PART I. FINANCIAL INFORMATION Financial Statements The company's H1 2025 financial statements show asset growth, 27% revenue increase, widened operating losses, and volatile net income influenced by significant non-operating events and reliance on financing activities Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows increased cash to $5.1 million, total assets to $22.9 million, and liabilities to $15.3 million due to new financing, while stockholders' equity slightly improved Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $5,095,257 | $1,442,901 | | Total Current Assets | $8,342,901 | $4,514,058 | | Goodwill | $8,012,331 | $8,012,331 | | Total Assets | $22,907,617 | $19,407,426 | | Liabilities & Equity | | | | Total Current Liabilities | $3,934,040 | $8,540,527 | | Derivative liability | $0 | $1,607,544 | | Note payable, non-current | $8,697,337 | $1,475,064 | | Total Liabilities | $15,311,818 | $12,732,007 | | Total Stockholders' Equity | $7,595,799 | $6,675,419 | Condensed Consolidated Statements of Operations Q2 2025 saw 21.8% revenue growth to $23.2 million and a $78.5 million net income due to non-operating gains, while the six-month period had 26.7% revenue growth to $40.7 million but a $17.2 million net loss due to a large one-time financing loss Key Operating Results (Unaudited) | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $23,214,218 | $19,051,420 | $40,728,612 | $32,140,319 | | Gross Profit | $1,852,228 | $1,586,311 | $3,389,896 | $2,748,308 | | Loss from Operations | ($2,462,580) | ($1,840,425) | ($7,130,437) | ($6,424,148) | | Net Income (Loss) | $78,463,104 | ($2,266,233) | ($17,235,781) | ($6,931,211) | | Diluted EPS | $15.25 | ($12.49) | ($32.00) | ($40.08) | - The second quarter of 2025 saw significant non-operating gains, including an $82.3 million gain on settlement of incremental warrants and a $4.1 million gain on debt extinguishment, which dramatically skewed net income14 - The six-month results were heavily impacted by a one-time, non-cash loss of $128.8 million on the issuance of a senior secured convertible note and warrants14 Condensed Consolidated Statement of Cash Flows H1 2025 saw net cash used in operations increase to $4.9 million, with no investing activities, while financing activities provided $8.4 million from stock issuances and new debt, resulting in a net cash increase of $3.5 million Summary of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($4,883,024) | ($1,341,369) | | Net Cash Provided by Investing Activities | $0 | $71,718 | | Net Cash Provided by Financing Activities | $8,363,477 | $2,144,066 | | Net Increase in Cash and Restricted Cash | $3,480,453 | $874,415 | - Financing activities in the first six months of 2025 included $6.7 million from the issuance of common stock and $3.4 million from new notes payable, highlighting the company's reliance on external capital22 Notes to Condensed Consolidated Financial Statements The notes detail a 1-for-80 reverse stock split, going concern doubts, a significant February 2025 financing deal and its June settlement for an $82.3 million gain, 2024 acquisitions, and a new $150 million equity purchase facility in August 2025 - The company effected a 1-for-80 reverse stock split of its common stock on July 7, 2025, with all historical share and per-share amounts retroactively adjusted2829185 - Management has expressed substantial doubt about the company's ability to continue as a going concern due to recurring net losses and negative cash flows from operations, planning to raise additional capital36281 - In February 2025, the company secured financing through a Securities Purchase Agreement (SPA), issuing a Senior Secured Convertible Note with a face value of $5.5 million and 16 Incremental Warrants6282 - In June 2025, the Incremental Warrants from the February financing were exchanged for 6,000 shares of new Series B Convertible Preferred Stock, resulting in a recognized gain on settlement of $82.3 million656790 - Subsequent to the quarter end, on August 4, 2025, the company entered into an Equity Purchase Facility Agreement, allowing it to sell up to $150 million in common stock to an institutional investor188215 - The company completed five acquisitions of franchisees in the first half of 2024, which are included in the consolidated financial statements from their respective acquisition dates4146 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 27% H1 2025 revenue growth to 2024 acquisitions, but highlights ongoing operating losses, negative cash flow, and substantial doubt about going concern, with liquidity reliant on recent financing activities and new equity facilities, while monitoring real estate commission structure legal challenges - The company's growth strategy is centered on acquiring its franchisees and other entities, with 2024 acquisitions driving a 30% increase in Residential Real Estate Brokerage revenue for the first six months of 2025203205250 - The company again highlights substantial doubt about its ability to continue as a going concern, citing recurring net losses and insufficient cash from operations to meet projected expenses for the next twelve months280281 Six-Month Revenue by Segment (YoY Comparison) | Segment | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Real Estate Brokerage Services (Residential) | $33,980,226 | $26,096,163 | 30% | | Franchising Services | $70,000 | $213,189 | -67% | | Coaching Services | $217,226 | $344,017 | -37% | | Property Management | $6,060,296 | $5,302,267 | 14% | | Real Estate Brokerage Services (Commercial) | $245,086 | $184,683 | 33% | | Title Settlement and Insurance | $155,778 | $0 | N/A | | Total Revenue | $40,728,612 | $32,140,319 | 27% | - The company's liquidity is highly dependent on external financing, having raised $8.4 million from financing activities in H1 2025, including $6.7 million from its ATM stock offering and $3.4 million in net proceeds from a new convertible note213278286 - The company is monitoring legal challenges to the real estate industry's commission structure, noting that recent settlements by the National Association of Realtors (NAR) will result in rule changes that could adversely affect its financial condition230235 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk288 Controls and Procedures As of June 30, 2025, management concluded that disclosure controls and procedures were ineffective, and previously identified material weaknesses in internal control over financial reporting remain unremediated - The CEO and Interim CFO concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2025290 - Previously identified material weaknesses in internal control over financial reporting, including a lack of segregation of duties, were not remediated as of the end of the quarter291292 PART II. OTHER INFORMATION Legal Proceedings The company is involved in several ordinary course legal proceedings, including lawsuits from a former COO for $249,000, another individual for unpaid compensation, and a former HR specialist for $50,000, all of which the company intends to vigorously defend - A former Chief Operating Officer, Mark Gracy, has filed a lawsuit seeking $249,000 for an alleged breach of his employment agreement, with mediation scheduled for August 25, 2025113297 - Joshua Epstein filed an action alleging breach of contract and other claims to recover unpaid compensation, with mediation scheduled for September 5, 2025116298 - A former Senior Human Resources and Payroll Specialist filed a lawsuit claiming $50,000 in damages for wrongful termination, which the company has denied117299 Risk Factors No material changes to risk factors were reported for the quarter compared to the prior annual report - No material changes to risk factors were reported for the quarter301 Unregistered Sales of Equity Securities and Issuer Purchases In Q2 2025, the company issued unregistered securities including 187 RSUs to agents, 1,220 shares from RSU conversion, and options for 1,250 shares to contractors, with no equity repurchases - In Q2 2025, the company issued 187 RSUs to agents, 1,220 shares upon RSU conversion, and options to purchase 1,250 shares to contractors, all as unregistered securities303304 - The company reported no issuer purchases of its equity securities in the quarter307 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None308 Other Information The company reported no other information for this item - None310 Exhibits This section lists all exhibits filed as part of the quarterly report, including corporate governance documents, financing agreements, and officer certifications
La Rosa (LRHC) - 2025 Q2 - Quarterly Report