Company: LRHC
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112656
Chunk: 27

Company: La Rosa Holdings Corp.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 27
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 in the Company’s unaudited condensed consolidated statements of operations.

As
a result of applying the fair value option, direct costs and fees related to the Convertible Note were expensed as incurred and
were not deferred.

On June 18, 2025, with the prior approval by the
Company’s Board of Directors, the Company and the Investor entered into, and closed the transactions contemplated by, that certain
Amendment and Exchange Agreement (the “Exchange Agreement”) pursuant to which (among other things) the Investor surrendered
and exchanged all of its Incremental Warrants in exchange for (the “Exchange”) 6,000 shares of the Company’s Series
B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”). The Convertible Note remained outstanding
post-Exchange.

Pursuant
to the terms of the Exchange Agreement, conversion of the Series B Preferred Stock into shares of common stock of the Company, par value
$0.0001 per share (the “Common Stock”) in excess of 19.99% of the Company’s outstanding shares of Common Stock is conditional
upon obtaining the approval of the Company’s shareholders in accordance with the rules and regulations of the Nasdaq Capital Market
(“Shareholder Approval”). The Company agreed to convene a meeting of stockholders to obtain Shareholder Approval within 120
days after the date of the  Exchange Agreement. The Company obtained the Shareholder Approval effective as of August 11, 2025.

The
Company determined the Exchange met the criteria for liability derecognition of the Incremental Warrants as the Exchange represented
settlement of the liability through delivery of other financial assets. As the warrant was an equity contract classified as a liability
at issuance, upon settlement, the equity contract was required to be marked to market. The Company recognized a change in fair value
of $9,200,000 measured as the difference between the fair value of the Incremental Warrants at March 31, 2025, and their fair value of
$90,560,000 immediately prior to the Exchange. The Series B Preferred Stock issued to the Investor in satisfaction of the Incremental
Warrants in the Exchange had an issuance date fair value of $8,261,000 based on the following assumptions:

    June 18, 

    2025 
  
    Stated Value 
    $6,000,000 
  
    Dividend Rate 
     0.0%