Stratum Holdings Corp.
For the period ended Mar 31, 2025. Filed May 29, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 29, 2025
LRHC$0.76-15.4%Stored close · as of Oct 16, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001213900-24-100202
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-29.
0001213900-25-048370
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 110 current paragraphs.
35 unchanged; 24 reworded; 49 added; 37 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 39 previous and 31 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (49)
Current report
Our business was founded by Mr. Joseph La Rosa, a successful real estate developer, business and life coach, author, podcaster, and public speaker. Mr. La Rosa’s self-help book “Do It Now” is a roadmap to personal success and well-being based on his transformative theories of family, passion and growth. His philosophy, seminars and educational forums have attracted numerous successful realtors that have spurred the growth of our business.
Current report
Our franchised offices are currently:
Current report
Our business stands on three pillars: Family, Passion, and Growth. We believe that our support and philosophy have attracted and will continue to attract and retain the highest producing realtors in our local markets. We believe that our focus on the interaction between our human agents and their clients is a strong weapon against internet-only commodity websites and the low touch discount brokerages. Our agent count continues to grow organically and through acquisition, we attribute our organic growth to the positive culture created in our Company and the competitive plans that we offer our agents. By creating a custom solution and a unique experience, we believe that our agents are able to guide their clients seamlessly through what may be their most expensive lifetime purchase.
Current report
In December 2024, the Company opened its first office and wholly owned subsidiary in North Carolina, La Rosa Realty NC LLC. In January 2025, the Company formed LR Luxury, LLC, engaged mostly in the residential real estate brokerage business. In April 2025, the Company also formed LR Agent Advance, LLC, offering a commission advancement program exclusively for La Rosa agents.
Current report
Recent Developments
Current report
As of April 8, 2025, the common stock has not regained compliance with the Bid Price Rule. However, in a letter dated April 9, 2025 (the “Second Nasdaq Bid Price Letter”), Nasdaq notified the Company that Nasdaq’s Staff has determined that the Company is eligible for an additional 180 calendar day period, or until October 6, 2025, to regain compliance (the “Second Compliance Period”). As of the date of this report our common stock has not regained compliance with the Bid Price Rule. If the Company chooses to implement a reverse stock split, it must complete the split no later than ten business days prior to the end of the Second Compliance Period in order to timely regain compliance. If we fail to regain compliance with the Bid Price Rule within the Second Compliance Period, or if we fail to continue to meet all applicable continued listing requirements for Nasdaq in the future, Nasdaq could delist our securities.
Current report
The Second Nasdaq Bid Price Letter has no immediate effect on the listing or trading of the common stock. Our common stock continues to be listed on the Nasdaq Capital Market under the symbol “LRHC”. We are currently evaluating our options for regaining compliance.
Current report
Nasdaq Notice Regarding Filing Deficiency
Current report
On May 21, 2025, the Company also received a notice (the “Notice”) from the Nasdaq Listing Qualifications Department (the “Staff”) that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025 (the “Filing”) with the SEC.
Current report
The Notice informed the Company that, under Nasdaq rules, the Company has 60 calendar days to submit a plan to regain compliance, and if the Staff accepts such plan, they can grant an exception of up to 180 calendar days from the Filing’s due date (or until November 17, 2025) to regain compliance.
Current report
The notice from Nasdaq has no immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on The Nasdaq Capital Market under the symbol “LRHC”. The Company intends to regain compliance with Nasdaq Listing Rule 5250(c)(1) as a result of filing of this Quarterly Report on Form 10-Q.
Current report
Amendment to CEO Employment Agreement
Current report
On February 3, 2025, on the approval of the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Company amended the employment agreement between the Company and Joseph La Rosa, the Company’s Chief Executive Officer. The amendment provided Mr. La Rosa with a right to receive certain annual equity awards and milestone equity awards not only in the form of stock options but also in the form of restricted stock units and amended Section 4.3(b) to include subsection (vii), according to which for every $1,000,000 raised by the Company through financing, Mr. La Rosa shall be granted an equity award equal to 2% of the outstanding shares of common stock of the Company.
Current report
February 2025 Financing
Current report
On February 4, 2025, we entered into the SPA with an institutional investor (“2025 Investor”) pursuant to which we issued and sold to the 2025 Investor on such date: (i) a Senior Secured Convertible Note in the original principal amount of $5,500,000 which matures on the two-year anniversary of the Closing Date (the “Initial Note”); and (ii) sixteen (16) warrants (the “Incremental Warrants”), each to purchase additional Notes in an original principal amount up to $2,500,000 at an exercise price of $2,256,250, in substantially the same form as the Initial Note (Incremental Notes and together with the Initial Note, the “Notes”). The purchase price paid by 2025 Investor under the SPA for the Initial Note and Incremental Warrants was $4,963,750, which was used by the Company to pay-off certain indebtedness, pay certain outstanding fees and expenses, acquisitions and general corporate purposes. The Company also granted 2025 Investor registration rights in the shares of common stock issuable upon conversion of the Notes. The Company Group also entered into a Security and Pledge Agreement with or in favor of the 2025 Investor pursuant to which the Company Group granted the 2025 Investor a security interest in substantially all of the property and assets of the Company Group to secure the Company’s obligations under the SPA, Notes, Incremental Warrants, Registration Rights Agreement and other Transaction Documents (as defined) and the Company’s subsidiaries guaranteed or obligations of the Company thereunder. The Company also agreed to obtain shareholder approval for the issuance of more than 19.99% of the issued and outstanding common stock in this financing.
Current report
On the Closing Date, as required by the SPA, Joseph La Rosa, as the majority stockholder of the Company, approved (i) the issuance of the Initial Note, the Incremental Warrants and Incremental Notes, all shares of common stock issuable as interest thereunder and all of the Conversion Shares and Incremental Conversion Shares in excess of 19.99% (without regard to any limitation on conversion or exercise thereof) of the Company’s issued and outstanding common stock at a price less than the minimum price required by the Nasdaq in accordance with Nasdaq Listing Rules 5635(b) and 5635(d); (ii) authorization to complete a reverse split of our common stock; and (iii) authorization to increase the number of authorized shares of our common stock to ensure that the Company has a sufficient number of authorized shares reserved for issuance to equal at least 200% of the maximum number of shares issuable upon conversion of the Notes, as determined under the Securities Purchase Agreement. Such approval was effective on March 27, 2025, or 20 days after the commencement of mailing of the definitive information statement regarding this approval to the stockholders of the Company.
Current report
Third Amended Agent Plan
Current report
On February 4, 2025, the Compensation Committee, our Board of Directors, and the majority stockholders approved the Third Amended and Restated La Rosa Holdings 2022 Agent Incentive Plan (“Third Amended Agent Plan”), which became effective on March 28, 2025.
Current report
The Third Amended Agent Plan revised the vesting terms of the grants under Agent Equity Program and added new terms allowing the participants to authorize the Company to set aside 5% of their agent net commissions on transactions in their name to purchase shares of the common stock at a 20% discount from the prior 30 day volume weighted average closing price of the common stock on Nasdaq.
Current report
Certain Future Corporate Actions
Current report
On February 4, 2025, our Board of Directors, and the majority stockholders approved the amendment (the “Reverse Stock Split Amendment”) to the Amended and Restated Articles of Incorporation of the Company to provide for a reverse stock split (the “Reverse Stock Split”) of the common stock of the Company at a ratio ranging from one for two (1:2) to one for one hundred (1:100) (the “Split Ratio Range”), the final determination of which shall be made by the Board of Directors, and the authorization to the Board of Directors to effect the Reverse Stock Split at their discretion. As of the date hereof, the Reverse Stock Split was not effected by the Company.
Current report
On February 4, 2025, our Board of Directors, and the majority stockholders approved the Certificate of Amendment to the Company’s Amended and Restated Articles of Incorporation to increase the number of the Company’s authorized shares of common stock to two billion (2,000,000,000) shares of common stock, and to restate Sections 3.01 and 3.02 thereof to reflect such increase. As of the date hereof, the Certificate of Amendment was not effected by the Company.
Current report
Change in Controlled Company Status
Current report
As of December 31, 2024, the Company qualified as a “controlled company” because more than 50% of the voting power for the election of directors was held by Joseph La Rosa, our Chief Executive Officer and Chairman. As a result of certain sales under the Company’s previously announced at-the-market offering, as of April 16, 2025 Mr. La Rosa no longer holds more than 50% of the voting power for the election of directors. As a result, the Company is no longer considered a “controlled company” for the purposes of the listing requirements of the Nasdaq Capital Market. Since the Company did not take availed itself of certain of the controlled company exemptions afforded by Nasdaq to controlled companies, such change in the Company’s status did not result in any corporate governance changes for the Company.
Current report
Stock Repurchase Program
Current report
On April 23, 2025, the Company’s Board of Directors has approved a new Share Repurchase Program, which authorizes the Company to purchase up to an aggregate of $500,000 of the Company’s outstanding shares of common stock in the open market in accordance with all applicable securities laws and regulations. Repurchases under this program may be made at management’s discretion at the time and in the amounts determined by the Chief Executive Officer and Chief Operating Officer of the Company. The Share Repurchase Program has an expiration date of December 31, 2025.
Current report
Change of Auditor
Current report
On April 29, 2025, the Company was notified by Marcum LLP (“Marcum”) that Marcum resigned as the Company’s independent registered accounting firm effective immediately. On April 29, 2025, the Company, with the approval of the Audit Committee (the “Committee”) of the Board of Directors of the Company, accepted resignation of Marcum as the Company’s independent registered public accounting firm effective immediately. On November 1, 2024, CBIZ CPAs P.C. (“CBIZ CPAs”) acquired the attest business of Marcum. On April 29, 2025, the Company, with the approval of the Committee, engaged CBIZ CPAs to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025 to be effective immediately.
Current report
ATM Offering
Current report
On November 22, 2024, the Company entered into a sales agreement (“ATM Agreement”) with A.G.P./Alliance Global Partners, as sales agent (“AGP”), relating to the sale of common stock. During the first quarter ended March 31, 2025, the Company issued an aggregate of 7,446,442 shares of common stock pursuant to such ATM Agreement for net proceeds of $2,919,192. The Company paid the sales agent compensation with respect to sale of such shares in the amount of $104,371.
Current report
Critical Accounting Estimates
Current report
A critical accounting estimate is one that is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. During the first quarter of 2025, the Company entered into a securities purchase agreement providing for the issuance of a convertible note and incremental warrants which required a fair value evaluation under ASC 825. This evaluation constituted an additional critical accounting estimate to the Company. SeeNote 4 Fair Value Measurements and Other LiabilitiesandNote 5 Borrowings to the accompanying condensed consolidated financial statements for more information. There have been no other material changes to the Company’s critical accounting estimates as compared to the estimates described in the Annual Report on Form 10-K as of December 31, 2024 which we believe are the most critical to our business and understanding of our results of operations and affect the more significant judgments and estimates that we use in preparation of our condensed consolidated financial statements. Other than the fair value evaluation mentioned above, there have been no other material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K as of December 31, 2024.
Current report
Revenue
Current report
Coaching services revenue decreased by approximately $39 thousand, or 29%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a strategic shift to allow large teams to onboard without coaching in an effort to increase onboarding at the expense of Coaching.
Current report
Gross Profit and Gross Margin
Current report
Real Estate Brokerage Services (Residential)
Current report
Franchising Services
Current report
Coaching Services
Current report
Property Management
Current report
Title Settlement and Insurance
Showing the first 40 of 49 passages. Open the source sections for the rest.
Removed paragraphs (37)
Previous report
In March 2024, the Company officially launched Final Offer. Final Offer is available to real estate brokers on the Company’s platform in key markets across Florida, California and Georgia, with plans to expand the offering across the organization.
Previous report
In February 2023, we launched our proprietary technology system - JAEME, part of “My Agent Account.” JAIME is a real estate AI assistant created to support and inspire our agents with personalized content to drive marketing, efficiency, and sales. This advanced technology can help agents to provide services to their clients in a more efficient way - even from their mobile devices. In October 2024, the Company launched My Agent Account version 3.0, a significant upgrade to its proprietary platform, which now includes a new module specifically designed for property management disbursements. This update is expected to improve operational efficiency for agents across the Company.
Previous report
In June 2024, the Company recruited a high-performing group of team leaders in Florida, who closed over 425 transactions and achieved sales exceeding $100 million in the past 12 months.
Previous report
We intend to continue growing our business organically and by acquisition.
Previous report
Critical Accounting Policies
Previous report
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” of the Notes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and in the Notes to the consolidated financial statements included in our Annual Report on Form 10-K for fiscal year ended December 31, 2023 describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K as of December 31, 2023.
Previous report
Recent Accounting Pronouncements
Previous report
See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” of the Notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous report
Costs related to residential real estate brokerage services increased by approximately $27.8 million, or 255%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was driven by approximately $29.2 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024. The gross profit increased by approximately $3.0 million, or 308%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily attributable to the gross profit from acquisitions.
Previous report
Franchising services revenue decreased by approximately $455 thousand, or 62%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease was attributable from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024, which no longer contribute to franchising royalties fees, which would have totaled approximately $505 thousand in the third quarter of 2024. Our remaining franchisees saw a similar decrease in volume related to the same market conditions in our residential services, which negatively impacted our franchising royalty fee revenue.
Previous report
Costs of revenue for franchising services increased by approximately $39 thousand, or 11%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, related to the increase costs of the external software that supports the Company’s franchises. The gross profit (loss) of franchising services has moved to a loss position for the nine-month period ending September 30, 2024 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the thirteen franchises in the fourth quarter of 2023 and the first three quarters of 2024.
Previous report
Coaching services revenue decreased by $57 thousand, or 31%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an reduction in activity in our coaching program due to the reduction in our residential transaction volume.
Previous report
Coaching services revenue increased by $5 thousand, or 1%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in an emphasis of our coaching program earlier in 2024, partially offset due to the reduction in our residential transaction volume.
Previous report
Costs of revenue related to coaching services increased by approximately $14 thousand, or 6%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Costs related to coaching services is related to the augmentation of the coaching program. The gross margin has remained relatively stable with an decrease of 2.5% in the three-month period ended September 30, 2024 compared to September 30, 2023.
Previous report
Costs of revenue related to property management services increased by approximately $920 thousand, or 13%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase in property management costs was primarily related to the timing of distributions to property owners as well as the increase in properties under management. The gross margin is consistent in the nine-month periods ended September 30, 2024 and 2023.
Previous report
Real Estate Brokerage Services (Commercial)
Previous report
Commercial real estate services sales revenue increased by approximately $34 thousand, or 110%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. During 2024, the Company invested in additional training and personnel to grow the commercial business, which increased the cost of revenue, which increased by approximately $40 thousand in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.
Previous report
Commercial real estate services sales revenue increased by approximately $149 thousand, or 110%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. During 2024, the Company invested in additional training and personnel to grow the commercial business, which increased the cost of revenue, which increased by approximately $173 thousand in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Previous report
Selling, General and Administrative Expense – Three Month Expense
Previous report
NM: Not Meaningful
Previous report
Selling, general and administrative costs, excluding stock-based compensation, increased by approximately $2.0 million, or 203%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. A portion of the increase was driven by $1.1 million of additional costs from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first three quarters of fiscal year 2024. The remaining increase is primarily attributable to approximately $441 thousand in public company costs, including listing costs, printer costs, transfer agent fees, and investor relation costs and related professional fees, since our initial public offering in October 2023 as well as approximately $286 thousand of amortization of the intangible assets incurred through the acquisitions in the fourth quarter of 2023 and the first three quarters of 2024 and an increase in personnel costs of $680 thousand.
Previous report
Selling, General and Administrative Expense – Nine Month Expense
Previous report
NM: Not Meaningful
Previous report
Selling, general and administrative costs, excluding stock-based compensation, increased by approximately $5.6 million, or 192%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. A portion of the increase was driven by $2.4 million of additional costs from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first three quarters of fiscal year 2024. The remaining increase is primarily attributable to approximately $1.9 million in public company costs, including listing costs, printer costs, transfer agent fees, D&O insurance and investor relation costs and related professional fees as well as approximately $726 thousand of amortization of the intangible assets incurred through the acquisitions in the fourth quarter of 2023 and the first three quarters of 2024, an increase in personnel costs of $1.6 million, and additional events and technology costs of $341 thousand.
Previous report
Other expense, net for the three months ended September 30, 2024 was approximately $645 thousand compared to other income, net, of approximately $74 thousand for the three months ended September 30, 2023. The expense in 2024 was due to interest expense and the amortization of financing fees related to the debt raise in February, April and July 2024, the loss on extinguishment related to the same three notes in September 2024 and the Advances on Future Receipts in May 2024, partially offset by a $219 thousand decrease in the revaluation of the derivative liabilities associated with the convertible debt. The income in 2023 was due to an IRS employee retention credit received for prior tax years, net of legal costs to obtain the credit, partially offset by amortization of financing fees.
Previous report
Other expense, net for the nine months ended September 30, 2024 was approximately $1.152 million compared to other expense, net, of approximately $612 thousand for the nine months ended September 30, 2023. The expense in 2024 was due to interest expense and the amortization of financing fees related to the debt raise in February, April and July 2024, the loss on extinguishment related to the same three notes in September 2024 and the Advances on Future Receipts in May 2024, partially offset by an decrease in the value of the derivative liabilities associated with the convertible debt. The 2023 expense was due to costs related to the amortization of financing fees related to convertible debt instruments with embedded equity elements issued in the fourth quarter of fiscal year 2022 along with an increase in interest expense associated with new debt issuances during the fourth quarter of fiscal year 2022, partially offset by a decrease in the revaluation of the derivative liabilities and the IRS employee retention credit received for prior tax years, net of legal costs to obtain the credit.
Previous report
On September 30, 2024 and December 31, 2023, we had cash of approximately $1.8 million and $1.0 million, respectively, on hand.
Previous report
Since our inception in 2021, we have funded our operations through our revenues and the sale of equity and debt securities.
Previous report
In October 2023, we raised gross proceeds of $5,000,000 through our sale of 1,000,000 shares of common stock in the initial public offering for $5.00 per share, with net proceeds of $4,360,000.
Previous report
In February 2024, we received $1,000,000 in net proceeds, excluding debt issuance costs of $188 thousand, through our private sale of a 13% OID secured promissory note in the principal amount of $1,052,632 for a purchase price of $1,000,000 to an accredited investor.
Previous report
In April 2024, we received $1,250,200 in net proceeds, excluding debt issuance costs of $139 thousand, through our private sale of a 13% OID senior secured promissory note in the principal amount of $1,316,000 for a purchase price of $1,250,200 to the same accredited investor in our February 2024 private placement.
Previous report
In May 2024, we entered into a standard merchant cash advance agreement where we sold in the aggregate $761,250 in future receipts of the Company for $500,000. Until the purchase price has been repaid, the Company agreed to pay Cedar $23,000 per week.
Previous report
In July 2024, we received $444,600 in net proceeds, excluding debt issuance costs of approximately $25 thousand, through our private sale of a 13% OID senior secured promissory note in the principal amount of $468,000 for a purchase price of $444,600 to the same accredited investor in our February 2024 and April 1 private placements.
Previous report
In August 2024, we received $725,000 in net proceeds, excluding equity issuance costs of approximately $25 thousand, by issuing 761,689 shares of common stock and a pre-funded warrant to purchase 509,498 shares of common stock pursuant to a securities purchase agreement with an institutional accredited investor, Brown Stone Capital Ltd., at a price equal to $0.59 per share.
Previous report
On September 26, 2024, we entered into a promissory note for the principal amount of $200,000. The promissory note bears interest at 12.5% per annum. The note is payable in three monthly installments of $75,000, beginning on November 1, 2024, with subsequent payments due on December 1, 2024, and January 1, 2025.
Previous report
On November 24, 2023, the Company received written notification from the staff (the “Staff”) of Nasdaq indicating that the Company no longer meets Nasdaq Listing Rule 5550(b)(2) requiring the Company to maintain a minimum market value of listed securities (“MVLS”) of $35 million. The notice was based on a review of the Company’s MVLS for the past 30 consecutive business days. Nasdaq’s listing rules provided the Company with a compliance period of 180 calendar days, or until May 22, 2024, in which to regain compliance. On April 18, 2024, the Company received a written notification from the Staff informing the Company that it has regained compliance with Nasdaq Continue Listing Rules by satisfying Nasdaq’s Equity Standard under Listing Rule 5550(b) based on the Company’s stockholders’ equity reported on the Company’s Annual Report on Form 10-K for the period ending December 31, 2023 and the matter is now closed.
Previous report
During the nine months ended September 30, 2024, we completed seven acquisitions with capital stock and three of the seven with additional cash payments totaling $240 thousand. Each of the seven acquisitions had an aggregate amount of $265 thousand of cash. See Note 2, “Business Combinations” of the Notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information regarding the acquisitions.
Reworded paragraphs (24)
Previous wording
We are a holding company for five agent-centric, technology-integrated, cloud-based, multi-service real estate segments. Our primary business, La Rosa Realty, LLC, has been listed in the “Top 75 Residential Real Estate Firms in the United States” from 2016 through 2020 by the National Association of Realtors, the leading real estate industry trade association in the United States.
Current wording
We are the holding company for six agent-centric, technology-integrated, cloud-based, multi-service real estate segments.
Previous wording
In addition to providing person-to-person residential and commercial real estate brokerage services to the public, we cross sell ancillary technology-based products and services primarily to our sales agents and the sales agents associated with our franchisees. Our business is organized based on the services we provide internally to our agents and to the public, which are residential and commercial real estate brokerage, franchising, real estate brokerage education and coaching, and property management. Our real estate brokerage business operates primarily under the trade name La Rosa Realty, which we own, and, to a lesser extent, under the trade name Better Homes Realty which we license. We have 24 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, and Puerto Rico. We have 8 La Rosa Realty franchised real estate brokerage offices and branches and 3 affiliated real estate brokerage offices that pay us fees in three states in the United States and Puerto Rico. Our real estate brokerage offices, both corporate and franchised, are staffed with 2,647 licensed real estate brokers and sales associates as of September 30, 2024, an increase of 9% since December 31, 2023. In addition to our real estate brokerage offices, we also have a wholly owned title services company that was acquired during the quarter.
Current wording
In addition to providing person-to-person residential and commercial real estate brokerage services to the public, we cross-sell ancillary technology-based products and services primarily to our sales agents and the sales agents associated with our franchisees. Our business is organized based on the services we provide internally to our agents and to the public, which are residential and commercial real estate brokerage, franchising, real estate brokerage education and coaching, property management, and title services. Our real estate brokerage business operates primarily under the trade name La Rosa Realty. We have 26 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, Georgia, North Carolina and Puerto Rico. The Company also has 6 La Rosa Realty franchised real estate brokerage offices and branches and 3 affiliated real estate brokerage offices, that pay us fees in 7 states in the United States and Puerto Rico. Additionally, the Company has a full-service escrow settlement and title company in Florida.
Previous wording
We have built our business by providing the home buying public with well trained, knowledgeable realtors who have access to our proprietary and third-party in-house technology tools and quality education and training, and valuable marketing that attracts some of the best local realtors who provide value-added services to our home buyers and sellers that are attracted to our brands. We give our real estate brokers and sales agents who are seeking financial independence a turnkey solution and support them in growing their brokerages while they fund their own businesses. This enables us to maintain a low fixed-cost business with several recurring revenue streams, yielding relatively high margins and cash flow.
Current wording
We have built our business by providing the home-buying public with well-trained, knowledgeable realtors who have access to our proprietary and third-party in-house technology tools and quality education and training, and valuable marketing that attracts some of the best local realtors who provide value-added services to our home buyers and sellers that are attracted to our brands. We give our real estate brokers and sales agents who are seeking financial independence a turnkey solution and support them in growing their brokerages while they fund their own businesses.
Previous wording
Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. We believe that agents who join our Company from the major real estate brokerage firms have increased their income by an average of approximately forty percent (40%). They can then use this additional income to reinvest in their businesses or as take-home profit. This is a strong incentive for them to compete against the discount, flat fee and internet brokerages that have sprung up in the past several years. Instead of us taking a greater share of their income, our agents pay what we believe to be reduced rates for training and mentorship and our proprietary technology. Our franchise model has a similar pricing methodology, permitting the franchise owner the freedom to operate their business with minimal control and lower expense than other franchise offerings.
Current wording
Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. They can then use these additional commissions to reinvest in their businesses or as take-home profit. We believe that this is a strong incentive for them to compete against the discount, flat fee and internet brokerages that have sprung up in the past several years. Instead of us taking a greater share of their income, our agents pay what we believe to be reduced rates for training and mentorship and our proprietary technology. Our franchise model has a similar pricing methodology, permitting the franchise owner the freedom to operate their business with minimal control and lower expense than other franchise offerings.
Previous wording
In the first nine months of 2024, we acquired majority ownership of the following franchisees of the Company: La Rosa Realty Georgia, LLC, La Rosa Realty California, La Rosa Realty Lakeland LLC, La Rosa Realty Success LLC and 100% ownership of La Rosa Realty Winter Garden LLC, BF Prime LLC, and Nona Title Agency LLC. In November 2024, we acquired 49% membership interests of our subsidiary, La Rosa Realty Premier, LLC, which became our wholly owned subsidiary.
Current wording
On October 12, 2023, we consummated our IPO. Following our IPO, during the fiscal year ended December 31, 2023, we acquired majority ownership of the following franchisees of the Company: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.), Horeb Kissimmee Realty, LLC, La Rosa Realty Premier, LLC, La Rosa Realty Orlando, LLC, and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC and La Rosa Realty North Florida LLC. In December 2023, we also formed our majority owned subsidiary La Rosa Realty Texas LLC. During the fiscal year ended December 31, 2024, we acquired majority ownership of the following franchisees and affiliates of the Company: La Rosa Realty Georgia LLC, La Rosa Realty California, La Rosa Realty Lakeland LLC DBA La Rosa Realty Prestige, and La Rosa Realty Success LLC, and 100% ownership of La Rosa Realty Winter Garden LLC, BF Prime LLC, Nona Title Agency LLC, La Rosa Realty Beaches LLC, and Baxpi Holdings. Additionally, we acquired the remaining non-controlling interest portions of Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) and La Rosa Realty Premier, LLC, making them both 100% owned entities.
Previous wording
It is management’s intention to acquire additional franchisees and other entities through the remainder of 2024 and in 2025. We continuously look to search for potential acquisition targets. Management is in discussions with several franchisees; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.
Current wording
It is management’s intention to acquire additional franchisees and other entities through the remainder of 2025. We continuously search for potential acquisition targets. Management is in discussions with several franchisees and other entities; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.
Previous wording
On October 10, 2024, the Company received a letter from Nasdaq notifying the Company that it was no longer in compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Nasdaq has granted the Company 180 calendar days, or until April 8, 2025, to regain compliance with the Bid Price Rule. If the Company does not regain compliance with the Bid Price Rule by April 8, 2025, the Company may be eligible for an additional 180-day period to regain compliance.
Current wording
On October 10, 2024, we received a letter from the Nasdaq Listing Qualifications Department notifying us that, for the 30 consecutive business day period between August 28, 2024 through October 9, 2024, our common stock had not maintained a minimum closing bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until April 8, 2025 (the “Compliance Period”), to regain compliance with the Bid Price Rule. In order to regain compliance with the Bid Price Rule, our common stock was required to maintain a minimum closing bid price of $1.00 for a minimum of ten consecutive business days during the Compliance Period prior to April 9, 2025.
Previous wording
Our financial results are primarily driven by the total number of sales agents in our Company, the number of sales agents closing residential real estate transactions, the number of sales agents utilizing our coaching services, the number of agents who work with our franchisees, and the number of properties under management. We increased our agent count by just over 6%, from 2,493 at September 30, 2023 to 2,647 at September 30, 2024.
Current wording
Our financial results are primarily driven by the total number of sales agents in our Company, the number of sales agents closing residential real estate transactions, the number of sales agents utilizing our coaching services, the number of agents who work with our franchisees, and the number of properties under management. We increased our agent count by 12.8%, from 2,454 at March 31, 2024 to 2,769 at March 31, 2025.
Previous wording
The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisees’ agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees, and our franchisees’ agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, (vii) fees from our events and forums, and (viii) revenue from title services.
Current wording
The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisees’ agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees, and our franchisees’ agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, (vii) fees generated from title services revenue and insurance and (viii) fees from our events and forums.
Previous wording
The majority of our revenue is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest, taxes, depreciation and amortization (“EBITDA”). Historically, the number of agents in the residential real estate industry has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue comes from fees tied to the number and size of real estate transactions closed by our agents.
Current wording
The majority of our revenue is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest, taxes, depreciation and amortization (“EBITDA”). Historically, the number of agents in the residential real estate industry has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue comes from fees tied to the number and size of real estate transactions closed by our agents. While the Company was not named as a defendant in any of the recent class action lawsuits alleging antitrust violations, it is possible that it could be a litigant at some point in the future. Several of these lawsuits have been settled (see our Annual Report on Form 10-K for 2024 fiscal year “Risk Factors –Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results)***.***These settlements will result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition and results of operations for the foreseeable future.
Previous wording
The U.S. Federal Reserve continues to take action intended to address the increases in inflation. The Federal Reserve Board maintained the federal funds rate at 533 basis points from August of 2023 through mid-September 2024, when it was then reduced to 483 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and reached a peak of about 8% during the second half of 2023. That interest rate sat in between 6.1% and 6.9% during Q3 of 2024. Consequently, housing demand has softened, prices are rising, consumer sentiment has weakened, and home sales are declining. In September of 2024, the existing home sales market declined 3.5% compared to September of 2023 according to the National Association of Realtors. This decline had an adverse impact on consumer demand for our services, as consumers weighed the financial implications of selling or purchasing a home. Continuing poor housing market conditions would adversely affect our operating performance and results of operations.
Current wording
The U.S. Federal Reserve continues to take action intended to address inflation. The Federal Reserve Board maintained the federal funds rate at 533 basis points from August of 2023 through mid-September 2024, when it was reduced to 483 basis points. In April 2025, the federal funds rate was 433 basis points. The fluctuations impact interest rates, which significantly contribute to mortgage rate adjustments. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and reached a peak of about 8% during the second half of 2023. That interest rate sat in between 6.62% and 6.85% during 2024 and was 6.65% by the end of March 2025. Consequently, housing demand remained soft, prices are rising, consumer sentiment has weakened, and home sales are declining. In March 2025, existing-home sales fell 5.9% month-over-month to a seasonally adjusted rate of 4.02 million. Year-over-year, sales drew back 2.4%. According to National Association of Realtors (“NAR”) Chief Economist Lawrence Yun, “Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates. Residential housing mobility, currently at historic lows, signals the troublesome possibility of less economic mobility for society.”
Previous wording
Additionally, on July 26, 2023, the SEC adopted new cybersecurity disclosure rules for public companies that require disclosure regarding cybersecurity risk management (including the corporate board’s role in overseeing cybersecurity risks, management’s role and expertise in assessing and managing cybersecurity risks, and processes for assessing, identifying and managing cybersecurity risks) in annual reports. These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K, generally within four days of determining an incident is material. We have included respective disclosures in our Annual Report on Form 10-K for fiscal year ended December 31, 2023 filed with the Commission on April 16, 2024. Since June 15, 2024, we are subject to such Form 8-K disclosure requirements.
Current wording
The recently adopted SEC cybersecurity disclosure rules for public companies require disclosure regarding cybersecurity risk management (including the corporate board’s role in overseeing cybersecurity risks, management’s role and expertise in assessing and managing cybersecurity risks, and processes for assessing, identifying and managing cybersecurity risks) in annual reports. These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K, generally within four days of determining an incident is material. We have included respective disclosures in our Annual Report on Form 10-K for fiscal year ended December 31, 2024 filed with the Commission on April 15, 2025.
Previous wording
Residential real estate services sales revenue increased by approximately $12.6 million, or 328%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was driven by approximately $12.2 million of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024. We increased our transaction fee, monthly agent fee, and annual fee effective September 1, 2023, which, if volume returns to 2023 levels, real estate brokerage services revenue, excluding incremental acquisition revenue, will increase in 2024.
Current wording
Residential real estate services sales revenue increased by approximately $4.0 million, or 39%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was driven primarily by approximately $3.6 million of revenue from the six acquisitions completed in the 2 nd – 4 th quarter of fiscal year 2024 along with incremental additional revenue from the three acquisitions completed in the first quarter of fiscal year 2024. We increased our transaction fee, monthly agent fee, and annual fee effective September 1, 2023, which, if volume returns to 2023 levels, real estate brokerage services revenue, excluding incremental acquisition revenue, will increase in 2025.
Previous wording
Franchising services revenue decreased by approximately $152 thousand, or 70%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The decrease was attributable from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024, which no longer contribute to franchising royalties fees, which would have totaled approximately $163 thousand in the third quarter of 2024. Our remaining franchisees saw a similar decrease in volume related to the same market conditions in our residential services, which negatively impacted our franchising royalty fee revenue.
Current wording
Franchising services revenue decreased by approximately $106 thousand, or 73%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease is attributable to the five of the six acquisitions completed in the 2 nd – 4 th quarter of fiscal year 2024 that were franchisees, which no longer contribute to franchising royalties fees. Our remaining franchisees did not see a significant changes in transaction revenues between the per.
Previous wording
Property management revenue increased by approximately $341 thousand, or 14%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in the number of properties under management along with a management fee price increase effective September 1, 2023.
Current wording
Property management revenue increased by approximately $432 thousand, or 172%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an increase in the number of properties under management along with a management fee price increase effective September 1, 2023.
Previous wording
Costs related to residential real estate brokerage services increased by approximately $11.4 million, or 325%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was driven by approximately $11.2 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024. The gross profit increased by approximately $1.2 million, or 368%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily attributable to the gross profit from acquisitions.
Current wording
Costs related to residential real estate brokerage services increased by approximately $3.7 million, or 40%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was driven by approximately $6.9 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the three acquisitions completed in the first quarter of fiscal year 2024. The gross profit increased by approximately $341 thousand, or 33%, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily attributable to the gross profit from acquisitions.
Previous wording
Costs of revenue for franchising services increased by approximately $4 thousand, or 3%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, related to the increase costs of the external software that supports the Company’s franchises. The gross profit (loss) of franchising services has moved to a loss position for the three-month period ending September 30, 2024 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the thirteen franchises in the fourth quarter of 2023 and the first three quarters of 2024.
Current wording
Costs of revenue for franchising services decreased by approximately $18 thousand, or 14%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, related to the acquisition of the five out of the six franchises acquired in the 2 nd - 4 th quarters of 2024. The gross profit of franchising services has decreased by $87 thousand, or about 611%, for the three-month period ending March 31, 2025 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the franchises in 2023 and 2024.
Previous wording
Costs of revenue related to coaching services decreased by approximately $27 thousand, or 27%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Costs related to coaching services is related to the augmentation of the coaching program. The gross margin has remained relatively stable with an decrease of 3.1% in the three-month period ended September 30, 2024 compared to September 30, 2023.
Current wording
Costs of revenue related to coaching services decreased by approximately $17 thousand, or 23%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Costs related to coaching services is related to the augmentation of the coaching program. The gross profit of coaching services has decreased by $21 thousand, or about 36%, for the three-month period ending March 31, 2025 over the comparable prior year period due to a shift in priority to growth in onboarding without a coaching requirement.
Previous wording
Costs of revenue related to property management services increased by approximately $283 thousand, or 11%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase in property management costs was primarily related to the timing of distributions to property owners as well as the increase in properties under management. The gross margin increased 1.8% remaining relatively consistent in the three-month periods ended September 30, 2024 and 2023.
Current wording
Costs of revenue related to property management services increased by approximately $364 thousand, or 14%, in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase in property management costs was primarily related to an increase in properties under management. The gross profit of property management services has increased by $68 thousand, or about 229%, for the three-month period ending March 31, 2025 over the comparable prior year period related to increase in properties under management.
Previous wording
We incurred stock-based compensation of approximately $390 thousand and $4.1 million in the three and nine months ended September 30, 2024, respectively, primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($2.1 million), other employees ($1.0 million), and investors and consultants who provided various services to the company ($1.0 million). We incurred stock-based compensation of approximately $5 thousand and $79 thousand in the three and nine months ended September 30, 2023, respectively, primarily due to option grants given to the non-management directors of our board of directors in February 2022.
Current wording
We incurred stock-based compensation of approximately $1.9 million in the three months ended March 31, 2025, primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($1.3 million), and consultants who provided various services to the Company ($0.6 million).
Previous wording
Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, we will require additional funds that might not be readily available or might not be on terms that are acceptable to us, or at all. Until such time that we fully implement our growth strategy, we expect to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead and costs of being a public company. As such, we anticipate that our 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 this quarterly report on Form 10-Q. We will be required to raise additional capital to service the three promissory notes issued in the first half of 2024, to repay the principal balance of each of the notes, and to fund ongoing operations.
Current wording
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.
Previous wording
We have incurred recurring net losses, and our operations have not provided net positive cash flows. In view of these matters, there is substantial doubt about our ability to continue as a going concern. We plan on continuing to expand via acquisition, which will help achieve future profitability, and we have plans to raise capital from outside investors, as we have done in the past, to fund operating losses and to provide capital for further business acquisitions. We cannot provide any assurance that we can successfully raise the capital needed on favorable terms, if at all.
Current wording
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.
Previous wording
During the nine months ended September 30, 2024, operating activities consumed $1.9 million of our cash on hand, which was primarily attributable to the net loss of $9.3 million, excluding stock-based compensation, amortization and depreciation, non-cash interest expense and amortization of debt discounts and provision for credit losses, partially offset by changes in working capital of $1.2 million, mostly due to an increase in accounts payable, accrued expenses, security deposit payables, partially offset by an increase in payments on lease liabilities.
Current wording
During the three months ended March 31, 2025, operating activities consumed $3.5 million of our cash on hand, which was primarily attributable to the net loss of $2.3 million, excluding stock-based compensation, loss on issuance of senior secured convertible notes, fair market value adjustments, and amortization and depreciation, changes in operating assets and liabilities consumed a further $1.2 million, mostly due to an increase in accounts payable and an increase in contract liabilities.
Previous wording
During the nine months ended September 30, 2024, we received net cash provided by financing activities of $3.4 million, which included the proceeds of our debt issuances in February, April and July 2024, a draw on the line of credit and the receipt of the advances on future receipts all totaling $3.6 million, proceeds from issuance of common stock of $1.9 million offset by deferred debt issuance costs, payments on notes payable, and payments to advances on future receipts and post-acquisition consideration all totaling $2.1 million.
Current wording
During the three months ended March 31, 2025, we received net cash provided by financing activities of $4.8 million, which included net proceeds from our S-3 of $2.9 million and from our debt issuance in February 2025 of $2.9 million, offset by $1.8 million in payments to notes payable, post-acquisition consideration, and advances on future receipts.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Our real estate brokerage offices, both corporate and franchised, are staffed with 2,769 licensed real estate brokers and sales associates as of March 31, 2025.
Current report — wording carried from elsewhere
Nasdaq Notice Regarding Minimum Bid Price Requirement
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Residential real estate services sales revenue increased by approximately $30.7 million, or 259%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was driven by approximately $32 million of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the seven acquisitions completed in the first nine months of fiscal year 2024, offset by a 19% decrease in total transaction volume. We increased our transaction fee, monthly agent fee, and annual fee effective September 1, 2023, which, if volume returns to 2023 levels, real estate brokerage services revenue, excluding incremental acquisition revenue, will increase in 2024.
Previous report — wording carried elsewhere
Property management revenue increased by approximately $986 thousand, or 14%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in the number of properties under management along with a management fee price increase effective September 1, 2023.
Previous report — wording carried elsewhere
We are 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 than us.