UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number: 001-41588

LA ROSA HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Nevada

87-1641189

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1420 Celebration Blvd., 2nd Floor

Celebration, Florida

34747

(Address of principal executive offices)

(Zip Code)

(321) 250-1799

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol(s)		Name of each exchange on which registered:
Common Stock		LRHC		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 15, 2024, the registrant had 16,026,006 shares of common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS	1

	CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023	1

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)	2

	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)	3

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)	5

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34

ITEM 4.	CONTROLS AND PROCEDURES	34

PART II.	OTHER INFORMATION	35

ITEM 1.	LEGAL PROCEEDINGS	35

ITEM 1A.	RISK FACTORS	35

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	36

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36

ITEM 4.	MINE SAFETY DISCLOSURES	36

ITEM 5.	OTHER INFORMATION	36

ITEM 6.	EXHIBITS	37

	SIGNATURES	48

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

	June 30, 2024			December 31, 2023
	(unaudited)			(audited)
Assets
Current assets:
Cash	$	1,551,135		$	959,604
Restricted cash		1,767,107			1,484,223
Accounts receivable, net of allowance for credit losses of $126,595 and $83,456, respectively		898,085			826,424
Total current assets		4,216,327			3,270,251

Noncurrent assets:
Property and equipment, net		12,180			14,893
Right-of-use asset, net		1,107,751			687,570
Intangible assets, net		5,844,654			4,632,449
Goodwill		7,514,169			5,702,612
Other long-term assets		32,285			21,270
Total noncurrent assets		14,511,039			11,058,794
Total assets	$	18,727,366		$	14,329,045
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,842,326		$	1,147,073
Accrued expenses		366,907			227,574
Contract liabilities		120,766			—
Derivative liability		317,400			—
Advances on future receipts		447,801			77,042
Accrued acquisition cash consideration		225,000			300,000
Notes payable, current		1,798,166			4,400
Lease liability, current		459,122			340,566
Total current liabilities		5,577,488			2,096,655

Noncurrent liabilities:
Note payable, net of current		645,294			615,127
Security deposits payable		1,767,107			1,484,223
Lease liability, noncurrent		670,032			363,029
Other liabilities		2,950			2,950
Total non-current liabilities		3,085,383			2,465,329
Total liabilities		8,662,871			4,561,984

Commitments and contingencies (Note 6)

Stockholders’ equity:
Preferred stock - $0.0001 par value; 50,000,000 shares authorized; 2,000 Series X shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		—			—
Common stock - $0.0001 par value; 250,000,000 shares authorized; 15,134,647 and 13,406,480 issued and outstanding at June 30, 2024 and December 31, 2023, respectively		1,513			1,341
Additional paid-in capital		23,715,067			18,016,400
Accumulated deficit		(19,026,624	)		(12,107,756	)
Total stockholders’ equity – La Rosa Holdings Corp. shareholders		4,689,956			5,909,985
Noncontrolling interest in subsidiaries		5,374,539			3,857,076
Total stockholders’ equity		10,064,495			9,767,061
Total liabilities and stockholders’ equity	$	18,727,366		$	14,329,045

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	19,051,420		$	7,486,720		$	32,140,319		$	13,528,356

Cost of revenue		17,465,109			6,819,485			29,392,011			12,233,411

Gross profit		1,586,311			667,235			2,748,308			1,294,945

Operating expenses:
Sales and marketing		212,608			101,893			445,335			193,271
General and administrative		2,740,156			850,477			5,062,011			1,733,738
Stock-based compensation — general and administrative		473,972			4,986			3,665,110			74,300
Total operating expenses		3,426,736			957,356			9,172,456			2,001,309

Loss from operations		(1,840,425	)		(290,121	)		(6,424,148	)		(706,364	)
Other income (expense)
Interest expense, net		(78,607	)		(48,406	)		(98,859	)		(140,539	)
Amortization of debt discount		(264,101	)		(82,274	)		(320,104	)		(674,894	)
Change in fair value of derivative liability		(83,100	)		17,306			(88,100	)		128,784
Other income, net		—			1			—			568
Loss before provision for income taxes		(2,266,233	)		(403,494	)		(6,931,211	)		(1,392,445	)
Benefit from income taxes		—			—			—			—
Net loss		(2,266,233	)		(403,494	)		(6,931,211	)		(1,392,445	)
Less: Net income (loss) attributable to noncontrolling interests in subsidiaries		53,839			—			(12,343	)		—
Net loss after noncontrolling interest in subsidiaries		(2,320,072	)		(403,494	)		(6,918,868	)		(1,392,445	)
Less: Deemed dividend		—			—			230,667			—
Net loss attributable to common stockholders	$	(2,320,072	)	$	(403,494	)	$	(7,149,535	)	$	(1,392,445	)

Loss per share of common stock attributable to common stockholders
Basic and diluted	$	(0.16	)	$	(0.07	)	$	(0.50	)	$	(0.23	)

Weighted average shares used in computing net loss per share of common stock attributable to common stockholders
Basic and diluted		14,863,934			6,004,000			14,268,294			6,003,293

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

	Preferred Stock								Additional					Total			Noncontrolling
Three Months Ended	Series X				Common Stock				Paid-In		Accumulated			Stockholders’			Interest In		Total
June 30, 2024	Shares		Par Value		Shares		Amount		Capital		Deficit			Equity			Subsidiaries		Equity
Balance as of March 31, 2024		2,000	$	—		14,252,716	$	1,425	$	22,283,884	$	(16,706,552	)	$	5,578,757		$	4,405,379	$	9,984,136
Net loss												(2,320,072	)		(2,320,072	)		53,839		(2,266,233	)
Issuance of common stock for acquisitions						571,314		58		892,623					892,681			915,321		1,808,002
Equity awards issued with debt issuance						50,000		4		64,614					64,618					64,618
Stock-based compensation						260,000		26		473,946					473,972					473,972
Issuance of common stock for equity awards, net of shares withheld for taxes						617		—		—					—					—
Balance as of June 30, 2024		2,000	$	—		15,134,647	$	1,513	$	23,715,067	$	(19,026,624	)	$	4,689,956		$	5,374,539	$	10,064,495

	Preferred Stock								Additional						Total			Noncontrolling
Six Months Ended	Series X				Common Stock				Paid-In			Accumulated			Stockholders’			Interest In			Total
June 30, 2024	Shares		Par Value		Shares		Amount		Capital			Deficit			Equity			Subsidiaries			Equity
Balance as of December 31, 2023		2,000	$	—		13,406,480	$	1,341	$	18,016,400		$	(12,107,756	)	$	5,909,985		$	3,857,076		$	9,767,061
Net loss													(6,918,868	)		(6,918,868	)		(12,343	)		(6,931,211	)
Issuance of common stock for acquisitions						1,117,737		112		1,884,339						1,884,451			1,529,806			3,414,257
Equity awards issued with debt issuance						117,000		11		151,225						151,236						151,236
Stock-based compensation						490,000		49		3,665,061						3,665,110						3,665,110
Issuance of common stock for equity awards, net of shares withheld for taxes						3,430		—		(1,958	)					(1,958	)					(1,958	)
Balance as of June 30, 2024		2,000	$	—		15,134,647	$	1,513	$	23,715,067		$	(19,026,624	)	$	4,689,956		$	5,374,539		$	10,064,495

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

(unaudited)

Three Months Ended	Preferred Stock Series A				Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total
June 30, 2023	Shares		Par Value		Shares		Par Value		Shares		Amount		Capital		Deficit			Equity
Balance as of March 31, 2023		2,264	$	—		2,000	$	—		6,004,000	$	600	$	3,993,032	$	(5,278,270	)	$	(1,284,638	)
Net loss																(403,494	)		(403,494	)
Issuance of preferred stock		572		—										576,383					576,383
Extinguishment of derivative liability related to exchange of convertible and related party debt														71,680					71,680
Stock-based compensation														4,986					4,986
Balance as of June 30, 2023		2,836	$	—		2,000	$	—		6,004,000	$	600	$	4,646,081	$	(5,681,764	)	$	(1,035,083	)

Six Months Ended	Preferred Stock Series A				Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total
June 30, 2023	Shares		Par Value		Shares		Par Value		Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2022		—	$	—		2,000	$	—		6,000,000	$	600	$	1,410,724	$	(4,289,319	)	$	(2,877,995	)
Net loss																(1,392,445	)		(1,392,445	)
Issuance of preferred stock		2,836		—										2,846,468					2,846,468
Extinguishment of derivative liability related to exchange of convertible and related party debt														314,589					314,589
Stock-based compensation														74,300					74,300
Shares issued under employee agreements										4,000		—		—					—
Balance as of June 30, 2023		2,836	$	—		2,000	$	—		6,004,000	$	600	$	4,646,081	$	(5,681,764	)	$	(1,035,083	)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(unaudited)

	Six Months Ended June 30,
	2024			2023
Cash Flows from Operating Activities:
Net loss	$	(6,931,211	)	$	(1,392,445	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		3,665,110			74,300
Amortization and deprecation		440,343			—
Noncash lease expense		211,566			—
Change in fair value of derivatives		88,100			(128,784	)
Amortization of debt discount and financing fees		320,104			674,894
Non-cash interest expense		90,922			105,090
Provision for credit losses		43,139			13,201
Changes in Operating Assets and Liabilities:
Accounts receivable		(103,358	)		177,813
Prepaid expenses		5,354			45,000
Accounts payable		626,100			(103,782	)
Accrued expenses		13,691			238,186
Contract liabilities		120,766			—
Security deposits payable		282,884			139,183
Operating lease liabilities		(214,879	)		—
Net Cash Used in Operating Activities		(1,341,369	)		(157,344	)
Cash Flows from Investing Activities:
Cash acquired through acquisition of businesses, net of $60,000 cash paid for acquisitions		71,718			—
Net Cash Provided by Investing Activities		71,718			—
Cash Flows from Financing Activities:
Borrowings on bank line of credit		147,881			189,745
Payments on bank line of credit		(147,881	)		(157,443	)
Proceeds from notes payable		2,250,200			—
Payment of debt issuance costs		(326,879	)		—
Payments on notes payable		(2,834	)		(1,571	)
Proceeds from advances on future receipts		500,000			—
Payments on advances on future receipts		(199,463	)		—
Payments on post-acquisition consideration		(75,000	)		—
Payments related to the public offering		—			(475,072	)
Payments to related party		—			(18,700	)
Issuance of preferred stock		—			923,000
Withholding tax paid on behalf of employees on stock based awards		(1,958	)		—
Net Cash Provided by Financing Activities		2,144,066			459,959

Net Increase in Cash and Restricted Cash		874,415			302,615
Cash and Restricted Cash at Beginning of Period		2,443,827			1,529,922
Cash and Restricted Cash at End of Period	$	3,318,242		$	1,832,537

Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest	$	20,772		$	26,845
Taxes	$	—		$	—

Non-Cash Activities:
Derivative liability embedded in debt instruments	$	229,300		$	—
Issuance of 1,117,737 shares of common stock as consideration of acquisitions of businesses	$	1,884,451		$	—
Issuance of 117,000 shares of common stock as part of the issuance of notes payable	$	151,236		$	—
Convertible debt and related party debt exchanged for 1,912 shares of Series A Convertible Preferred Stock	$	—		$	1,923,468
Decrease in accounts payable related to deferred offering costs	$	—		$	(79,655	)
Issuance of 490,000 shares of common stock for services rendered	$	3,665,110		$	—
Office leases acquired under operating lease obligations	$	609,049		$	—

Reconciliation of Cash and Restricted Cash
Cash	$	1,551,135		$	292,725
Restricted Cash		1,767,107			1,539,812
Cash and Restricted Cash	$	3,318,242		$	1,832,537

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

La Rosa Holdings Corp. and Subsidiaries

Notes to the Interim 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 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 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- and six-month periods ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. 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, 2023, included in the Company’s Annual Report on Form 10-K. The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited financial statements referred to above.

Liquidity – Going Concern and Management’s Plans

On June 30, 2024, the Company had a cash balance of $1.6 million and negative working capital of $1.4 million.

On July 16, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a 13% senior secured promissory note with a principal amount of $468,000 and a purchase price of $444,600 after an original issue discount of $23,400. The note is convertible into shares of the Company’s common stock at the option of the lender. The promissory note begins amortizing five months after the date of the loan, with full maturity occurring twelve months after the date of each loan. See Note 11 — Subsequent Events for additional information.

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.

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.

Reclassifications

Certain items in the prior period’s condensed consolidated financial statements have been reclassified to conform to the current year presentation reflected in the financial statements. Specifically, stock-based compensation was separated from general and administrative expenses on the condensed consolidated statements of operations.

La Rosa Holdings Corp. and Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Recently Adopted Accounting Standards

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for the Company in the fiscal year beginning after December 15, 2023. The Company adopted the standard beginning in fiscal year 2024. The adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification”). The amendments are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s corresponding disclosure rule changes. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently evaluating the ASU to determine its impact on the Company’s income tax disclosures.

Note 2 — Business Combinations

The Company has completed a number of acquisitions in the first half of 2024 and will 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.

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 half of 2024, the Company acquired majority ownership of the following franchisees of the Company: La Rosa Realty Georgia LLC (“Georgia”) and La Rosa Realty California (“California”), La Rosa Realty Lakeland LLC (“Lakeland”), La Rosa Realty Success LLC (“Success”) and 100% ownership of La Rosa Realty Winter Garden LLC (“Winter Garden”). All five franchises engage mostly in the residential real estate brokerage services to the public primarily through sales agents and also provide coaching and support services to agents on a fee basis.

La Rosa Holdings Corp. and Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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 five acquisitions. The values assigned to certain acquired assets and liabilities are preliminary as the Company is continuing to evaluate the fair value of the assets and liabilities and may be adjusted as further information becomes available during the allocation period of up to 12 months from the acquisition date.

	Winter Garden			Georgia			California			Lakeland			Success			Total
Acquired ownership		100	%		51	%		51	%		51	%		51	%
Acquisition date		2/21/2024			3/7/2024			3/15/2024			4/18/2024			5/24/2024
Common stock issued		268,858			276,178			1,387			514,939			56,375			1,117,737

Cash consideration	$	—		$	—		$	—		$	50,000		$	10,000		$	60,000
Equity consideration		352,204			516,453			123,113			823,903			68,778			1,884,451
Total purchase price		352,204			516,453			123,113			873,903			78,778			1,944,451
Noncontrolling interest		—			496,200			118,285			839,632			75,689			1,529,806
Acquisition date fair value	$	352,204		$	1,012,653		$	241,398		$	1,713,535		$	154,467		$	3,474,257

Purchase price allocation	$	352,204		$	1,012,653		$	241,398		$	1,713,535		$	154,467		$	3,474,257
Less fair value of net assets acquired:
Cash		17,623			79,553			1,436			32,935			171			131,718
Working capital (less cash)		(17,148	)		(54,991	)		(45,027	)		(59,325	)		(21,323	)		(197,814	)
Intangible assets		171,767			446,657			111,202			815,411			104,798			1,649,835
Long-term assets		—			91,118			106,542			129,521			22,697			349,878
Long-term liabilities		—			(98,641	)		(69,449	)		(94,591	)		(8,236	)		(270,917	)
Net assets acquired		172,242			463,696			104,704			823,951			98,107			1,662,700
Goodwill	$	179,962		$	548,957		$	136,694		$	889,584		$	56,360		$	1,811,557

Goodwill generated from the acquisition is primarily attributable to expected synergies from future growth and strategic advantages provided through expansion and is not expected to be deductible for income tax purposes.

The classes of intangible identifiable assets acquired and the estimated useful life of each class is presented in the table below for the five acquisitions:

	Winter Garden		Georgia		California		Lakeland		Success		Total
Franchise agreement (10 to 11 years)	$	146,990	$	356,200	$	92,367	$	511,453	$	48,302	$1,155,312
Agent relationships (8 to 11 years)		—		43,447		7,657		147,455		—	198,559
Real estate listings (1 year)		22,239		37,310		10,417		129,847		55,228	255,041
Non-compete agreements (4 years)		2,538		9,700		761		26,656		1,268	40,923
Total identifiable intangible assets acquired	$	171,767	$	446,657	$	111,202	$	815,411	$	104,798	$1,649,835

The amounts of revenue, cost of revenue, gross profit, and loss from operations before income taxes of the five acquisitions included in the Company’s condensed consolidated statement of operations from the date of the acquisition for the three- and six-month periods ended June 30, 2024 is as follows:

	Three Months		Six Months
	Ended		Ended
	June 30,		June 30,
	2024		2024
Revenue	$	3,007,645	$	3,253,081
Cost of revenue	$	2,752,472	$	2,982,184
Gross profit	$	255,173	$	270,898
Loss before provision for income taxes	$	94,571	$	90,142

The following unaudited pro forma financial information presents the combined operating results of the Company, Winter Garden, Georgia, California, Lakeland and Success as if each acquisition had occurred as of January 1, 2023. 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.

La Rosa Holdings Corp. and Subsidiaries
Notes to the Interim Unaudited Condensed Consolidated Financial Statements

The unaudited pro forma financial information is presented in the table below for the six-month periods ended June 30, 2024 and 2023:

		Six Months Ended
		June 30,
		2024				2023

SEC Form 10-Q filed by La Rosa Holdings Corp.