La Rosa Holdings Corp. Goodwill & Intangibles Disclosure
Note 4 — Goodwill and Intangible Assets
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company recognized goodwill for the first time in the fourth quarter of 2023; as such, the Company first tested for impairment in the fourth quarter of 2024 the results of which 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 | ) | ||||||
| Goodwill as of 12/31/2024 | $ | 8,012,331 | $ | 5,702,612 | ||||
The components of purchased intangible assets were as follows:
| Weighted | |||||||||||||||
| Average | |||||||||||||||
| Remaining | December 31, 2024 | ||||||||||||||
| Amortization | Gross | ||||||||||||||
| Period (in years) | Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||
| Franchise agreement | 9 | 5,249,482 | 467,138 | 4,782,344 | |||||||||||
| Agent relationships | 8 | 916,282 | 93,431 | 822,851 | |||||||||||
| Real estate listings | 0.3 | 564,756 | 472,543 | 92,213 | |||||||||||
| Non-compete agreements | 3 | 188,748 | 46,076 | 142,672 | |||||||||||
| Total | 9 | $ | 6,919,268 | $ | 1,079,188 | $ | 5,840,080 | ||||||||
| Weighted | ||||||||||||||
| Average | ||||||||||||||
| Remaining | December 31, 2023 | |||||||||||||
| Amortization | Gross | |||||||||||||
| Period (in years) | Carrying Amount | Accumulated Amortization | Net Amount | |||||||||||
| Franchise agreement | 11 | 3,743,081 | 32,334 | 3,710,747 | ||||||||||
| Agent relationships | 8 | 522,780 | 8,692 | 514,088 | ||||||||||
| Real estate listings | 1 | 298,798 | 28,366 | 270,432 | ||||||||||
| Non-compete agreements | 4 | 140,924 | 3,742 | 137,182 | ||||||||||
| Total | 10 | $ | 4,705,583 | $ | 73,134 | $ | 4,632,449 | |||||||
The Company recorded $1,006,052 and $73,134 of amortization of the intangible assets during the years ended December 31, 2024 and December 31, 2023, respectively. Based on the intangible assets recorded at December 31, 2024, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:
| Amortization | ||||
| 2025 | $ | 749,941 | ||
| 2026 | 657,711 | |||
| 2027 | 654,098 | |||
| 2028 | 611,917 | |||
| 2029 | 609,696 | |||
| Thereafter | 2,556,717 | |||
| Total | $ | 5,840,080 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Apr 15, 2025 | Showing above |
| 2023 | Apr 16, 2024 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.