Company: LRHC
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032211
Chunk: 2528

Company: La Rosa Holdings Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 8
Chunk 2528
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 follow.

Impairment test

During the fiscal fourth quarter of 2024, we determined
that a triggering event occurred as a result of additional decline in operational estimates for franchises acquired, along with uncertainty
for projected cash flows, and also further decreases in our stock price. Therefore, we performed a quantitative impairment test as of
the first day of fiscal fourth quarter of 2024 for our reporting units with remaining goodwill.

The fair value of each reporting unit was estimated
using a weighing of the income and market valuation approaches. The income approach applied a fair value methodology to each reporting
unit based on discounted cash flows. This analysis requires significant judgments, including estimation of future cash flows, which is
dependent on internally developed forecasts of revenue and profitability, estimation of the long-term rate of growth for our business,
estimation of the useful life over which cash flows will occur, and determination of our carrying value of equity for the reporting unit
being tested.

The combined fair values for all reporting
units were then reconciled to the aggregate market value of our shares of, common stock on the date of testing. Based on our most
recent impairment test, eight of our reporting units’ fair values were below their respective carrying values. An impairment
charge of $787,438 was recognized for the year ended December 31, 2025.

As a result of this quantitative testing, we evaluated
other long-term assets for impairment utilizing the un-discounted cash flows and determined that all of the impairment was attributable
to goodwill which is recorded as Impairment of Goodwill on our Consolidated Statements of Operation.

Additionally, following performance of the annual
impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have
occurred. Accordingly, no further impairment charges were recognized during the fiscal year ended December 31, 2024.

The gross carrying amount of goodwill as of December
31, 2024 and December 31, 2023 was $8,012,331 and $5,702,612, respectively.

Changes in the carrying amount of goodwill are
as follows:

    2024  
    2023 
  
    Balance, January 1 
    $5,702,612  
    $- 
  
    Additions 
     3,097,157  
     5,702,612 
  
    Impairment 
     (787,438) 
     - 
  
    Good