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La Rosa Holdings Corp

For the period ended Jun 30, 2024. Filed Aug 15, 2024.

View on SEC.gov

About 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.

Jun 30, 2024 · Filed Aug 15, 2024

LRHC$0.76-15.4%Stored close · as of Oct 16, 2026

What changed in Management’s Discussion and Analysis?

Read the current filing

Previous report: 10-Q

Period ended 2024-03-31; filed 2024-05-15.

0001213900-24-043603

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current report: 10-Q

Period ended 2024-06-30; filed 2024-08-15.

0001213900-24-069618

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The 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 84 previous paragraphs and 96 current paragraphs.

53 unchanged; 24 reworded; 10 added; 7 removed; 0 previous and 9 current paragraphs rearranged.

Tables are not compared: 30 previous and 39 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 (10)

Current report

Costs related to residential real estate brokerage services increased by approximately $16.3 million, or 222%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was driven by approximately $18.0 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024. The gross profit increased by approximately $1.8 million, or 277%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily attributable to the gross profit from acquisitions.

Current report

Commercial real estate services sales revenue increased by approximately $127 thousand, or 440%, in the three months ended June 30, 2024 as compared to the three months ended June 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 $129 thousand in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Current report

Commercial real estate services sales revenue increased by approximately $115 thousand, or 165%, in the six months ended June 30, 2024 as compared to the six months ended June 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 $134 thousand in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current report

Selling, General and Administrative Expense – Three Month Expense

Current report

Selling, General and Administrative Expense – Six Month Expense

Current report

In May 2024, the Company entered into a standard merchant cash advance agreement which the Company 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.

Current 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.

Current 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.
Removed paragraphs (7)
Reworded paragraphs (24)

Previous wording

We are the 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 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.

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 21 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, and Georgia. We have 16 La Rosa Realty franchised real estate brokerage offices and branches and two affiliated real estate brokerage offices that pay us fees in two states in the United States and Puerto Rico. Our real estate brokerage offices, both corporate and franchised, are staffed with 2,454 licensed real estate brokers and sales associates as of March 31, 2024.

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, 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 22 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, and Georgia. We have 15 La Rosa Realty franchised real estate brokerage offices and branches and two affiliated real estate brokerage offices that pay us fees in two states in the United States and Puerto Rico. Our real estate brokerage offices, both corporate and franchised, are staffed with 2,581 licensed real estate brokers and sales associates as of July 31, 2024, and increase of 6% since December 31, 2023.

Previous wording

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 and Georgia, with plans to expand the offering across the organization.

Current wording

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 wording

In the first quarter of 2024, we acquired majority ownership of the following franchisees of the Company: La Rosa Realty Georgia, LLC, La Rosa Realty California, and 100% ownership of La Rosa Realty Winter Garden LLC. In April 2024, we also acquired majority ownership of La Rosa Realty Lakeland LLC, our franchisee.

Current wording

In the first half 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.

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 under four 4%, from 2,378 at March 31, 2023 to 2,471 at March 31, 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 just under four 4%, from 2,436 at June 30, 2023 to 2,535 at June 30, 2024.

Previous wording

The U.S. Federal Reserve continues to take action intended to address sharp increases in inflation. The Federal Reserve Board increased the federal funds rate to a range of 525 to 550 basis points as of March 20, 2024 from a range of 0 to 25 basis points as of the first quarter of 2022. These increases have impacted interest rates, which have significantly contributed to rising mortgage rates. 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 has reached a recent peak of about 8% during the second half of 2023. That interest rate stood at 6.87% as of March 21, 2024. Consequently, housing demand is softening, prices are rising, consumer sentiment has weakened, and home sales are declining. In September of 2023, the existing home sales market declined 15.4% compared to September of 2022 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 the increases in inflation. The Federal Reserve Board has maintained the federal funds rate at 533 basis points since August of 2023 from a range of 0 to 25 basis points as of the first quarter of 2022. The increase has impacted interest rates, which have significantly contributed to rising mortgage rates. 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 has reached a recent peak of about 8% during the second half of 2023. That interest rate sat in between 6.6% and 6.8% during Q2 of 2024. Consequently, housing demand is softening, prices are rising, consumer sentiment has weakened, and home sales are declining. In June of 2024, the existing home sales market declined 5.4% compared to June 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.

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. We will be subject to such Form 8-K disclosure requirements starting June 15, 2024.

Current 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.

Previous wording

Residential real estate services sales revenue increased by approximately $6.9 million, or 211%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was driven by approximately $7.6 million 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, offset by a 36% 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.

Current wording

Residential real estate services sales revenue increased by approximately $11.1 million, or 237%, in the three months ended June 30, 2024 as compared to the three months ended June 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 five acquisitions completed in the first half of fiscal year 2024, offset by a 17% 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 wording

Costs related to residential real estate brokerage services increased by approximately $6.2 million, or 208%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. 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 $736 thousand, or 247%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily attributable to the gross profit from acquisitions.

Current wording

Costs related to residential real estate brokerage services increased by approximately $10.1 million, or 231%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was driven by approximately $11.1 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024. The gross profit increased by approximately $1.0 million, or 304%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily attributable to the gross profit from acquisitions.

Previous wording

Franchising services revenue decreased by approximately $160 thousand, or 53%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease was attributable 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, which no longer contribute to franchising royalties fees, which would have totaled approximately $174 thousand in the first 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 $143 thousand, or 68%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The decrease was attributable from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024, which no longer contribute to franchising royalties fees, which would have totaled approximately $167 thousand in the second 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 wording

Costs of revenue for franchising services increased by approximately $20 thousand, or 19%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, related to the increase costs of the external software that supports the Company’s franchises. The gross profit of franchising services has decreased by about 50% for the three-month period ending March 31, 2024 over the comparable prior year period, which is attributable to the reduction in the cost of revenue due to the acquisitions of the nine franchises in the fourth quarter of 2023 and the first quarter of 2024.

Current wording

Costs of revenue for franchising services increased by approximately $14 thousand, or 13%, in the three months ended June 30, 2024 as compared to the three months ended June 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 June 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 eleven franchises in the fourth quarter of 2023 and the first quarter of 2024.

Previous wording

Coaching services revenue increased by approximately $1 thousand, or 1%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to an increase in an emphasis of our coaching program, partially offset due to the reduction in our residential transaction volume.

Current wording

Coaching services revenue increased by $60 thousand, or 40%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to an increase in an emphasis of our coaching program, partially offset due to the reduction in our residential transaction volume.

Previous wording

Costs of revenue related to coaching services increased by approximately $6 thousand, or 9%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Costs related to coaching services is related to the augmentation of the coaching program. The gross margin is relatively consistent in the three-month periods ended March 31, 2024 and 2023.

Current wording

Costs of revenue related to coaching services increased by approximately $35 thousand, or 45%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Costs related to coaching services is related to the augmentation of the coaching program. The gross margin is relatively consistent in the three-month periods ended June 30, 2024 and 2023.

Previous wording

Property management revenue increased by approximately $270 thousand, or 12%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 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 $375 thousand, or 16%, in the three months ended June 30, 2024 as compared to the three months ended June 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 wording

Costs of revenue related to property management services increased by approximately $269 thousand, or 12%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 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 three-month periods ended March 31, 2024 and 2023.

Current wording

Costs of revenue related to property management services increased by approximately $367 thousand, or 16%, in the three months ended June 30, 2024 as compared to the three months ended June 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 three-month periods ended June 30, 2024 and 2023.

Previous wording

Selling, general and administrative costs increased by approximately $1.6 million, or 162%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Half of the increase was driven by $804 thousand of additional costs 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 remaining increase is primarily attributable to approximately $378 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 $185 thousand of amortization of the intangible assets incurred through the acquisitions in the fourth quarter of 2023 and the first quarter of 2024.

Current wording

Selling, general and administrative costs, excluding stock-based compensation, increased by approximately $2.0 million, or 210%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. A portion of the increase was driven by $666 thousand of additional costs from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024. The remaining increase is primarily attributable to approximately $863 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 $254 thousand of amortization of the intangible assets incurred through the acquisitions in the fourth quarter of 2023 and the first half of 2024 and an increase in personnel costs of $163 thousand.

Previous wording

We incurred stock-based compensation of approximately $3.2 million in the three months ended March 31, 2024, primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($1.9 million), other employees ($0.9 million), and consultants who provided various services to the company ($0.4 million). We incurred stock-based compensation of approximately $69 thousand in the three months ended March 31, 2023 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 $474 thousand and $3.7 million in the three and six months ended June 30, 2024, respectively, primarily due to option grants to our CEO pursuant to the terms of his employment agreement ($2.1 million), other employees ($0.9 million), and consultants who provided various services to the company ($0.7 million). We incurred stock-based compensation of approximately $5 thousand and $74 thousand in the three and six months ended June 30, 2023, respectively, primarily due to option grants given to the non-management directors of our board of directors in February 2022.

Previous wording

Other expense, net for the three months ended March 31, 2024 was approximately $81 thousand compared to other expense, net, of approximately $573 thousand for the three months ended March 31, 2023. The expense in 2024 was due to interest expense and the amortization of financing fees related to the debt raise in February 2024. The expense in 2023 was primarily 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.

Current wording

Other expense, net for the three months ended June 30, 2024 was approximately $426 thousand compared to other expense, net, of approximately $113 thousand for the three months ended June 30, 2023. The expense in 2024 was due to interest expense and the amortization of financing fees related to the debt raise in February 2024 and April 2024 and the Advances on Future Receipts in May 2024 as well as an increase in the value of the derivative liabilities associated with the convertible debt. The expense in 2023 was primarily 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.

Previous wording

On March 31, 2024 and December 31, 2023, we had cash of approximately $1.1 million and $1.0 million, respectively, on hand.

Current wording

On June 30, 2024 and December 31, 2023, we had cash of approximately $1.6 million and $1.0 million, respectively, on hand.

Previous wording

In April 2024, we received $1,250,200 in net proceeds, excluding debt issuance costs of $128 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.

Current wording

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 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 two 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

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.

Previous wording

During the three months ended March 31, 2024, operating activities consumed $0.5 million of our cash on hand, which was primarily attributable to the net loss of $1.2 million, excluding stock-based compensation, amortization and depreciation, partially offset by changes in working capital of $0.6 million, mostly due to an increase in accounts payable and an increase in contract liabilities.

Current wording

During the six months ended June 30, 2024, operating activities consumed $1.3 million of our cash on hand, which was primarily attributable to the net loss of $2.0 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 $0.7 million, mostly due to an increase in accounts payable, security deposit payables, and an increase in contract liabilities, partially offset by an increase in accounts receivable and payments on lease liabilities.

Previous wording

During the three months ended March 31, 2024, we purchased three acquisitions with capital stock. Each of the three acquisition had an aggregate amount of $0.1 million 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.

Current wording

During the six months ended June 30, 2024, we purchased five acquisitions with capital stock and two of the five with additional cash payments totaling $60 thousand. Each of the five acquisitions had an aggregate amount of $132 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.

Previous wording

During the three months ended March 31, 2024, we received net cash provided by financing activities of $0.7 million, which included the proceeds of our debt issuance in February 2024 of $1.0 million, offset by deferred debt issuance costs of $0.2 million and payments to notes payable, post-acquisition consideration, and advances on future receipts.

Current wording

During the six months ended June 30, 2024, we received net cash provided by financing activities of $2.1 million, which included the proceeds of our debt issuance in February 2024 and April 1 of $2.2 million and the receipt of the advances on future receipts of $0.5 million, offset by deferred debt issuance costs of $0.3 million, payments on notes payable, and payments to advances on future receipts and post-acquisition consideration totaling $0.3 million.
Rearranged current paragraphs (9)

Current report — wording carried from elsewhere

Residential real estate services sales revenue increased by approximately $18.1 million, or 226%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was driven by approximately $19.7 million of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024, offset by a 27% 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.

Current report — wording carried from elsewhere

Franchising services revenue decreased by approximately $304 thousand, or 59%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The decrease was attributable from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024, which no longer contribute to franchising royalties fees, which would have totaled approximately $342 thousand in the second 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 report — wording carried from elsewhere

Costs of revenue for franchising services increased by approximately $35 thousand, or 16%, in the six months ended June 30, 2024 as compared to the six months ended June 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 six-month period ending June 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 eleven franchises in the fourth quarter of 2023 and the first quarter of 2024.

Current report — wording carried from elsewhere

Coaching services revenue increased by $62 thousand, or 22%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to an increase in an emphasis of our coaching program, partially offset due to the reduction in our residential transaction volume.

Current report — wording carried from elsewhere

Costs of revenue related to coaching services increased by approximately $41 thousand, or 28%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Costs related to coaching services is related to the augmentation of the coaching program. The gross margin is relatively consistent in the six-month periods ended June 30, 2024 and 2023.

Current report — wording carried from elsewhere

Property management revenue increased by approximately $645 thousand, or 16%, in the six months ended June 30, 2024 as compared to the six months ended June 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 report — wording carried from elsewhere

Costs of revenue related to property management services increased by approximately $636 thousand, or 14%, in the six months ended June 30, 2024 as compared to the six months ended June 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 six-month periods ended June 30, 2024 and 2023.

Current report — wording carried from elsewhere

Selling, general and administrative costs, excluding stock-based compensation, increased by approximately $3.6 million, or 186%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. A portion of the increase was driven by $1.3 million of additional costs from the six acquisitions completed in the fourth quarter of fiscal year 2023 and the five acquisitions completed in the first half of fiscal year 2024. The remaining increase is primarily attributable to approximately $1.3 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 $438 thousand of amortization of the intangible assets incurred through the acquisitions in the fourth quarter of 2023 and the first half of 2024, an increase in personnel costs of $284 thousand, and additional marketing events of $155 thousand.

Current report — wording carried from elsewhere

Other expense, net for the six months ended June 30, 2024 was approximately $507 thousand compared to other expense, net, of approximately $686 thousand for the six months ended June 30, 2023. The expense in 2024 was due to interest expense and the amortization of financing fees related to the debt raise in February 2024 and April 2024 and the Advances on Future Receipts in May 2024 as well as an increase in the value of the derivative liabilities associated with the convertible debt. The expense in 2023 was primarily 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.