Company: LRHC
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001213900-25-078012
Chunk: 22

Company: La Rosa Holdings Corp.
Filing Date: 2025-08-18
Form: 10-Q
Item: Item 1
Chunk 22
---
5,423,815 

Note 4 — Fair Value Measurements and
Other Liabilities

Fair Value Measurements

Fair value is the price that would be received
for an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company classified certain liabilities based on the following fair value hierarchy:

●Level
                                            1 – Quoted prices in active markets that are unadjusted and accessible at the measurement
                                            date for identical, unrestricted assets or liabilities;

●Level
                                            2 – Quoted prices for identical assets and liabilities in markets that are not active,
                                            quoted prices for similar assets and liabilities in active markets or financial instruments
                                            for which significant inputs are observable, either directly or indirectly; and

●Level
                                            3 – Prices or valuations that require inputs that are both significant to the fair
                                            value measurement and unobservable.

A financial instrument’s level within the
fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated
the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources.
The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The carrying amounts of financial instruments,
including cash, restricted cash, accounts receivable, accounts payable, and accrued expenses reflected in the condensed consolidated
financial statements approximate fair value due to their short-term maturities.

10

La Rosa Holdings Corp. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements

The Company determined that on June 30, 2025
and December 31, 2024, certain instruments qualified as derivative liabilities and were recorded at fair value on the date of issuance
and re-measured at fair value each reporting period with the change reported in earnings. See Note 7 – Equity Shares and Warrants for more information.

Securities Purchase Agreement

On February 4, 2025, the Company entered
into an SPA with an investor (“Investor”) for a Senior Secured Convertible Note (“Convertible Note”) with a face
value of $5,500,000 and 16 Incremental Warrants exercisable for a face amount of $2,500,000 each. See Note
5 – Borrowings for further discussion.

The purchase price paid by the Investor
under the SPA for the Convertible Note and Incremental Warrants was