v3.25.1
Business Combinations
 12 Months Ended
Dec. 31, 2024
Business Combinations [Abstract]  
Business Combinations

Note 3 — Business Combinations

 

During 2024, the Company acquired majority ownership of the following franchisees and affiliates of the Company: La Rosa Realty Winter Garden LLC, Las Rosa Realty Georgia LLC, La Rosa Realty California, La Rosa Realty Lakeland LLC, La Rosa Realty Success LLC, BF Prime LLC, and La Rosa Realty Beaches LLC & La Rosa Realty Baxpi. All six franchises engage mostly in the residential real estate brokerage services to the public primarily through sales agents and also provide coaching and support services to agents on a fee basis. In addition, the company has acquired Nona Title Agency LLC (rebranded FPG Title).

 

The acquisitions were accounted for using the acquisition method of accounting, which requires that the assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date.

 

On October 12, 2023, the Company completed its IPO. Following the IPO, the Company 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.) (“Lake Nona”), Horeb Kissimmee Realty, LLC (“Kissimmee”), La Rosa Realty Premier, LLC (“Premier”), and La Rosa Realty Orlando, LLC (“Orlando”), and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC (“CW Properties”) and La Rosa Realty North Florida LLC (“North Florida”). All six franchises engage mostly in the residential real estate brokerage services to the public primarily through sales agents and also provide coaching and support services to agents on a fee basis.

 

The acquisitions were accounted for using the acquisition method of accounting, which requires that the assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date.

 

The following table summarizes the purchase consideration and the purchase price allocation to the estimated fair values of the identifiable assets acquired and liabilities assumed for the eight acquisitions for the year ended December 31, 2024:

 

   Winter Garden   Georgia   California   Lakeland   Success   BF Prime   Nona Title   Beaches & Baxpi   Total 
Acquired ownership   100%   51%   51%   51%   51%   100%   100%   100%     
Acquisition date   2/21/2024    3/7/2024    3/15/2024    4/18/2024    5/25/2024    8/19/2024    8/21/2024    12/31/2024      
Common stock issued   268,858    276,178    1,387    514,939    56,375    39,739    461,154    1,227,698    2,846,328 
                                              
Cash consideration  $
—
   $
—
   $
—
   $50,000   $10,000   $5,890   $174,580   $100,000   $340,470 
Equity consideration   352,204    516,453    123,113    823,903    68,778    44,111    484,212    1,036,177    3,448,951 
Total purchase price  $352,204   $516,453   $123,113   $873,903   $78,778   $50,001   $658,792   $1,136,177   $3,789,421 
Noncontrolling interest   
—
    496,200    118,285    839,632    75,689    
—
    
—
    
—
    1,529,806 
Acquisition date fair value  $352,204   $1,012,653   $241,398   $1,713,535   $154,467   $50,001   $658,792   $1,136,177   $5,319,227 
                                              
Purchase price allocation  $352,204   $1,012,653   $241,398   $1,713,535   $154,467   $50,001   $658,792   $1,136,177   $5,319,227 
Less fair value of net assets acquired:                                             
Cash   17,623    79,553    1,436    32,935    171    4,542    129,157    11,461    276,878 
Working capital (less cash)   (17,148)   (54,991)   (45,027)   (59,325)   (21,323)   (3,817)   (128,306)   (24,562)   (354,499)
Intangible assets   171,767    446,657    111,202    815,411    104,798    9,632    103,074    451,144    2,213,685 
Long-term assets   
—
    91,118    106,542    129,521    22,697    14,545    
—
    
—
    364,423 
Long-term liabilities   
—
    (98,641)   (69,449)   (94,591)   (8,236)   (7,500)   
-
    
-
    (278,417)
Net assets acquired   172,242    463,696    104,704    823,951    98,107    17,402    103,925    438,043    2,222,070 
Goodwill  $179,962   $548,957   $136,694   $889,584   $56,360   $32,599   $554,867   $698,134   $3,097,157 

 

The classes of intangible assets acquired and the estimated useful life of each class is presented in the table below for the eight acquisitions:

 

   Winter Garden   Georgia   California   Lakeland   Success   BF Prime   Nona Title   Beaches & Baxpi   Total 
Franchise agreement (10 to 11 years)  $146,990   $356,200   $92,367   $511,453   $48,302   $7,771   $
—
   $343,318   $1,506,401 
Agent relationships (8 to 11 years)   
—
    43,447    7,657    147,455    
—
    
—
    103,074    91,869    393,502 
Real estate listings (1 year)   22,239    37,310    10,417    129,847    55,228    1,526    
—
    9,390    265,957 
Non-compete agreements (4 years)   2,538    9,700    761    26,656    1,268    335    
—
    6,566    47,824 
Total identifiable intangible assets acquired  $171,767   $446,657   $111,202   $815,411   $104,798   $9,632   $103,074   $451,143   $2,213,684 

The following table summarizes the purchase consideration and the purchase price allocation to the estimated fair values of the identifiable assets acquired and liabilities assumed for the six acquisitions for the year ended December 31, 2023:

 

   Lake Nona   Kissimmee   CW Properties   Premier   Orlando   North Florida   Total 
Acquired ownership   51%   51%   100%   51%   51%   100%     
Acquisition date   10/13/2023    10/16/2023    12/12/2023    12/13/2023    12/20/2023    12/28/2023      
Common stock issued   324,998    513,626    714,286    259,023    415,506    522,675    2,750,114 
Cash consideration  $50,000   $500,000   $
—
   $15,000   $
—
   $300,000   $865,000 
Equity consideration   974,994    1,438,153    1,200,000    393,715    648,190    831,053    5,486,105 
Total purchase price   1,024,994    1,938,153    1,200,000    408,715    648,190    1,131,053    6,351,105 
Noncontrolling interest   984,798    1,862,147    
—
    392,687    622,770    
—
    3,862,402 
Acquisition date fair value  $2,009,792   $3,800,300   $1,200,000   $801,402   $1,270,960   $1,131,053   $10,213,507 
                                    
Purchase price allocation  $2,009,792   $3,800,300   $1,200,000   $801,402   $1,270,960   $1,131,053   $10,213,507 
Less fair value of net assets acquired:                                   
Cash   104,929    163,924    71,589    23,023    15,952    43,839    423,256 
Working capital (less cash)   (177,064)   (270,028)   (94,755)   58    (33,369)   (58,206)   (633,364)
Intangible assets   1,172,141    1,700,161    438,760    263,260    517,797    613,464    4,705,583 
Long-term assets   371,132    184,440    64,282    7,406    
—
    32,132    659,392 
Long-term liabilities   (396,936)   (195,368)   (34,756)   (450)   
—
    (16,462)   (643,972)
Net assets acquired   1,074,202    1,583,129    445,120    293,297    500,380    614,767    4,510,895 
Goodwill  $935,590   $2,217,171   $754,880   $508,105   $770,580   $516,286   $5,702,612 

 

The purchase consideration of North Florida was comprised of both equity and cash. In accordance with the terms of the purchase agreement, the cash consideration of $300,000 is to be paid over an eight-month period beginning January 2024, with two thirds of the balance was paid in August 2024. The remaining cash consideration has been accrued as of December 31, 2024. The cash commitment does not include any contingencies.

 

Goodwill generated from the acquisition is primarily attributable to expected synergies from future growth and strategic advantages provided through expansion and is not expected to be deductible for income tax purposes.

 

The classes of intangible assets acquired and the estimated useful life of each class is presented in the table below for the six acquisitions:

 

   Lake Nona   Kissimmee   CW Properties   Premier   Orlando   North Florida   Total 
Franchise agreement (10 to 11 years)   967,107    1,199,274    359,201    234,485    402,351    580,663    3,743,081 
Agent relationships (8 to 11 years)   86,688    327,123    37,068    
—
    71,901    
—
    522,780 
Real estate listings (1 year)   82,016    116,550    31,277    23,456    25,128    20,371    298,798 
Non-compete agreements (4 years)   36,330    57,214    11,214    5,319    18,417    12,430    140,924 
Total identifiable intangible assets acquired   1,172,141    1,700,161    438,760    263,260    517,797    613,464    4,705,583 

 

The amounts of revenue, cost of revenue, gross profit, and loss from operations before income taxes of the eight and six acquisitions, respectively, included in the Company’s Consolidated Statement of Operations from the date of the acquisition for the years ended December 31, 2024 and 2023 are as follows:

 

   Year ended   Year ended 
   December 31,   December 31, 
   2024   2023 
Revenue  $9,872,020   $4,585,978 
Cost of revenue  $8,944,685   $4,232,694 
Gross profit  $927,517   $353,284 
Loss before provision for income taxes  $150,410   $(1,823)
Weighted average shares used in computing net loss per share of common stock   20,222,347    9,799,084 

 

The following unaudited pro forma financial information presents the combined operating results of the Company, Lake Nona, Kissimmee, and the four acquisitions as if each acquisition had occurred as of January 1, 2023. The unaudited pro forma financial information includes the accounting effects of the business combinations, including adjustments to the amortization of intangible assets. The unaudited pro forma information does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of the Company’s future consolidated results.

The unaudited pro forma financial information is presented in the table below for the years ended December 31, 2024 and 2023:

 

   Twelve Months Ended 
   December 31, 
   2024   2023 
Revenue  $71,938,934   $69,988,585 
Cost of revenue  $65,484,111   $63,914,041 
Gross profit  $6,454,823   $6,074,544 
           
Loss before provision for income taxes  $(14,499,740)  $(9,355,251)
Loss per share of common stock attributable to common stockholders, basic and diluted  $(0.79)  $(0.74)
Weighted average shares used in computing net loss per share of common stock attributable to common stockholders   19,976,390    12,660,886