Company Operations and Structure - As of September 30, 2025, the company has 3,116 licensed real estate brokers and sales associates across its corporate and franchised offices [246]. - The company operates 25 corporate real estate brokerage offices and branches in Florida, California, Texas, Georgia, North Carolina, and Puerto Rico, along with 5 franchised offices and 3 affiliated offices [244]. - The company completed its IPO on October 12, 2023, and subsequently acquired majority ownership of several franchisees, enhancing its market presence [251]. - In December 2024, the company opened its first office in North Carolina and formed LR Luxury, LLC, focusing on residential real estate brokerage [252]. - The company dissolved a non-operational subsidiary, Baxpi Holdings LLC, on September 12, 2025, to simplify its corporate structure [254]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $20,216,143, representing a 3% increase from $19,593,036 in the same period of 2024 [300]. - Total revenue for the nine months ended September 30, 2025, increased by approximately $9.21 million, or 18%, to $60.94 million compared to $51.73 million in the same period of 2024 [305]. - The company had net cash provided by investing activities of $71,718 during the nine months ended September 30, 2024, related to seven acquisitions [340]. Revenue Breakdown - Revenue from residential real estate brokerage services increased by approximately $286,157, or 2%, driven by increased sales and acquisitions [301]. - Franchising services revenue decreased by approximately $37,766, or 57%, due to the acquisition of franchises in fiscal year 2024 [302]. - Coaching services revenue increased by approximately $27,502, or 22%, primarily due to increases in agent counts [303]. - Property management revenue increased by approximately $255,156, or 9%, due to an increase in the number of properties under management [304]. - Residential real estate brokerage services revenue rose by approximately $8.17 million, or 19%, driven by acquisitions completed in the fourth quarter of fiscal year 2024 [306]. - Franchising services revenue decreased by approximately $181 thousand, or 65%, due to the loss of franchisee contributions following acquisitions in fiscal year 2024 [307]. - Coaching services revenue declined by approximately $99 thousand, or 21%, primarily due to a strategic shift allowing large teams to onboard without coaching [308]. - Property management revenue increased by approximately $1.01 million, or 12%, attributed to a rise in the number of properties under management [309]. Capital and Financing Activities - The company entered into a Securities Purchase Agreement on November 12, 2025, to issue senior secured convertible notes with an aggregate principal amount of up to $250,000,000 [256]. - The Company issued 75,000 shares of common stock under the ATM Agreement, generating net proceeds of $838,390 during the three months ended September 30, 2025 [266]. - The Commitment Amount under the Amended Facility Agreement was increased from $150 million to $1.0 billion, allowing for greater capital raising potential [269]. - Stockholders approved the Amended Facility Agreement with approximately 95.7% of the votes, enabling the issuance of shares exceeding 19.99% of the Company's outstanding common stock [270]. - The Company increased its authorized shares of common stock to 2 billion, effective June 2, 2025, to support future capital needs [278]. - The company executed a 1-for-80 reverse stock split effective July 7, 2025, retroactively adjusting all share and price per share information [284]. - The company issued a Senior Secured Convertible Note with an original principal amount of $5.5 million, maturing on February 4, 2027, and received gross proceeds of $4,963,750 [332]. - During the nine months ended September 30, 2025, the company incurred a net cash used in operating activities of $6.2 million, primarily due to a net loss of $6.6 million [337][338]. - The company received net cash provided by financing activities of $9.1 million during the nine months ended September 30, 2025, which included net proceeds from debt issuance of $3.4 million [341]. Compliance and Governance - The Company regained compliance with Nasdaq Listing Rule 5550(a)(2) after the closing bid price of its common stock was at $1.00 or greater for 10 consecutive business days [279]. - Stockholders' equity improved to $7,595,799 as of June 30, 2025, allowing the Company to comply with Nasdaq Listing Rule 5550(b)(1) [280]. - The Company regained "controlled company" status as of July 7, 2025, after a reverse stock split that provided the CEO with over 50% voting power [283]. Strategic Initiatives - The company is actively seeking potential acquisition targets to accelerate growth and expand its market reach [253]. - The company is leveraging its real estate platform to expand into the AI ecosystem through strategic acquisitions and partnerships [255]. - The company has established a strong focus on training and technology support for its agents, which is believed to be one of the best in the industry [249]. - The Company launched My Agent Account Version 4.0, enhancing its proprietary agent platform with a new Transaction Management module aimed at improving efficiency and reducing costs [282]. - The Company entered into a non-binding Letter of Intent with MiiX Financial to implement and distribute residential financing solutions, targeting all credit levels [277]. Market Conditions - The federal funds rate was reduced to 422 basis points in September 2025, impacting mortgage rates and housing sales [291]. - Existing-home sales rose 1.5% month-over-month to a seasonally adjusted rate of 4.06 million in September 2025, with a median sales price of $415,200, a 2.1% increase year-over-year [291]. - The company is monitoring ongoing antitrust litigation that could lead to significant changes in commission structures affecting its revenue model [292]. Challenges and Concerns - The company has incurred recurring net losses, raising substantial doubt about its ability to continue as a going concern [336]. - The company anticipates that its existing working capital will not be sufficient to meet projected operating expenses for at least twelve months from the issuance of the consolidated financial statements [335]. - Other expense, net for the nine months ended September 30, 2025, increased approximately $9.5 million compared to the same period in 2024, primarily due to a loss on issuance of senior secured convertible note for $128.8 million [330]. - Selling, general and administrative expenses increased by approximately $1.38 million, or 46%, in the three months ended September 30, 2025, primarily due to increased payroll and professional fees [323]. - Stock-based compensation for the nine months ended September 30, 2025, was approximately $4.8 million, primarily due to option grants and consultant shares [326]. - The gross margin for residential real estate brokerage services was 9.1% for the nine months ended September 30, 2025, a slight decrease from 9.2% in 2024 [316]. - Title settlement and insurance revenue was $208.31 thousand for the nine months ended September 30, 2025, marking a new revenue stream following the acquisition of Nona Title [321]. - The agent count increased by 17.7%, from 2,647 at September 30, 2024, to 3,116 at September 30, 2025 [285].
La Rosa (LRHC) - 2025 Q3 - Quarterly Report