Company: LRHC
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112656
Chunk: 168

Company: La Rosa Holdings Corp.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 168
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 Company and the Investor
entered into an 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”). On the same date, the Company
filed a Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “Certificate of Designation”)
with the Secretary of State of Nevada. The Initial Note remains outstanding post-Exchange. See Note 8 – Stockholder’s Equity
for further discussion.

On June 26, 2025, the Company and the Investor
entered into an Amendment No. 1 to the Initial Note to correct the maturity date to February 4, 2027 and amend the Alternate Conversion
Price to be the greater of (i) 95% of the lowest VWAP of the common stock of the Company during the seven (7) consecutive Trading Day
period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice
(as defined in the Initial Note) and (ii) the Floor Price (as defined in the Initial Note).

Upon the modification on June 26, 2025, the Company
evaluated the debt modification guidance, including the troubled debt restructuring guidance, determining that the modification of this
instrument for which the Company made a fair value option election pursuant to Subtopic 825-10 at inception, is not a troubled debt restructuring
and rather, an extinguishment of the existing Initial Note. The Company recorded a gain on debt extinguishment of $4,113,000, which pursuant
to ASC 470-50-40-2 for all extinguishments of debt, represents the difference between the reacquisition price (which includes any premium)
and the net carrying amount of the debt being extinguished (which includes any deferred debt issuance costs) should be recognized as a
gain or loss when the debt is extinguished. There were no deferred debt issuance costs as the Initial Note was accounted for under the
fair value option at issuance, and regarding the amendment, the Company incurred approximately $2,000 in costs, which were expensed in
the period incurred.

Cash
Advance Agreements

On February 5, 2025, the Company paid off their
Standard Merchant Cash Advance Agreement (the “