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 September 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 November 18, 2024, the registrant had 20,200,891 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 SEPTEMBER 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023	1

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

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

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 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	23

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35

ITEM 4.	CONTROLS AND PROCEDURES	35

PART II. OTHER INFORMATION		36

ITEM 1.	LEGAL PROCEEDINGS	36

ITEM 1A.	RISK FACTORS	37

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	38

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38

ITEM 4.	MINE SAFETY DISCLOSURES	38

ITEM 5.	OTHER INFORMATION	38

ITEM 6.	EXHIBITS	39

	SIGNATURES	51

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

La Rosa Holdings Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30, 2024			December 31, 2023
	(unaudited)			(audited)
Assets
Current assets:
Cash	$	1,811,608		$	959,604
Restricted cash		2,148,148			1,484,223
Accounts receivable, net of allowance for credit losses of $165,554 and $83,456, respectively		817,391			826,424
Other current assets		1,188			—
Total current assets		4,778,335			3,270,251

Noncurrent assets:
Property and equipment, net		17,739			14,893
Right-of-use asset, net		1,088,759			687,570
Intangible assets, net		5,673,222			4,632,449
Goodwill		8,102,089			5,702,612
Other long-term assets		26,853			21,270
Total noncurrent assets		14,908,662			11,058,794
Total assets	$	19,686,997		$	14,329,045
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,093,563		$	1,147,073
Accrued expenses		729,043			227,574
Contract liabilities		72,365			—
Line of credit		75,697			—
Derivative liability		50,040			—
Advances on future receipts		262,263			77,042
Accrued acquisition cash consideration		341,404			300,000
Notes payable, current		2,095,692			4,400
Lease liability, current		526,609			340,566
Total current liabilities		6,246,676			2,096,655

Noncurrent liabilities:
Note payable, net of current		643,734			615,127
Security deposits payable		1,821,582			1,484,223
Lease liability, noncurrent		581,622			363,029
Other liabilities		2,950			2,950
Total non-current liabilities		3,049,888			2,465,329
Total liabilities		9,296,564			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 September 30, 2024 and December 31, 2023, respectively		—			—
Common stock - $0.0001 par value; 250,000,000 shares authorized; 18,560,199 and 13,406,480 issued and outstanding at September 30, 2024 and December 31, 2023, respectively		1,856			1,341
Additional paid-in capital		26,433,290			18,016,400
Accumulated deficit		(21,478,792	)		(12,107,756	)
Total stockholders’ equity – La Rosa Holdings Corp. shareholders		4,956,354			5,909,985
Noncontrolling interest in subsidiaries		5,434,079			3,857,076
Total stockholders’ equity		10,390,433			9,767,061
Total liabilities and stockholders’ equity	$	19,686,997		$	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 September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue	$	19,593,036		$	6,792,250		$	51,733,355		$	20,320,606

Cost of revenue		17,957,130			6,216,751			47,349,141			18,450,162

Gross profit		1,635,906			575,499			4,384,214			1,870,444

Operating expenses:
Sales and marketing		246,369			49,277			691,704			242,548
General and administrative		2,747,616			938,634			7,809,627			2,672,372
Stock-based compensation — general and administrative		389,711			5,041			4,054,821			79,341
Total operating expenses		3,383,696			992,952			12,556,152			2,994,261

Loss from operations		(1,747,790	)		(417,453	)		(8,171,938	)		(1,123,817	)
Other income (expense)
Interest expense, net		(98,566	)		(6,966	)		(197,425	)		(147,505	)
Loss on extinguishment of debt		(722,729	)		-			(722,729	)		-
Amortization of debt discount		(135,185	)		(207,887	)		(455,289	)		(882,781	)
Change in fair value of derivative liability		307,098			10,201			218,998			138,985
Other income, net		4,544			278,266			4,544			278,834
Net loss		(2,392,628	)		(343,839	)		(9,323,839	)		(1,736,284	)
Less: Net income (loss) attributable to noncontrolling interests in subsidiaries		59,540			—			47,197			—
Net loss after noncontrolling interest in subsidiaries		(2,452,168	)		(343,839	)		(9,371,036	)		(1,736,284	)
Less: Deemed dividend		920,038			—			1,150,706			—
Net loss attributable to common stockholders	$	(3,372,206	)	$	(343,839	)	$	(10,521,742	)	$	(1,736,284	)

Loss per share of common stock attributable to common stockholders
Basic and diluted	$	(0.21	)	$	(0.06	)	$	(0.70	)	$	(0.29	)

Weighted average shares used in computing net loss per share of common stock attributable to common stockholders
Basic and diluted		16,358,452			6,180,633			14,970,099			6,063,056

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)

Three Months Ended	Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’			Noncontrolling Interest In		Total
September 30, 2024	Shares		Par Value		Shares		Amount		Capital		Deficit			Equity			Subsidiaries		Equity
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
Net loss												(2,452,168	)		(2,452,168	)		59,540		(2,392,628	)
Issuance of common stock for acquisitions						500,893		51		528,273					528,324			—		528,324
Equity awards issued with debt issuance						1,194,232		118		1,075,412					1,075,530					1,075,530
Stock-based compensation						455,769		46		389,665					389,711					389,711
Issuance of common stock for equity awards, net of shares withheld for taxes						1,274,658		128		724,873					725,001					725,001
Balance as of September 30, 2024		2,000	$	—		18,560,199	$	1,856	$	26,433,290	$	(21,478,792	)	$	4,956,354		$	5,434,079	$	10,390,433

Nine Months Ended	Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’			Noncontrolling Interest In		Total
September 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												(9,371,036	)		(9,371,036	)		47,197		(9,323,839	)
Issuance of common stock for acquisitions						1,618,630		162		2,412,612					2,412,774			1,529,806		3,942,580
Equity awards issued with debt issuance						1,311,232		130		1,226,637					1,226,767					1,226,767
Stock-based compensation						945,769		95		4,054,726					4,054,821					4,054,821
Issuance of common stock for equity awards, net of shares withheld for taxes						1,278,088		128		722,915					723,043					723,043
Balance as of September 30, 2024		2,000	$	—		18,560,199		1,856		26,433,290		(21,478,792	)		4,956,354			5,434,079		10,390,433

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)

	Preferred Stock Series A				Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total
Three Months Ended September 30, 2023	Shares		Par Value		Shares		Par Value		Shares		Amount		Capital		Deficit			Equity
Balance as of June 30, 2023		2,836	$	—		2,000	$	—		6,004,000	$	600	$	4,646,081	$	(5,681,764	)	$	(1,035,083	)
Net loss																(343,839	)		(343,839	)
Issuance of series A preferred stock		600		—										600,000					600,000
Issuance of common stock for deferred offering costs										250,168		25		1,250,815					1,250,840
Issuance of common stock related to debt maturity										30,000		3		149,997					150,000
Extinguishment of derivative liability related to exchange of convertible and related party debt														95,555					95,555
Stock-based compensation														5,041					5,041
Balance as of September 30, 2023		3,436	$	—		2,000	$	—		6,284,168	$	628	$	6,747,489	$	(6,025,603	)	$	722,514

	Preferred Stock Series A				Preferred Stock Series X				Common Stock				Additional Paid-In		Accumulated			Total
Nine Months Ended September 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																(1,736,284	)		(1,736,284	)
Issuance of series A preferred stock		3,436		—										3,446,468					3,446,468
Issuance of common stock for deferred offering costs										250,168		25		1,250,815					1,250,840
Issuance of common stock related to debt maturity										30,000		3		149,997					150,000
Extinguishment of derivative liability related to exchange of convertible and related party debt														410,144					410,144
Stock-based compensation														79,341					79,341
Shares issued under employee agreements										4,000		—		—					—
Balance as of September 30, 2023		3,436	$	—		2,000	$	—		6,284,168	$	628	$	6,747,489	$	(6,025,603	)	$	722,514

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)

	Nine Months Ended September 30,
	2024			2023

Cash Flows from Operating Activities:
Net loss	$	(9,323,839	)	$	(1,736,284	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		4,054,821			79,341
Amortization and deprecation		725,866			—
Noncash lease expense		376,631			—
Change in fair value of derivatives		(218,998	)		(138,985	)
Amortization of debt discount and financing fees		455,289			927,319
Loss on extinguishment of debt		722,729			—
Non-cash interest expense		9,029			56,877
Provision for credit losses		82,099			17,826
Changes in Operating Assets and Liabilities:
Accounts receivable		(60,859	)		132,513
Deposits and prepaid expenses		21,778			45,000
Accounts payable		752,181			(171,370	)
Accrued expenses		452,988			145,013
Contract liabilities		72,365			—
Security deposits payable		329,859			191,965
Operating lease liabilities		(384,875	)		—
Net Cash Used in Operating Activities		(1,932,936	)		(450,785	)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment		(5,033	)		—
Cash acquired through acquisition of businesses, net of $240,470 cash paid for acquisitions		24,947			—
Net Cash Provided by Investing Activities		19,914			—
Cash Flows from Financing Activities:
Borrowings on bank line of credit		223,578			293,523
Payments on bank line of credit		(147,881	)		(277,695	)
Proceeds from notes payable		2,889,869			—
Payments deferred debt issuance costs		(395,407	)		—
Payments on notes payable		(949,556	)		(280,951	)
Proceeds from advances on future receipts		500,000			500,650
Payments on advances on future receipts		(521,463	)		(326,250	)
Payments on post-acquisition consideration		(120,000	)		—
Payments related to the public offering		—			(595,108	)
Payments to related party		—			(18,855	)
Proceeds from issuance of preferred stock		—			1,523,000
Proceeds from issuance of common stock		1,951,768			—
Withholding tax paid on behalf of employees on stock based awards		(1,957	)		—
Net Cash Provided by Financing Activities		3,428,951			818,314

Net Increase in Cash and Restricted Cash		1,515,929			367,529
Cash and Restricted Cash at Beginning of Period		2,443,827			1,529,922
Cash and Restricted Cash at End of Period	$	3,959,756		$	1,897,451

Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest	$	106,202		$	22,386
Taxes	$	—		$	—

Non-Cash Activities:
Derivative liability embedded in debt instruments	$	269,038		$	—
Issuance of 1,618,630 shares of common stock as consideration of acquisitions of businesses	$	2,412,774

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