Company Operations and Growth - As of March 31, 2025, the company has 2,769 licensed real estate brokers and sales associates across its corporate and franchised offices[149]. - The company operates 26 corporate real estate brokerage offices and branches in Florida, California, Texas, Georgia, North Carolina, and Puerto Rico[148]. - The company completed its IPO on October 12, 2023, and has since acquired majority ownership of several franchisees, including La Rosa Realty North Florida LLC and La Rosa Realty Georgia LLC[156]. - The company plans to acquire additional franchisees and entities throughout 2025, actively searching for potential acquisition targets[158]. - The company has opened its first office in North Carolina, La Rosa Realty NC LLC, in December 2024, and formed LR Luxury, LLC, in January 2025[157]. - The company increased its agent count by 12.8%, from 2,454 at March 31, 2024, to 2,769 at March 31, 2025[177]. - The company’s business model is built on three pillars: Family, Passion, and Growth, which it believes will continue to attract high-performing realtors[155]. Financial Performance - Total revenue for the three months ended March 31, 2025, was $17,514,394, representing a 34% increase compared to $13,088,899 for the same period in 2024[192]. - Revenue from Real Estate Brokerage Services (Residential) increased by approximately $4.0 million, or 39%, driven by acquisitions completed in fiscal year 2024[193]. - Property Management revenue increased by approximately $432,000, or 172%, due to an increase in properties under management and a management fee price increase[196]. - Gross profit for the three months ended March 31, 2025, was $1,537,668, a 32% increase from $1,161,997 in the same period in 2024[197]. - Selling, general and administrative expenses increased by approximately $1.7 million, or 68%, primarily due to increases in professional fees and payroll[205]. - The company incurred stock-based compensation of approximately $1.9 million, mainly due to option grants to the CEO and consultants[206]. - Other expense, net increased by approximately $91.0 million, primarily due to a loss on issuance of a senior secured convertible note for $128.8 million[207]. - As of March 31, 2025, the company had a cash balance of $4.9 million and negative working capital of $94.0 million[208]. - Net cash used in operating activities for the year ended March 31, 2025, was $(3,493,029), compared to $(538,305) in 2024[214]. - For the three months ended March 31, 2025, the company experienced a net loss of $2.3 million, excluding stock-based compensation and other adjustments[215]. - Operating activities consumed $3.5 million in cash, primarily due to the net loss and changes in operating assets and liabilities[215]. - Financing activities provided net cash of $4.8 million, including net proceeds from an S-3 of $2.9 million and debt issuance of $2.9 million[217]. - Payments totaling $1.8 million were made towards notes payable, post-acquisition consideration, and advances on future receipts[217]. Compliance and Regulatory Issues - The company received a notice from Nasdaq on October 10, 2024, regarding non-compliance with the minimum bid price requirement, with a compliance period until April 8, 2025[159]. - The company is evaluating options to regain compliance with Nasdaq Listing Rule 5250(c)(1) after failing to timely file its Quarterly Report for the fiscal quarter ended March 31, 2025[162]. - The company has adopted new cybersecurity disclosure rules, requiring transparency in its cybersecurity risk management practices[186]. - The company is subject to various data protection regulations, and non-compliance could result in legal and financial penalties[188]. Market Conditions - The federal funds rate was reduced to 433 basis points in April 2025, impacting mortgage rates and housing demand[183]. - Existing-home sales fell 5.9% month-over-month to a seasonally adjusted rate of 4.02 million in March 2025, with a year-over-year decline of 2.4%[183]. - The company faces potential adverse effects on its financial condition due to recent legal challenges regarding real estate agent commissions, including a $418 million settlement by NAR[184]. Shareholder Actions - The company approved a new Share Repurchase Program, authorizing the purchase of up to $500,000 of its outstanding shares by December 31, 2025[174]. - The company issued 7,446,442 shares of common stock under an ATM Agreement for net proceeds of $2,919,192 during Q1 2025[176]. - The company plans to increase the number of authorized shares of common stock to 2 billion (2,000,000,000) shares[172]. - As of April 16, 2025, Joseph La Rosa no longer holds more than 50% of the voting power, resulting in the company no longer being classified as a "controlled company"[173]. Future Outlook - The company plans to continue expanding through acquisitions to achieve future profitability and will require additional capital to fund operations[213]. - The company is classified as a smaller reporting company and is electing scaled disclosure reporting obligations[218].
La Rosa (LRHC) - 2025 Q1 - Quarterly Report