Company: LRHC
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112656
Chunk: 159

Company: La Rosa Holdings Corp.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 159
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ensed Consolidated Financial Statements

The
purchase price paid by the Investor under the SPA for the Convertible Note and Incremental Warrants was $4,963,750 in gross proceeds
of which $910,250, $496,191 and $148,724 were used to assume or extinguish other debt for net proceeds of $3,408,585. It was determined
that the note and warrants within this transaction met the requirements for the Fair Value Option under ASC 825, which the Company elected.
Using the fair value option, the Convertible Note is required to be recorded at initial fair value on the date of issuance,
and each balance sheet date thereafter. Changes in the estimated fair value of the notes are recognized as gain/loss on fair value adjustment
within other income (expenses) 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