||
| Total Revenue | $ | 20,216,143 | $ | 19,593,036 | $ | 623,107 | 3 | % | ||||||||
NM: Not Meaningful
Real Estate Brokerage Services (Residential)
Residential real estate services sales revenue increased by approximately $286 thousand, or 2%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase was driven primarily by residential real estate sales increasing and the related acquisitions of BF Prime on August 19th of 2024 and Beaches on December 31, 2024.
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Franchising Services
Franchising services revenue decreased by approximately $38 thousand, or 57%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease is attributable to the acquisition of franchises in fiscal year 2024, which no longer contribute to franchising royalties fees. Our remaining franchisees did not see a significant changes in transaction revenues between periods.
Coaching Services
Coaching services revenue increased by approximately $28 thousand, or 22%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to increases in agent counts offset by a strategic shift to allow large teams to onboard without coaching in an effort to increase onboarding which reduced coaching revenues.
Property Management
Property management revenue increased by approximately $255 thousand, or 9%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to an increase in the number of properties under management.
Nine months Ending September 30
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 50,750,399 | $ | 42,580,179 | $ | 8,170,220 | 19 | % | ||||||||
| Franchising Services | 97,947 | 278,902 | (180,955 | ) | -65 | % | ||||||||||
| Coaching Services | 369,990 | 469,279 | (99,289 | ) | -21 | % | ||||||||||
| Property Management | 9,169,187 | 8,156,002 | 1,013,185 | 12 | % | |||||||||||
| Real Estate Brokerage Services (Commercial) | 348,919 | 248,993 | 99,926 | 40 | % | |||||||||||
| Title Settlement and Insurance | 208,313 | - | 208,313 | NM | ||||||||||||
| Total Revenue | $ | 60,944,755 | $ | 51,733,355 | $ | 9,211,400 | 18 | % | ||||||||
NM: Not Meaningful
Real Estate Brokerage Services (Residential)
Residential real estate services sales revenue increased by approximately $8.2 million, or 19%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase was driven primarily by acquisitions completed in the 4th quarter of fiscal year 2024 along with incremental additional revenue from the acquisitions in the first three quarters of fiscal year 2024.
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Franchising Services
Franchising services revenue decreased by approximately $181 thousand, or 65%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decrease is attributable to the acquisitions completed in fiscal year 2024 that were franchisees, which no longer contribute to franchising royalties fees. Our remaining franchisees did not see a significant changes in transaction revenues between the per.
Coaching Services
Coaching services revenue decreased by approximately $99 thousand, or 21%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a strategic shift to allow large teams to onboard without coaching in an effort to increase onboarding at the expense of Coaching.
Property Management
Property management revenue increased by approximately $1.01 million, or 12%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to an increase in the number of properties under management.
Gross Profit and Gross Margin
Three Months Ending September 30
| Three Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 1,569,045 | $ | 1,515,544 | $ | 53,501 | 4 | % | ||||||||
| Gross Margin | 9.4 | % | 9.2 | % | ||||||||||||
| Franchising Services | $ | (86,110 | ) | $ | (57,581 | ) | $ | (28,529 | ) | 50 | % | |||||
| Gross Margin | -308.1 | % | -87.6 | % | ||||||||||||
| Coaching Services | $ | 47,920 | $ | 54,369 | $ | (6,449 | ) | -12 | % | |||||||
| Gross Margin | 31.4 | % | 43.4 | % | ||||||||||||
| Property Management | $ | 101,505 | $ | 99,125 | $ | 2,380 | 2 | % | ||||||||
| Gross Margin | 3.3 | % | 3.5 | % | ||||||||||||
| Real Estate Brokerage Services (Commercial) | $ | 23,286 | $ | 24,449 | $ | (1,163 | ) | -5 | % | |||||||
| Gross Margin | 22.4 | % | 38.0 | % | ||||||||||||
| Title Settlement and Insurance | $ | 52,535 | $ | - | $ | 52,535 | NM | |||||||||
| Gross Margin | 100.0 | % | 0.0 | % | ||||||||||||
| Total Gross Profit | $ | 1,708,181 | $ | 1,635,906 | $ | 72,275 | 4 | % | ||||||||
| Total Gross Margin | 8.4 | % | 8.3 | % | 0.1 | % | ||||||||||
NM: Not Meaningful
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Real Estate Brokerage Services (Residential)
Gross margin normalized and overall increased by approximately $54 thousand or 4% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, related to positive growth in margins related to plan and agent mix from the Ultimate Plans as well as agent onboarding from 2024 acquisitions.
Franchising Services
Gross margin decreased by approximately $29 thousand, or 50%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, related to the acquisition of the franchises acquired during 2024.
Coaching Services
Gross margin decreased by approximately $6 thousand, or 12%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Costs related to coaching services is related to the augmentation of the coaching program to expedite agent onboarding due to a shift in priority to growth in onboarding without a coaching requirement.
Property Management
Gross margin related to property management services increased by approximately $2 thousand, or 2%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase in property management revenues and costs was primarily related to an increase in properties under management.
Title Settlement and Insurance
We acquired Nona Title rebranded FPG Title near the end of the third quarter of 2024, increases are related to this acquisition generating revenues, cost of revenues and general and administrative expenses for the first time for the three months ended September 30, 2025.
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Nine months Ending September 30
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 4,625,244 | $ | 3,937,670 | $ | 687,574 | 17 | % | ||||||||
| Gross Margin | 9.1 | % | 9.2 | % | -0.1 | % | ||||||||||
| Franchising Services | $ | (241,269 | ) | $ | (97,934 | ) | $ | (143,335 | ) | 146 | % | |||||
| Gross Margin | -246.3 | % | -35.1 | % | -211.2 | % | ||||||||||
| Coaching Services | $ | 126,263 | $ | 213,722 | $ | (87,459 | ) | -41 | % | |||||||
| Gross Margin | 34.1 | % | 45.5 | % | -11.4 | % | ||||||||||
| Property Management | $ | 299,810 | $ | 255,952 | $ | 43,858 | 17 | % | ||||||||
| Gross Margin | 3.3 | % | 3.1 | % | 0.1 | % | ||||||||||
| Real Estate Brokerage Services (Commercial) | $ | 79,716 | $ | 74,804 | $ | 4,912 | 7 | % | ||||||||
| Gross Margin | 22.8 | % | 30.0 | % | -7.2 | % | ||||||||||
| Title Settlement and Insurance | $ | 208,313 | $ | - | $ | 208,313 | NM | |||||||||
| Gross Margin | 100.0 | % | 0.0 | % | 100.0 | % | ||||||||||
| Total Gross Profit | $ | 5,098,077 | $ | 4,384,214 | $ | 713,863 | 16 | % | ||||||||
| Total Gross Margin | 8.4 | % | 8.5 | % | -0.1 | % | ||||||||||
NM: Not Meaningful
Real Estate Brokerage Services (Residential)
Gross margin related to residential real estate brokerage services increased by approximately $0.7 million, or 17%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase was driven by approximately $7.5 million of cost of revenue primarily from the four acquisitions completed in the fourth quarter of fiscal year 2023 and the six acquisitions completed in the first three quarters of fiscal year 2024.
Franchising Services
Gross margin decreased by approximately $143 thousand, or 146%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, related to the acquisition of the franchises acquired in the 2024.
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Coaching Services
Gross margin decreased by approximately $87 thousand, or 41%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Costs related to coaching services is related to the augmentation of the coaching program to expedite agent onboarding due to a shift in priority to growth in onboarding without a coaching requirement.
Property Management
Gross margin related to property management services increased by approximately $44 thousand, or 17%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase in property management revenues and costs was primarily related to an increase in properties under management.
Title Settlement and Insurance
We acquired Nona Title rebranded FPG Title near the end of the third quarter of 2024, increases are related to this acquisition generating revenues, cost of revenues and general and administrative expenses for the first time for the nine months ended September 30, 2025.
Selling, General and Administrative Expense
Three Months Ending September 30
| Three Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Sales and Marketing | $ | 157,412 | $ | 246,369 | $ | (88,957 | ) | -36 | % | |||||||
| Payroll and benefits | 1,850,887 | 1,160,580 | 690,307 | 59 | % | |||||||||||
| Rent and other | 521,223 | 287,900 | 233,324 | 81 | % | |||||||||||
| Professional fees | 828,284 | 452,827 | 375,457 | 83 | % | |||||||||||
| Office | 61,720 | 127,165 | (65,445 | ) | -51 | % | ||||||||||
| Technology | 281,001 | 103,167 | 177,834 | 172 | % | |||||||||||
| Insurance, training and other | 149,635 | 138,323 | 11,311 | 8 | % | |||||||||||
| Public company costs | 357,482 | 192,130 | 165,352 | 86 | % | |||||||||||
| Amortization and deprecation | 167,687 | 285,524 | (117,837 | ) | -41 | % | ||||||||||
| Total SG&A Expenses | $ | 4,375,331 | $ | 2,993,985 | $ | 1,381,346 | 46 | % | ||||||||
NM: Not Meaningful
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Selling, general and administrative costs increased by approximately $1.38 million, or 46%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Of this $375 thousand is related to professional service, and $690 thousand is related to payroll and benefits which were added to support the acquisitions, administrative, sales and marketing activities in addition public company cost increased by $165 thousand related to financing activities and other compliance matters.
Nine months Ending September 30
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Sales and Marketing | $ | 1,326,859 | $ | 691,704 | $ | 635,155 | 92 | % | ||||||||
| Payroll and benefits | 4,868,404 | 3,075,137 | 1,793,267 | 58 | % | |||||||||||
| Rent and other | 1,285,851 | 773,087 | 512,765 | 66 | % | |||||||||||
| Professional fees | 2,478,705 | 1,162,346 | 1,316,359 | 113 | % | |||||||||||
| Office | 242,403 | 299,022 | (56,619 | ) | -19 | % | ||||||||||
| Technology | 558,780 | 271,431 | 287,349 | 106 | % | |||||||||||
| Insurance, training and other | 448,421 | 439,102 | 9,319 | 2 | % | |||||||||||
| Public company costs | 678,237 | 1,063,635 | (385,398 | ) | -36 | % | ||||||||||
| Amortization and deprecation | 585,699 | 725,867 | (140,168 | ) | -19 | % | ||||||||||
| Total SG&A Expenses | $ | 12,473,359 | $ | 8,501,331 | $ | 3,972,028 | 47 | % | ||||||||
NM: Not Meaningful
Selling, general and administrative costs increased by approximately $4.0 million, or 47%, in the nine months September 30, 2025 as compared to the nine months ended September 30, 2024. Of this $1.3 million is related to professional service, and $1.8 million is related to payroll and benefits which were added to support the acquisitions, administrative, sales and marketing activities.
Stock-based compensation
We incurred stock-based compensation of approximately $2.3 million and $4.8 million in the three and nine months ended September 30, 2025, respectively, primarily due to option and other grants to our CEO pursuant to the terms of his employment agreement ($2.2 million) and consultant shares granted for various advisory and marketing functions ($1.5 million) and other grants to our agents and employees in the form of restricted stock units.
We incurred stock-based compensation of approximately $390 thousand and $4.1 million in the three and nine months ended September 30, 2024, respectively, due to option grants to our CEO pursuant to the terms of his employment agreement $2.1 million), other employees ($1.0 million), and investors and consultants who provided various services to the company ($1.0 million).
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Other Income (Expense), Net
Other income (expense), net for the three months ended September 30, 2025, decreased approximately $91 thousand compared to other income (expense), net, for the three months ended September 30, 2024. The decrease in expense in 2025 was primarily due the 2024 loss of $722 thousand offset by the 2024 fair value adjustments for derivatives and warrants.
Other expense, net for the nine months ended September 30, 2025, increased approximately $9.5 million compared to other expense, net, for the nine months ended September 30, 2024. The increase in expense in 2025 was primarily due to the loss on issuance of senior secured convertible note for $128.8 million, offset by gain on extinguishment of incremental warrants $82.3 million, gain of $31.8 million on the change in fair value of convertible note and warrants and a $4.6 million gain on extinguishment of debt.
Liquidity and Capital Resources
On September 30, 2025, the Company had a cash balance of $4.0 million and working capital of $1.2 million.
On February 4, 2025, the Company and an institutional investor entered into the SPA, pursuant to which the Company issued to the Investor: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on February 4, 2027 (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (“Incremental Notes” and together with the Initial Note, the “Notes”). The purchase price paid by the Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750.
The $4,963,750 in gross proceeds of which $910,250, $496,191 and $148,724 were used to assume or extinguish other debt for net proceeds of $3,408,585. Remaining funds from the offering was used by the Company to pay-off certain indebtedness of the Company, pay certain outstanding fees and expenses (including expenses of the offering, and fees payable to the placement agent and advisors), acquisitions and general corporate purposes. Of the proceeds from the offering, $354,450 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreements with Cedar Advance, LLC, $340,421 was paid to satisfy, in full, the remaining balance of the standard merchant cash advance agreement with Arin Funding, LLC and $910,250 was paid to satisfy, in full, the remaining balance of the senior secured promissory notes with an accredited investor. See Note 5 – Borrowings for further discussion to the accompanying condensed consolidated financial statements for further disclosure.
In addition to the debt pay downs during the nine months ended September 30, 2025, the Company eliminated all warrants tied to the investor senior secured promissory notes outstanding as of December 31,2024. Two of the three warrants were exercised on a cashless basis, with the third warrant being bought back by the Company in the amount of $379,083, fully eliminating these unfavorable ratchet warrants.
The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, the Company will require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Until such time that the Company fully implements its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead and costs of being a public company. As such, the Company anticipates that its existing working capital, including cash on hand, and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the consolidated financial statements. The Company will be required to raise additional capital to service its promissory notes, to repay the principal balance of each of the notes, and to fund ongoing operations.
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The Company has incurred recurring net losses, and the Company’s operations have not provided net positive cash flows. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company plans on continuing to expand via acquisition, which will help achieve future profitability, and the Company has plans to raise capital from outside investors, as it has done in the past, to fund operating losses and to provide capital for further business acquisitions. There can be no assurance the Company can successfully raise the capital needed.
Summary of Cash Flows
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net Cash Used in Operating Activities | $ | (6,232,547 | ) | $ | (1,341,369 | ) | ||
| Net Cash Provided by Investing Activities | $ | - | $ | 71,718 | ||||
| Net Cash Provided by Financing Activities | $ | 9,087,302 | $ | 2,144,066 | ||||
Cash Flows from Operating Activities
During the nine months ended September 30, 2025, operating activities consumed $6.2 million of our cash on hand, which was primarily attributable to the net loss of $6.6 million, excluding stock-based compensation, gains and losses on issuance of senior secured convertible notes and warrants, fair market value adjustments, amortization, depreciation and other changes, changes in operating assets and liabilities provided $382 thousand, mostly due to an increase in accounts payable and accrued expenses and an decrease in operating lease liabilities.
During the nine months ended September 30, 2024, operating activities consumed $1.9 million of our cash on hand, which was primarily attributable to the net loss of $9.3 million, excluding stock-based compensation, amortization and depreciation, non-cash interest expense and amortization of debt discounts and provision for credit losses, partially offset by changes in working capital of $1.2 million, mostly due to an increase in accounts payable, accrued expenses, security deposit payables, partially offset by an increase in payments on lease liabilities.
Cash Flows from Investing Activities
During the nine months ended September 30, 2025 there were no activities that consumed cash.
During the nine months ended September 30, 2024, we completed seven acquisitions with capital stock and three of the seven with additional cash payments totaling $240 thousand. Each of the seven acquisitions had an aggregate amount of $265 thousand of cash.
Cash Flows from Financing Activities
During the nine months ended September 30, 2025, we received net cash provided by financing activities of $9.1 million, which included net proceeds from our S-3 of $7.5 million and from our debt issuance in February 2025 of $3.4 million, offset by $1.8 million in payments to notes payable, post-acquisition consideration, and advances on future receipts.
During the nine months ended September 30, 2024, we received net cash provided by financing activities of $3.4 million, which included the proceeds of our debt issuances in February, April and July 2024, a draw on the line of credit and the receipt of the advances on future receipts all totaling $3.6 million, proceeds from issuance of common stock of $1.9 million offset by deferred debt issuance costs, payments on notes payable, and payments to advances on future receipts and post-acquisition consideration all totaling $2.1 million.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of September 30, 2025, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Interim Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures are ineffective, as we are a newly publicly traded company with limited resources in our finance department, and we are in the process of establishing our procedures around our disclosure controls.
Changes in Internal Control over Financial Reporting
As reported in our Annual Report on Form 10-K for 2024 fiscal year, material weaknesses were identified due to lack of segregation of duties, control environment and size and nature of cybersecurity staffing. We have therefore concluded that our internal controls over financial reporting are not effective at the reasonable assurance level. A material weakness is a deficiency, or combination of deficiencies, in our internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis.
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, it is difficult to effectively segregate accounting duties which comprises a material weakness in internal controls. To the extent reasonably possible given our limited resources, we intend to take measures to cure the weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate controls over our Exchange Act reporting disclosures. As such, we consider these material weaknesses to not be remediated as of September 30, 2025.
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(t) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. 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.
As previously disclosed, 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. On April 11, 2023, Company filed a motion to dismiss. Original mediation was scheduled for August 25, 2025 with a second mediation set for December 1, 2025. There have been no other changes as the attorneys work on discovery and negotiations with the plaintiff’s counsel. The Company denies the merits of the claims and intends on vigorously defending the litigation.
As previously disclosed, on January 3, 2024, Ms. Sarah Palmer filed a putative national class action complaint against La Rosa Realty, LLC in the United States District Court, Middle District of Florida, Orlando Division. Ms. Palmer alleges that she received two (2) brief pre-recorded calls one week apart to her cell phone from La Rosa Realty, LLC presenting her an employment opportunity as a real estate agent. Ms. Palmer seeks an undisclosed amount of monetary damages from La Rosa Realty, LLC for the alleged would-be injurious, isolated and opportunistic employment gestures to her through a purported nationwide class action. Ms. Palmer claims that the defendant violated her privacy, annoyed and harassed her, constituted a nuisance, and occupied her telephone line. On March 12, 2024, La Rosa Realty, LLC filed a motion to dismiss the case with prejudice. The action settled at mediation and was dismissed on May 20, 2025 without prejudice pending completion of the settlement terms.
As previously disclosed, on March 5, 2025, Joshua Epstein filed an action 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 from the defendant, La Rosa Holdings Corp. Original partial mediation occurred on September 5, 2025, then was reset for December 2, 2025. The Company denies the merits of the claims and intends on vigorously defending the litigation.
As previously disclosed, 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. The case remains pending.
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.
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ITEM 1A. RISK FACTORS.
Certain shares previously issued and sold under our Third Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan may have been sold in violation of federal and state securities laws and may be subject to rescission rights and other penalties, requiring us to repurchase shares sold thereunder.
During the period from December 31, 2024 to September 30, 2025, the Company mistakenly issued an aggregate of 3,068 shares (as adjusted for the reverse stock split effected on July 7, 2025) of restricted common stock to its contractors pursuant to Third Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan (a part of the La Rosa Holdings Corp. 2022 Equity Incentive Plan, as amended), as free trading shares (the “Sales”). At the time of issuance of such securities, the Company mistakenly relied on the Registration Statement on Form S-8 (File No. 333-275118) filed by the Company with the SEC and declared effective upon such filing on October 20, 2023, while the shares issued in such Sales were not registered pursuant to such registration statement.
Because the registration statement did not cover the Sales, the Sales could be determined to be unregistered sales of securities and, in accordance with Section 5 of the Securities Act, direct purchasers in the Sales may have rescission rights pursuant to which they may be entitled to recover the amount paid for such shares, plus statutory interest, upon returning the shares to us within one year from the transaction date. In addition, we could be subject to enforcement actions or penalties and fines by federal and/or state regulatory authorities. We cannot predict the likelihood of any claims or actions being brought against us or the amount of any penalties or fines in connection with the Sales.
Except as disclosed above in this Section “Item 1A. Risk Factors,” there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) In addition to the issuances of unregistered securities described in the Current Reports on Form 8-K filed by the Company with the SEC, in the third quarter of 2025 the Company issued the following securities which were not registered under the Securities Act.
During the period from December 31, 2024 to September 30, 2025, the Company issued an aggregate of 3,068 shares of unregistered common stock to contractors pursuant to Third Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan, including 1,088 shares of unregistered common stock issued in the third quarter of 2025.
In the quarter ended September 30, 2025, the Company issued 644 unregistered shares of common stock to consultants pursuant to their respective consulting agreements with the Company.
Unless otherwise noted, the securities above were issued pursuant to the registration requirements of the Securities Act provided by Section 4(a)(2) and/or Rule 506 of Regulation D promulgated under the Securities Act, in light of the fact that none of the issuances involved a public offering of securities and no solicitation or advertisements for such securities were made by any party.
(b) Not applicable.
(c) None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
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ITEM 6. EXHIBITS.
(a) Exhibits. The following documents are filed as part of this report:
| Exhibit No.: | Description: | |
| 2.1 | Reorganization Agreement And Plan of Share Exchange dated July 22, 2021 by and among La Rosa Holdings Corp., La Rosa Coaching, LLC, La Rosa CRE, LLC, La Rosa Franchising, LLC, La Rosa Property Management, LLC, and La Rosa Realty, LLC. (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of June 14, 2022). | |
| 3.1 | Amended and Restated Articles of Incorporation of La Rosa Holdings Corp. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of June 14, 2022). | |
| 3.2 | Certificate of Amendment to Articles of Incorporation for 3.5 for 1 reverse stock split (incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of April 19, 2022). | |
| 3.3 | Certificate of Correction of Certificate of Amendment to Articles of Incorporation for 10 for 1 reverse stock split (incorporated by reference to Exhibit 3.5 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of April 19, 2022). | |
| 3.4 | Certificate Of Designations, Preferences And Rights Of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.6 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of April 26, 2023). | |
| 3.5 | Certificate of Amendment to Articles of Incorporation for 2 for 1 forward stock split (incorporated by reference to Exhibit 3.7 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of April 26, 2023). | |
| 3.6 | Certificate of Amendment to Articles of Incorporation on increase of authorized stock (incorporated by reference to Exhibit 3.8 of the Company’s Registration Statement on Form S-1 (File No. 284962) filed with the SEC as of June 27, 2025). | |
| 3.7 | Certificate of Designation of Series B Convertible Preferred Stock of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC as of June 20, 2025) | |
| 3.8 | Certificate of Amendment to Amended and Restated Articles of Incorporation of La Rosa Holdings Corp., filed on July 2, 2025 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC as of July 8, 2025). | |
| 3.9 | Certificate of Correction of the Company filed on July 14, 2025 to the Certificate of Designation of Series B Convertible Preferred Stock of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 16, 2025). | |
| 3.10 | Form of Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company (Series X Preferred Stock Redemption) (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 3.11 | Form of Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company (Reverse Stock Split Amendment) (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 3.12 | Bylaws of La Rosa Holdings Corp. (incorporated by reference to Exhibit 3.3 of the Company’s Registration Statement on Form S-1 (File No. 333-264372) filed with the SEC as of June 14, 2022). | |
| 4.1 | Form of Senior Secured Convertible Note (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 4.2 | Form of Incremental Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) |
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| 4.3 | Form of the Waiver, dated April 23, 2025, to the Senior Secured Convertible Note, issued on February 4, 2025(incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC as of April 25, 2025) | |
| 4.4 | Form of Amendment No. 1, dated June 26, 2025, to the Senior Secured Convertible Note, dated February 4, 2025. (incorporated by reference to Exhibit 4.18 of the Company’s Registration Statement on Form S-1 (File No. 284962) filed with the SEC as of June 27, 2025). | |
| 4.5 | Form of Amendment No. 1, dated June 26, 2025, to the Senior Secured Convertible Note, dated February 4, 2025 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC as of July 2, 2025). | |
| 4.6 | Form of Senior Secured Convertible Note (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.1 | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.2 | Form of Security and Pledge Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.3 | Form of Intellectual Property Security Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.4 | Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.5 | Form of Voting Agreement (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.6 | Form of Guaranty (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.7 | Form of Lock-Up Agreement of a certain investor (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.8# | Form of Lock-Up Agreement of the Chief Executive Officer of the Company (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.9# | Amendment No. 4, dated February 3, 2025, to the Amended and Restated Employment Agreement dated April 29, 2022, as amended (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K filed with the SEC as of February 5, 2025) | |
| 10.10 | Third Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan. (incorporated by reference to Exhibit 10.158 of the Company’s Annual Report on Form 10-K filed with the SEC as of April 15, 2025) | |
| 10.11 | Sales Agreement, dated November 22, 2024, by and between the Company and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 1.2 of the Company’s Registration Statement on Form S-3 filed with the SEC as of November 22, 2024 | |
| 10.12 | Form of LR Agent Advance Commission Purchase Agreement (incorporated by reference to Exhibit 10.15 of the Company’s Quarterly Report on Form 10-Q filed with the SEC as of May 29, 2025) | |
| 10.13 | Form of the Waiver Agreement, dated May 23, 2025 (incorporated by reference to Exhibit 10.16 of the Company’s Quarterly Report on Form 10-Q filed with the SEC as of May 29, 2025) | |
| 10.14 | Form of Amendment and Exchange Agreement between the Company and the Investor, dated June 18, 2025 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC as of June 20, 2025) |
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| 10.15 | Form of Voting Agreement between the Company and Joseph La Rosa, dated June 18, 2025 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC as of June 20, 2025) | |
| 10.16 | Second Amended and Restated La Rosa Holdings Corp. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.194 of the Registration Statement on Form S-1 (No. 333-289503) filed with the SEC on August 11, 2025) | |
| 10.17 | Form of Amendment No. 1, dated July 14, 2025, to the Amendment and Exchange Agreement, dated June 18, 2025 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 16, 2025). | |
| 10.18 | Form of Exchange Agreement between the Company and the holder, signed on July 14, 2025 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2025). | |
| 10.19 | Form of Exchange Agreement between the Company and Joseph La Rosa, signed on July 17, 2025 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2025). | |
| 10.20 | Form of Equity Purchase Facility Agreement, dated as of August 4, 2025 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2025). | |
| 10.21 | Form of Registration Rights Agreement, dated as of August 4, 2025 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2025) | |
| 10.22 | Amended and Restated Equity Purchase Facility Agreement, dated as of September 18, 2025 (incorporated by reference to Exhibit 10.200 of the Company’s Registration Statement on Form S-1 (No. 333-290510) filed with the SEC on September 30, 2025) | |
| 10.23 | Amended and Restated Registration Rights Agreement, dated as of September 18, 2025 (incorporated by reference to Exhibit 10.201 of the Company’s Registration Statement on Form S-1 (No. 333-290510) filed with the SEC on September 30, 2025) | |
| 10.24 | Securities Purchase Agreement, dated as of November 12, 2025, by and among the Company and the Investors (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.25 | Registration Rights Agreement, dated as of November 12, 2025, by and among the Company and the Investors (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.26 | Form of Security and Pledge Agreement by and between the Company and the Investors (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.27 | Form of Account Control Agreement by and between the Company and the Investors (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.28 | Form of Token Right (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.29 | Form of Guaranty (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.30 | Redemption Agreement, dated as of November 12, 2025, between the Company and Joseph La Rosa (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.31 | Amended and Restated Employment Agreement, dated as of November 12, 2025, between the Company and Joseph La Rosa (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) |
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| 10.32 | Consulting Agreement by and between the Company and Nick. Adler, dated as of November 12, 2025 (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K filed with the SEC on November 13, 2025) | |
| 10.33* | Office Service Agreement, dated June 30, 2025, between Celebration Corporate Center, LLC and the Company | |
| 10.34* | Commercial Lease Agreement, dated August 29, 2025, between Homespot, Inc., and BF Prime LLC | |
| 21.1* | List of Subsidiaries | |
| 31.1* | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a- 14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a- 14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Schema Document | |
| 101.CAL* | Inline XBRL Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Label Linkbase Document | |
| 101.PRE* | Inline XBRL Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) |
| * | Filed herewith |
| ** | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
| # | Management contracts or compensatory plans, contracts or arrangements. |
64
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LA ROSA HOLDINGS CORP. | ||
| Date: November 19, 2025 | By: | /s/ Joseph La Rosa |
| Name: | Joseph La Rosa | |
| Title: | Founder, Chief Executive Officer, and Director | |
| (Principal Executive Officer) | ||
| Date: November 19, 2025 | By: | /s/ Joseph La Rosa |
| Name: | Joseph La Rosa | |
| Title: | Interim Chief Financial Officer | |
| (Principal
Financial Officer) (Principal Accounting Officer) |
65
FAQ
How did La Rosa Holdings Corp. (LRHC) perform financially in Q3 2025?
For the quarter ended
What were La Rosa Holdings Corp. (LRHC) results for the first nine months of 2025?
For the nine months ended
What is the liquidity position of La Rosa Holdings Corp. as of September 30, 2025?
As of
Why does La Rosa Holdings Corp. disclose substantial doubt about its ability to continue as a going concern?
The company has incurred recurring net losses and its operations have not generated positive cash flows. Management states that existing working capital, cash on hand, and cash from operations are not expected to cover projected operating expenses for at least the next twelve months, so additional capital will be required to service debt and fund operations.
What major financing did La Rosa Holdings Corp. complete in 2025?
On
What is La Rosa Holdings Corp.’s total debt as of September 30, 2025?
As of
What equity and capital-raising arrangements does La Rosa Holdings Corp. have outstanding?
La Rosa Holdings issued 6,000 shares of Series B preferred stock with a fair value of
