Company: LRHC
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032211
Chunk: 1064

Company: La Rosa Holdings Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 1064
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 of the Company’s common stock as a commitment fee, a warrant to purchase
53,700 shares of the Company’s common stock with an exercise price of $3.00, exercisable until the five-year anniversary of the
closing date, and a second warrant to purchase 54,200 shares of the Company’s common stock with an exercise price of $2.25. The
second warrant only became exercisable if the note was not fully paid on or before the maturity date, at which point the warrant was
exercisable until the five-year anniversary of the vesting date. The second warrant would be cancelled and extinguished if the note was
fully paid on or before the note maturity date. The investor also had a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance,
and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note were
convertible into shares of the Company’s common stock at a conversion price of $2.50 per share unless the Company failed to make
an amortization payment when due, in which case the conversion price would be the lower of $2.50 or 85% of the lowest VWAP of the shares
prior to five days of the conversion. The proceeds of the note were used for business development and general working capital purposes.

The Company evaluated the terms of the securities
purchase agreements and determined that the commitment shares and the first warrants were freestanding instruments. The Company determined
the commitment shares were to be classified as equity, which are initially recorded at fair value with no subsequent remeasurement. The
Company determined that the first warrants were classified as a derivative liability, which were initially recorded at fair value with
changes in fair value recorded in earnings. The second warrants and certain terms within the debt notes were contingent upon certain possible
events that were within the Company’s control. The Company determined that the contingencies were not probable and, as such, were
not recorded as contingent liabilities.

The Company incurred issuance costs that were
directly attributable to issuing the debt instruments in the amount of $346,248, which included placement fees of $202,518 paid to Alexander
Capital. Of the debt issuance costs, $326,879 was paid in cash and the remainder was the value of a warrant issued to Alexander Capital.
The Company determined that the warrant issued to Alexander Capital was classified as equity. The issuance costs were not specifically
related to any instrument within the transactions and