MIAMI--(BUSINESS WIRE)--LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), a hospitality company which leases entire existing hotels on a long-term basis and rents rooms in its hotels to business and vacation travelers, announced today it will report financial results for the first quarter ended March 31, 2024 on Monday, May 13, 2024 after the close of the stock market. The Company will host a conference call on Tuesday, May 14, 2024 at 9:00 am Eastern Time to discuss the results.Investors i ...

MIAMI--(BUSINESS WIRE)--LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), a hospitality company which leases entire existing hotels on a long-term basis and rents rooms in its hotels to business and vacation travelers, announced today it will report financial results for the first quarter ended March 31, 2024 on Monday, May 13, 2024 after the close of the stock market. The Company will host a conference call on Tuesday, May 14, 2024 at 9:00 am Eastern Time to discuss the results. Investors ...

LuxUrban Hotels Incorporated (NASDAQ:LUXH) Q4 2023 Earnings Conference Call April 16, 2024 9:00 AM ET Company Participants Devin Sullivan - Managing Director at Equity Group Brian Ferdinand - Chairman Shanoop Kothari - Co-CEO and CFO Conference Call Participants Allen Klee - Maxim Group Matthew Erdner - JonesTrading Nehal Chokshi - Northland Capital Markets Tom Kerr - Zacks Investment Research Operator Thank you for standing by. My name is Kath, and I will be your conference operator today. At this time, I ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-41473 LUXURBAN HOTELS INC. (Exact name of registrant as specified in its charter) | Delaware | 82-3334945 | | --- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 2125 Biscayne Blvd Suite 253 Miami, Florida 33137 33137 (Address of principal executive offices) (Zip code) For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ...

OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 For the transition period from __________ to __________ Commission File Number: 001-41473 LUXURBAN HOTELS INC. (Exact name of registrant as specified in its charter) | Delaware | 82-3334945 | | --- | -- ...

PART I [Business](index=6&type=section&id=Item%201.%20BUSINESS) LuxUrban Hotels Inc. operates an asset-light model, leasing entire hotels for long-term rentals, with approximately 1,200 rooms available and plans for international expansion - The company utilizes an asset-light business model, leasing entire hotels on a long-term basis and renting out the rooms. As of the filing date, the portfolio has grown to approximately **1,200 hotel rooms**[21](index=21&type=chunk) - In late 2021, the company began winding down its legacy business of leasing multifamily residential units to pivot its strategy towards leasing hotels[22](index=22&type=chunk) Property Portfolio Summary (as of December 31, 2022) | Metric | Value | | :--- | :--- | | Total Properties | 10 | | Total Units Available | 839 | | Weighted Avg. Lease Term (years) | 12.8 | | Weighted Avg. Remaining Lease Term (years) | 12.0 | | Weighted Avg. Remaining Term (incl. options) (years) | 15.3 | | Total Security Deposits / Letters of Credit ($) | 10,515,000 | Historical Occupancy and RevPAR | Year | Occupancy (%) | RevPAR ($) | | :--- | :--- | :--- | | 2021 | 72 | 122 | | 2022 | 77 | 247 | - The company estimates its property-level break-even RevPAR (revenue per available room) for its portfolio was between **$135 to $145 per night** as of December 31, 2022. The actual RevPAR for the full year 2022 was **$247**[37](index=37&type=chunk) - As of December 31, 2022, the company had **213 full-time employees**, with **135 being unionized**, primarily as a result of the lease for the former Blakely NY Hotel[44](index=44&type=chunk)[48](index=48&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces significant business risks, including economic conditions, limited operating history, net losses, and substantial debt, alongside public company risks such as management inexperience and internal control weaknesses [Risks Related to Our Business](index=18&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include macroeconomic impacts, limited operating history, a history of net losses, significant debt, reliance on long-term leases and third-party booking platforms, and unionized labor - The company has a history of net losses, reporting a net loss of **$(9,390,353)** in 2022, **$(2,233,384)** in 2021, and **$(4,615,725)** in 2020[84](index=84&type=chunk) - A significant amount of indebtedness is maturing in 2023. Investor Financing Notes are secured by a first-priority lien on all company assets and cash flows, which could hinder securing additional financing[85](index=85&type=chunk)[86](index=86&type=chunk) - Historically, over **90% of revenues** have been generated through third-party booking websites such as Booking.com, VRBO, Airbnb, and Expedia[109](index=109&type=chunk) - A majority of the company's employees are represented by labor unions and/or covered by collective bargaining agreements, which could increase costs and reduce staffing flexibility[134](index=134&type=chunk) [Risks Related to Being a Public Company](index=35&type=section&id=Risks%20Related%20to%20Being%20a%20Public%20Company) Risks as a public company include management's limited experience, historical material weaknesses in internal controls, the CEO's controlling ownership, and a prior SEC settlement involving the CEO - The company's management team has limited experience managing a publicly traded company, having completed its IPO in August 2022[159](index=159&type=chunk) - Prior to its IPO, the company had material weaknesses in its internal control over financial reporting, particularly concerning its financial close processes[162](index=162&type=chunk)[163](index=163&type=chunk) - The Chairman and CEO, Brian Ferdinand, beneficially owns approximately **59.2% of the voting power**, making the company a "controlled company" under Nasdaq rules, which qualifies it for exemptions from certain corporate governance requirements[172](index=172&type=chunk)[173](index=173&type=chunk) - The CEO, Brian Ferdinand, previously entered into an Offer of Settlement with the SEC in April 2020 related to disclosure and reporting violations at a different public company where he was a board member[158](index=158&type=chunk) [Unresolved Staff Comments](index=41&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company has no unresolved staff comments from the SEC - None[184](index=184&type=chunk) [Properties](index=41&type=section&id=Item%202.%20PROPERTIES) The company's property portfolio is detailed in Item 1, with corporate headquarters located in leased office space in Miami, Florida - The company leases office space for its corporate headquarters in Miami, Florida, which it believes is adequate for its immediate needs[186](index=186&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is not a party to any pending or threatened legal proceedings expected to materially affect its business or financial condition - The company is not currently a party to any legal proceedings that it believes could have a material adverse effect on its business[187](index=187&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's business - Not applicable[188](index=188&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS,%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq under "LUXH", has never paid dividends, and used its $13.5 million IPO proceeds for deposits, debt repayment, and working capital - The company's common stock is traded on the Nasdaq Stock Market LLC under the ticker symbol "LUXH"[191](index=191&type=chunk) - The company has never declared or paid cash dividends and does not expect to in the foreseeable future, intending to retain future earnings[193](index=193&type=chunk) - The company's IPO was completed on August 16, 2022, generating gross proceeds of **$13,500,000**. Net proceeds were used to fund letters of credit for property deposits, repay related-party debt, pay executive bonuses and director fees, and for general working capital[200](index=200&type=chunk)[201](index=201&type=chunk) [Reserved](index=43&type=section&id=Item%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's transition to an asset-light hotel leasing model, which drove significant revenue growth but also widened net losses due to increased operating expenses and exit costs, while liquidity is supported by IPO proceeds despite a working capital deficit [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Net rental revenue increased 105% to $43.8 million in 2022, driving a 486% surge in gross profit, but total operating expenses rose 457% to $15.8 million, widening the net loss to $9.4 million Comparison of Operations for Years Ended December 31 | Metric | 2022 ($) | 2021 ($) | % Change YoY | | :--- | :--- | :--- | :--- | | Net Rental Revenue | 43,825,424 | 21,379,913 | 105% | | Gross Profit | 12,375,349 | 2,110,760 | 486% | | Total Operating Expenses | 15,831,540 | 2,844,637 | 457% | | Loss from Operations | (3,456,191) | (733,877) | 371% | | Net Loss | (9,390,353) | (2,233,384) | 320% | - The increase in operating expenses was primarily driven by costs not present in 2021, including **$2.5 million** in non-cash stock compensation, **$2.4 million** in non-cash write-offs for exiting the apartment business, and **$4.1 million** in cash costs for the same exit[230](index=230&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company reported a working capital deficit of $13.9 million, an increase from the prior year, primarily due to higher current liabilities, though management expects sufficient liquidity for the next 12 months Liquidity Position as of December 31 | Metric | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,076,402 | 6,998 | | Total Current Assets | 11,547,594 | 1,279,426 | | Total Current Liabilities | 25,439,614 | 9,519,725 | | Working Capital (Deficit) | (13,892,020) | (8,240,299) | - The company incurred **$6.5 million** in exit costs related to its apartment unit business in 2022, which included guest relocation, lease termination, personnel costs, and non-cash lease exit costs[238](index=238&type=chunk) [Financing Activities](index=50&type=section&id=Financing%20Activities) The company funds operations through affiliate loans, third-party investor financings, and its IPO, with significant loans payable and revenue participation rights granted in conjunction with certain financings Outstanding Third-Party Investor Financings (as of Dec 31, 2022) | Financing Series | Original Principal ($) | Amount Outstanding ($) | | :--- | :--- | :--- | | First Investor Financing | 3,325,000.00 | 3,403,033.34 | | Second Investor Financing | 2,875,000.00 | 2,907,459.54 | | Third Investor Financing | 2,875,000.00 | 2,889,375.00 | | **Total** | **9,075,000.00** | **9,199,867.89** | - In conjunction with financings from Greenle Partners, the company granted revenue participation rights, typically **5% to 10% of quarterly revenues** for the first five years of a relevant lease, and **1% thereafter**[246](index=246&type=chunk) [Critical Accounting Policies and Estimates](index=53&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies include revenue recognition upon guest occupancy, the adoption of ASC Topic 842 for leases, stock-based compensation valuation using Black-Scholes, and income tax accounting - Revenue is recognized when a guest occupies a rental unit for the agreed-upon time. Payments received for future stays are recorded as a liability ('rents received in advance') until the stay occurs[266](index=266&type=chunk)[272](index=272&type=chunk) - The company adopted the new lease accounting standard, ASC Topic 842, effective January 1, 2022. This resulted in recording a net Operating Lease Right-Of-Use Asset of **$83.3 million** and corresponding current and noncurrent Operating Lease Liabilities on the balance sheet as of December 31, 2022[278](index=278&type=chunk)[290](index=290&type=chunk) - Stock-based compensation for option awards is estimated using the Black-Scholes-Merton option pricing model, with expense recognized on a straight-line basis over the service period[286](index=286&type=chunk)[287](index=287&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, LuxUrban Hotels Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[293](index=293&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section refers to the company's consolidated financial statements, which begin on page F-1 of the Annual Report - The company's Consolidated Financial Statements are included in the report, starting on page F-1[294](index=294&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no disagreements with its accountants on matters of accounting and financial disclosure - There have been no disagreements with the company's accountants on accounting and financial disclosures[295](index=295&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2022, due to material weaknesses in financial close processes, with a remediation plan underway - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were not effective at a reasonable assurance level[296](index=296&type=chunk) - The ineffectiveness was due to material weaknesses identified in internal controls over financial reporting, specifically related to the periodic and annual financial close processes[297](index=297&type=chunk)[306](index=306&type=chunk) - A remediation plan has been initiated, which includes hiring additional qualified financial personnel, engaging specialized external resources, forming an audit committee, and adopting other entity-level controls[298](index=298&type=chunk)[306](index=306&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20OTHER%20INFORMATION) There is no other information to report in this section - None[309](index=309&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=58&type=section&id=Item%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - Not applicable[310](index=310&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=59&type=section&id=Item%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS,%20AND%20CORPORATE%20GOVERNANCE) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement[313](index=313&type=chunk) [Executive Compensation](index=59&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement[314](index=314&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement[315](index=315&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement[316](index=316&type=chunk) [Principal Accountant Fees and Services](index=59&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information regarding principal accountant fees and services is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement[317](index=317&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=60&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements and exhibits filed as part of the Annual Report, including consolidated financial statements and a detailed index of all exhibits - This section contains the index of financial statements and a comprehensive list of all exhibits filed with the Form 10-K[319](index=319&type=chunk)[323](index=323&type=chunk) [Form 10-K Summary](index=63&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable - Not Applicable[328](index=328&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 For the transition period from ___________ to __________ Commission File Number: 001-41473 LUXURBAN HOTELS INC. (Exact name of registrant as specified in its charter) Delaware 82-3334945 (State or other jurisdiction (IRS Employer Identification Number) of incorporation or org ...

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1 – Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20%E2%80%93%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents unaudited condensed consolidated financial statements and accompanying notes detailing key accounting policies and events [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) The balance sheets show a significant increase in assets and liabilities due to new lease accounting standards Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :------------------ | | Total Current Assets | $6,641,193 | $1,279,426 | | Total Assets | $61,800,118 | $3,767,936 | | Total Current Liabilities | $25,143,248 | $9,519,725 | | Total Liabilities | $71,246,699 | $14,981,986 | | Total Stockholders' Deficit | $(9,446,581) | $(11,214,050) | - Total assets significantly increased from **$3.77 million to $61.80 million**, primarily due to the recognition of operating lease right-of-use assets[7](index=7&type=chunk) - Total liabilities also saw a substantial increase from **$14.98 million to $71.25 million**, largely driven by operating lease liabilities[7](index=7&type=chunk) - The stockholders' deficit improved from **$(11.21) million to $(9.45) million**[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) The statements of operations reveal a substantial turnaround in profitability with significant revenue growth Condensed Consolidated Statements of Operations Summary | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Rental Revenue | $10,201,338 | $4,182,866 | $19,300,763 | $7,488,895 | | Gross Profit (Loss) | $2,856,618 | $147,628 | $5,369,881 | $(431,636) | | Net Income (Loss) | $762,409 | $(1,133,132) | $2,181,842 | $(2,440,038) | | Basic & Diluted EPS | $0.04 | $— | $0.10 | $— | - The company reported significant improvements in profitability, with **net rental revenue increasing by 144%** for the three months and **158%** for the six months ended June 30, 2022[9](index=9&type=chunk) - Gross profit turned positive, reaching **$2.86 million** for the quarter and **$5.37 million** for the six months[9](index=9&type=chunk) - Net income was **$762,409** for the quarter and **$2,181,842** for the six months, a substantial turnaround from net losses in the prior year periods[9](index=9&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity and Members' Deficit (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20and%20Members%27%20Deficit%20%28Unaudited%29) The company's equity structure changed following its conversion to a C corporation, resulting in an improved stockholders' deficit Changes in Stockholders' Deficit | Metric | June 30, 2022 | December 31, 2021 | | :------------------------- | :------------ | :---------------- | | Common Stock | $216 | $— | | Accumulated Deficit | $(9,446,797) | $— | | Total Stockholders' Deficit| $(9,446,581) | $(11,214,050) | - The company converted to a C corporation in January 2022, impacting the equity structure[19](index=19&type=chunk) - The total stockholders' deficit improved from **$(11,214,050)** at December 31, 2021, to **$(9,446,581)** at June 30, 2022, due to net income and reclassification of members' deficit[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Cash flows show increased use of cash in operations, offset by a rise in cash from financing activities Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :----------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(1,107,709) | $(571,649) | | Net Cash Provided by Financing Activities | $1,101,267 | $579,006 | | Net (Decrease) Increase in Cash and Restricted Cash | $(6,442) | $7,357 | | Total Cash and Restricted Cash – end of period | $1,100,556 | $7,869 | - Net cash used in operating activities increased to **$(1,107,709)** for the six months ended June 30, 2022, despite positive net income, due to changes in operating assets and liabilities[14](index=14&type=chunk) - Net cash provided by financing activities increased to **$1,101,267**, primarily from loans payable, offsetting the operating cash outflow[14](index=14&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The notes provide detailed explanations of the company's business model, accounting policies, debt structure, and recent events [1 - Description of Business and Principles of Consolidation](index=8&type=section&id=1%20-%20DESCRIPTION%20OF%20BUSINESS%20AND%20PRINCIPLES%20OF%20CONSOLIDATION) The company operates an asset-light short-term rental business and recently converted to a C corporation - CorpHousing Group (CHG) operates an asset-light business model, acquiring and managing short-term rental properties through long-term leases[16](index=16&type=chunk) - As of June 30, 2022, total units available were **584**, up from 423 in 2021[17](index=17&type=chunk) - In January 2022, Corphousing and its subsidiary converted to C corporations to operate as a public company[19](index=19&type=chunk) [2 - Summary of Significant Accounting Policies](index=8&type=section&id=2%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting policies for revenue recognition, income taxes, and commission expenses - Revenue is primarily from rental units, recognized when guests occupy the unit, with advance rents totaling **$4,071,095** as of June 30, 2022[22](index=22&type=chunk)[25](index=25&type=chunk) - The company recorded a provision for income taxes of **$750,000** for the six months ended June 30, 2022, implying an approximate **30% tax rate**[26](index=26&type=chunk)[27](index=27&type=chunk) - Commissions paid to third-party sales channels increased significantly to **$2,690,298** for the six months ended June 30, 2022[28](index=28&type=chunk) [3 - Going Concern](index=12&type=section&id=3%20-%20GOING%20CONCERN) The company's negative working capital and stockholders' deficit raise substantial doubt about its ability to continue as a going concern - As of June 30, 2022, the company had **negative working capital of $18,502,055** and a **stockholders' deficit of $9,446,581**, raising substantial doubt about its ability to continue as a going concern[32](index=32&type=chunk) [4 - Leases](index=12&type=section&id=4%20-%20LEASES) The adoption of Topic 842 significantly impacted the balance sheet by recognizing right-of-use assets and lease liabilities - The company adopted Topic 842 (Leases) effective January 1, 2022, recognizing a **right-of-use asset of $36,304,289** and corresponding lease liabilities[34](index=34&type=chunk)[37](index=37&type=chunk) Lease Information as of June 30, 2022 | Metric | Amount | | :-------------------------------------- | :------------ | | Operating lease right of use asset | $49,941,971 | | Operating lease liability, current | $7,182,381 | | Operating lease liability, non-current | $43,962,492 | | Total future minimum lease payments | $120,738,637 | | Weighted average discount rate | 10% | | Weighted average remaining lease term | 9.1 years | | Operating lease cost (6 months ended) | $5,787,499 | [5 - Accounts Payable and Accrued Liabilities](index=14&type=section&id=5%20-%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20LIABILITIES) Accounts payable and accrued expenses increased, driven by higher rent, sales tax, and IPO-related costs Accounts Payable and Accrued Expenses | Category | June 30, 2022 | December 31, 2021 | | :------------------------ | :------------ | :---------------- | | Total | $5,301,053 | $4,209,366 | | Credit cards payable | $937,459 | $980,000 | | Professional fees | $681,000 | $600,000 | | Rent | $1,184,481 | $570,000 | | Commissions | $425,000 | $570,000 | | Sales tax | $866,409 | $295,000 | | IPO costs | $678,669 | $290,000 | - Accounts payable and accrued expenses increased to **$5,301,053** at June 30, 2022, from **$4,209,366** at December 31, 2021, driven by increases in rent, sales tax, and IPO-related costs[42](index=42&type=chunk) [6 - Loans Payable — SBA — PPP Loan](index=14&type=section&id=6%20-%20LOANS%20PAYABLE%20%E2%80%94%20SBA%20%E2%80%94%20PPP%20LOAN) The company holds an outstanding PPP loan of $815,183 due for repayment in 2023 - The company obtained **$815,183 in PPP loans** in April and May 2020, with a fixed interest rate of **1.00%**, and the full amount is due for repayment in 2023[44](index=44&type=chunk)[46](index=46&type=chunk) [7 - Loans Payable — SBA — EIDL Loan](index=16&type=section&id=7%20-%20LOANS%20PAYABLE%20%E2%80%94%20SBA%20%E2%80%94%20EIDL%20LOAN) The company has an outstanding SBA EIDL loan of $800,000 with a 30-year term - The company received **$800,000 in SBA EIDL loans** in 2020, bearing interest at **3.75%** with 30-year terms, and the outstanding balance remained **$800,000** at June 30, 2022[47](index=47&type=chunk)[49](index=49&type=chunk) Future Minimum Principal Repayments of SBA EIDL Loans | Year | Amount | | :-------- | :---------- | | 2023 | $8,316 | | 2024 | $14,551 | | 2025 | $15,106 | | 2026 | $15,682 | | 2027 | $16,280 | | Thereafter| $730,065 | | Total | $800,000 | [8 - Merchant Cash Advances](index=16&type=section&id=8%20-%20MERCHANT%20CASH%20ADVANCES) Outstanding merchant cash advances have decreased and are expected to be repaid within twelve months - Outstanding merchant cash advances, net of unamortized costs, decreased to **$575,489** at June 30, 2022, from **$1,386,008** at December 31, 2021[52](index=52&type=chunk) [9 - Loans Payable](index=17&type=section&id=9%20-%20LOANS%20PAYABLE) Total loans payable increased, with a significant portion classified as current maturities Loans Payable Summary | Category | June 30, 2022 | December 31, 2021 | | :------------------------ | :------------ | :---------------- | | Total Loans Payable | $3,325,843 | $2,192,118 | | Less: Current maturities | $2,780,054 | $1,267,004 | | Long-term Loans Payable | $545,789 | $925,114 | - Total loans payable increased to **$3,325,843** at June 30, 2022, with a significant portion (**$2,780,054**) classified as current maturities[53](index=53&type=chunk) [10 - Loans Payable — Related Parties](index=17&type=section&id=10%20-%20LOANS%20PAYABLE%20%E2%80%94%20RELATED%20PARTIES) Loans payable to related parties increased, with the entire amount classified as current Loans Payable — Related Parties Summary | Category | June 30, 2022 | December 31, 2021 | | :------------------------ | :------------ | :---------------- | | Total Loans Payable | $1,071,128 | $518,721 | | Less: Current maturities | $1,071,128 | $22,221 | | Long-term Loans Payable | $— | $496,500 | - Loans payable to related parties increased to **$1,071,128** at June 30, 2022, with the entire amount classified as current maturities[54](index=54&type=chunk) [11 - Convertible Notes - Related Parties](index=19&type=section&id=11%20-%20CONVERTIBLE%20NOTES%20-%20RELATED%20PARTIES) Convertible notes from related parties increased, with a large portion now classified as current Convertible Notes — Related Parties Summary | Category | June 30, 2022 | December 31, 2021 | | :------------------------ | :------------ | :---------------- | | Total Convertible Notes | $3,297,060 | $2,608,860 | | Less: Current maturities | $2,596,865 | $— | | Long-term Convertible Notes | $700,195 | $2,608,860 | - Convertible notes from related parties increased to **$3,297,060** at June 30, 2022, with a significant portion (**$2,596,865**) classified as current maturities[56](index=56&type=chunk) [12 - Line of Credit](index=19&type=section&id=12%20-%20LINE%20OF%20CREDIT) The company maintains a $95,000 line of credit, which was nearly fully drawn as of June 30, 2022 - The company has a line of credit agreement for **$95,000**, and the outstanding balance was **$94,975** at both June 30, 2022, and December 31, 2021[57](index=57&type=chunk) [13 - Related Party Transactions](index=19&type=section&id=13%20-%20RELATED%20PARTY%20TRANSACTIONS) Consulting fees paid to a stockholder-owned entity decreased significantly in the second quarter of 2022 Related Party Consulting Fees | Service Provider | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2021 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | SuperLuxMia LLC | $0 | $191,845 | $246,115 | $386,805 | | CAO's entity | $12,500 | $47,500 | $35,000 | $45,000 | - Consulting fees paid to SuperLuxMia LLC (owned by a stockholder) decreased significantly in Q2 2022 compared to Q2 2021[58](index=58&type=chunk)[59](index=59&type=chunk) [14 - Risks and Uncertainties](index=19&type=section&id=14%20-%20RISKS%20AND%20UNCERTAINTIES) The company is exposed to credit risk concentration, primarily related to cash balances held in financial institutions - The company's financial instruments are exposed to concentrations of credit risk, primarily cash, which is placed with high-quality credit institutions[60](index=60&type=chunk) [15 - Major Sales Channels](index=21&type=section&id=15%20-%20MAJOR%20SALES%20CHANNELS) A significant portion of the company's revenue is concentrated among three major sales channels - Three sales channels accounted for approximately **91% and 88% of total revenue** during the three and six months ended June 30, 2022, respectively[62](index=62&type=chunk) [16 - Commitments and Contingencies](index=21&type=section&id=16%20-%20COMMITMENTS%20AND%20CONTINGENCIES) The future financial and operational impact of the COVID-19 pandemic on the company remains uncertain - The COVID-19 pandemic's impact on future results remains uncertain, though the company cannot estimate its potential financial and operational impact with precision[63](index=63&type=chunk) [17 - Subsequent Events](index=21&type=section&id=17%20-%20SUBSEQUENT%20EVENTS) Subsequent to the reporting period, the company completed an IPO, entered new leases, and issued warrants and options - Subsequent to June 30, 2022, the company entered into new leases and completed a private placement of **$1,955,000**, issuing **252,875 warrants**[64](index=64&type=chunk)[65](index=65&type=chunk) - The company priced its IPO on August 11, 2022, raising **$13.5 million** before fees, leading to the conversion of several notes into equity[66](index=66&type=chunk) - In connection with the IPO, the company issued warrants to purchase **1,782,000 shares** and granted options to purchase **2,644,000 shares** to officers, directors, and employees[68](index=68&type=chunk)[69](index=69&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational performance, business strategy, and future outlook [Overview](index=23&type=section&id=Overview) The company operates an asset-light short-term rental model focused on commercially zoned hotel units - The company operates an asset-light model for short-term rentals, focusing on commercially zoned hotel units to avoid short-stay regulations[72](index=72&type=chunk) - As of June 30, 2022, it operated **590 units** across seven U.S. cities, with plans for international expansion[74](index=74&type=chunk)[75](index=75&type=chunk) - The strategy involves divesting residential properties to achieve **85-95% hotel inventory**, with over **90% of current revenues** from properties not subject to short-stay regulations[73](index=73&type=chunk)[74](index=74&type=chunk) [Key Drivers](index=25&type=section&id=Key%20Drivers) Growth is driven by leasing hotel properties, maximizing operational efficiency, and investing in technology and marketing - Key growth drivers include signing leases for hotel properties, attracting guests through OTAs and direct bookings, and maximizing operational efficiency[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk][84](index=84&type=chunk][85](index=85&type=chunk][86](index=86&type=chunk][87](index=87&type=chunk) - The company uses proprietary data analytics for property selection and dynamic pricing, and integrates third-party AI for guest screening and remote operations[77](index=77&type=chunk)[83](index=83&type=chunk) [Management's Opinion of COVID-19's Business Impact](index=26&type=section&id=Management%27s%20Opinion%20of%20COVID-19%27s%20Business%20Impact) The company's performance was adversely affected by COVID-19 in 2020 but has since shown a strong recovery - COVID-19 materially adversely affected financial results in 2020 and 2021, with **Occupancy Rates dropping by 23%** and **RevPAR by 35%** from 2019 to 2020[88](index=88&type=chunk][90](index=90&type=chunk] - Occupancy Rates and RevPAR rebounded in 2021 and 2022, increasing by **18% and 11% (2021)** and **0% and 13% (H1 2022)** respectively[91](index=91&type=chunk)[92](index=92&type=chunk) Occupancy Rates and RevPAR Trends | Year | OCC | REVPAR | | :------------------------ | :---- | :----- | | 2018 | 86 % | 160 | | 2019 | 84 % | 157 | | 2020 | 61 % | 103 | | 2021 | 72 % | 122 | | 2022 (Six months ended) | 72 % | 138 | [Regulations Governing Short-Term Rentals](index=28&type=section&id=Regulations%20Governing%20Short-Term%20Rentals) The company is shifting its portfolio to commercially zoned properties to ensure compliance with short-stay regulations - The company has divested all leases of residentially zoned properties in New York City and now primarily operates commercially zoned properties[95](index=95&type=chunk][97](index=97&type=chunk) - Measures implemented to avoid violations include acquiring commercially zoned properties and refining booking platforms to prohibit non-compliant rental lengths[96](index=96&type=chunk) [Local Tax Compliance and Monitoring](index=30&type=section&id=Local%20Tax%20Compliance%20and%20Monitoring) The company is addressing past tax collection issues and has implemented a new platform to automate compliance - The company identified issues with state and local tax collection and is working to pay approximately **$866,409** in applicable taxes, penalties, and interest[100](index=100&type=chunk) [Revenue and Expense by City](index=30&type=section&id=Revenue%20and%20Expense%20by%20City) Miami Beach and New York represent the largest shares of revenue and expenses across the company's portfolio Annual % of Revenue By City | City | 2021 | 2020 | 2019 | | :-------------- | :--- | :--- | :--- | | Boston | 18 % | 6 % | — | | DC | 3 % | 15 % | 13 % | | Denver | 7 % | 1 % | 7 % | | Fort Lauderdale | 2 % | — | — | | Los Angeles | 11 % | 6 % | — | | Miami | 6 % | 16 % | 10 % | | Miami Beach | 24 % | 21 % | 23 % | | New York | 23 % | 30 % | 18 % | | Seattle | 6 % | 5 % | 16 % | | Nashville | — | — | 13 % | | Total | 100 %| 100 %| 100 %| Annual % of Expenses By City | City | 2021 | 2020 | 2019 | | :-------------- | :--- | :--- | :--- | | Boston | 10 % | 8 % | — | | DC | 6 % | 15 % | 14 % | | Denver | 3 % | 3 % | 10 % | | Fort Lauderdale | 2 % | — | — | | LA | 17 % | 10 % | — | | Miami | 7 % | 15 % | 14 % | | Miami Beach | 29 % | 13 % | 25 % | | New York | 21 % | 34 % | 15 % | | Seattle | 4 % | 3 % | 14 % | | Nashville | — | — | 8 % | | Total | 100 %| 100 %| 100 %| - Miami Beach and New York consistently represent significant portions of both revenue and expenses, with Miami Beach showing increased percentages in 2021[101](index=101&type=chunk) [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) EBITDA improved significantly, turning positive in 2022 and indicating enhanced operating performance Reconciliation of Net Income (Loss) to EBITDA | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income (loss) | $762,409 | $(1,133,132) | $2,181,842 | $(2,440,038) | | Provision for Income Taxes| $750,000 | $— | $750,000 | $— | | Interest and Financing cost | $595,742 | $542,764 | $1,159,879 | $660,007 | | Depreciation Expense | $— | $— | $2,556 | $— | | EBITDA | $2,108,151 | $(590,368) | $4,094,277 | $(1,780,031) | - **EBITDA** significantly improved, turning positive to **$2,108,151** for the three months and **$4,094,277** for the six months ended June 30, 2022[103](index=103&type=chunk)[104](index=104&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) The company achieved substantial revenue growth and a strong recovery in profitability compared to the prior year Key Financial Results (YoY Change) | Metric | 3 Months Ended June 30, 2022 vs 2021 | 6 Months Ended June 30, 2022 vs 2021 | | :---------------------- | :----------------------------------- | :----------------------------------- | | Gross Rental Revenue | +88 % | +109 % | | Net Rental Revenue | +144 % | +158 % | | Cost of Revenue | +82 % | +76 % | | Gross Profit (Loss) | +1,835 % | -1,344 % (from loss to profit) | | Total Operating Costs | +20 % | +38 % | | Income / (Loss) from Operations | -434 % (from loss to profit) | -297 % (from loss to profit) | | Net Income (Loss) | -167 % (from loss to profit) | -189 % (from loss to profit) | - Net rental revenue saw substantial increases of **144% and 158%** for the three and six months ended June 30, 2022, respectively, driven by more available units[107](index=107&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) - Total operating costs increased by **20% and 38%** for the three and six months, respectively, due to the operation of additional units[111](index=111&type=chunk)[116](index=116&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company's working capital deficit has increased, but a recent IPO is expected to fund operations for at least 12 months Liquidity and Capital Resources Summary | Metric | June 30, 2022 | December 31, 2021 | | :---------------------- | :------------ | :---------------- | | Cash | $566 | $6,998 | | Total Current Assets | $6,641,193 | $1,279,426 | | Total Current Liabilities | $25,143,248 | $9,519,725 | | Working Capital (Deficit) | $(18,502,055) | $(8,240,299) | - Working capital deficit increased to **$(18,502,055)** at June 30, 2022, from **$(8,240,299)** at December 31, 2021, primarily due to increased operating lease liabilities[120](index=120&type=chunk) - The company completed an IPO on August 11, 2022, raising **$13.5 million** before expenses, which is expected to fund operations and growth for at least 12 months[121](index=121&type=chunk)[122](index=122&type=chunk) - The company secured **$1.33 million** in Insider Bridge Financing and **$5.75 million** in Investor Bridge Financing in 2022 to fund operations and security deposits[130](index=130&type=chunk)[131](index=131&type=chunk][132](index=132&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) The company currently has no off-balance sheet arrangements - The company does not currently have any off-balance sheet arrangements[144](index=144&type=chunk) [Indemnification Agreements](index=40&type=section&id=Indemnification%20Agreements) The company has indemnification agreements with commercial partners, directors, and certain employees - The company includes limited indemnification provisions in agreements with commercial partners and has entered into indemnification agreements with its directors and executive officers[145](index=145&type=chunk)[146](index=146&type=chunk][147](index=147&type=chunk) [Contractual Obligations and Commitments](index=40&type=section&id=Contractual%20Obligations%20and%20Commitments) Total contractual obligations amount to $130.89 million, dominated by operating lease obligations Contractual Obligations and Commitments as of June 30, 2022 (in thousands) | Obligation | Total | 1 Year | 2 – 3 Years | 4 – 5 Years | More than 5 Years | | :------------------------ | :-------- | :-------- | :---------- | :---------- | :---------------- | | Loans payable | $10,149 | $6,844 | $2,543 | $32 | $730 | | Operating Lease Obligations | $120,738 | $9,731 | $20,023 | $18,211 | $72,773 | | Total | $130,887 | $16,575 | $22,566 | $18,243 | $73,503 | - Total contractual obligations and commitments amounted to **$130.89 million** as of June 30, 2022, with operating lease obligations representing the largest portion at **$120.74 million**[148](index=148&type=chunk) [Third-Party Payment Processors](index=41&type=section&id=Third-Party%20Payment%20Processors) The company relies on third-party processors for over 95% of reservations and maintains cash reserves to offset chargebacks - Over **95% of reservations** are processed via third-party credit card processors, incurring **3% to 6.5% processing fees**[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, detailed market risk disclosures are not required, but interest rate risk is noted - As a smaller reporting company, the company is not required to provide detailed quantitative and qualitative market risk disclosures but acknowledges exposure to interest rate risk[151](index=151&type=chunk)[152](index=152&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies include revenue recognition upon guest occupancy and provisions for income taxes following the C corporation conversion - Revenue is recognized when guests occupy units, with prepayments recorded as 'rents received in advance'[154](index=154&type=chunk][159](index=159&type=chunk][162](index=162&type=chunk) - The company converted to a C corporation in January 2022 and made a provision for income taxes for the six months ended June 30, 2022[171](index=171&type=chunk][176](index=176&type=chunk][177](index=177&type=chunk) [Internal Control over Financial Reporting](index=47&type=section&id=Internal%20Control%20over%20Financial%20Reporting) The company identified material weaknesses in its internal control over financial reporting and is implementing a remediation plan - The company identified **material weaknesses** in its internal control over financial reporting related to periodic and annual financial close processes[183](index=183&type=chunk][195](index=195&type=chunk] - A remediation plan is underway, including hiring qualified personnel, engaging external resources, and implementing entity-level controls[196](index=196&type=chunk) [Accounting Pronouncements](index=49&type=section&id=Accounting%20Pronouncements) The company adopted the new lease accounting standard (Topic 842) effective January 1, 2022 - The company implemented ASU 2016-02, Leases (Topic 842), effective January 1, 2022, which requires recognizing right-of-use assets and lease liabilities on the balance sheet[186](index=186&type=chunk) [Emerging Growth Company Status](index=49&type=section&id=Emerging%20Growth%20Company%20Status) The company qualifies as an emerging growth company, allowing for an extended transition period for new accounting standards - The company is an 'emerging growth company' and has elected to take advantage of the extended transition period for new or revised financial accounting standards[188](index=188&type=chunk][189](index=189&type=chunk][190](index=190&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, detailed market risk disclosures are not required, but interest rate risk is noted - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[151](index=151&type=chunk) - The company is exposed to interest rate risk primarily related to its outstanding debt, affecting interest earned on cash and interest paid on debt[152](index=152&type=chunk) [Item 4 – Controls and Procedures](index=31&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management identifies material weaknesses in internal controls and outlines an ongoing remediation plan - Disclosure controls and procedures were **not effective** at the reasonable assurance level as of June 30, 2022, due to material weaknesses in internal control[192](index=192&type=chunk) - Material weaknesses were identified in periodic and annual financial close processes, attributed to insufficient resources, processes, and systems[195](index=195&type=chunk) - A remediation plan has commenced, including hiring qualified personnel, engaging external resources, and adopting entity-level controls[196](index=196&type=chunk) [Part II - Other Information](index=32&type=section&id=Part%20II%20-%20Other%20Information) [Item 1 – Legal Proceedings](index=32&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) This section references the commitments and contingencies footnote for information on legal proceedings - Information on legal proceedings is referenced to Footnote 12 (Note 16) – Commitments and Contingencies[199](index=199&type=chunk) [Item 1A – Risk Factors](index=32&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) There have been no material changes to the risk factors previously described in the company's Form S-1 - No material changes from the risk factors described in the company's Form S-1 dated January 12, 2022[200](index=200&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details unregistered sales of equity securities, including bridge financing and the issuance of warrants and stock options - In April 2022, the company issued **$1.33 million in promissory notes** and warrants to purchase **320,000 common shares** to officers and directors[201](index=201&type=chunk) - In May and June 2022, the company sold **$3.68 million principal amount** of 15% original issue discount notes and warrants to purchase **920,000 common shares** to private investors[202](index=202&type=chunk][204](index=204&type=chunk) - The 2022 Investor Bridge Notes are secured by a first priority security interest in all assets and are convertible into stock at a conversion price of **$3.00 per share**[204](index=204&type=chunk][206](index=206&type=chunk) - From January 1 to June 30, 2022, contingent options to purchase **2,644,000 common shares** were granted to officers and employees under the 2022 Performance Equity Plan[209](index=209&type=chunk) [Item 3 – Defaults Upon Senior Securities](index=55&type=section&id=Item%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[211](index=211&type=chunk) [Item 4 – Mine Safety Disclosures](index=55&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[212](index=212&type=chunk) [Item 5 – Other Information](index=55&type=section&id=Item%205%20%E2%80%93%20Other%20Information) No other information was reported under this item - No other information was reported[213](index=213&type=chunk) [Item 6 – Exhibits](index=55&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed as part of the quarterly report, including certifications and XBRL documents List of Exhibits | Exhibit No. | Description | | :---------- | :--------------------------------------------------------- | | 31.1** | Section 302 Certification by Chief Executive Officer and President | | 31.2** | Section 302 Certification by Chief Financial Officer (Principal Accounting Officer) | | 32.1*** | Section 906 Certification by Chief Executive Officer and Chief Financial Officer | | 101.INS** | Inline XBRL Instance Document | | 101.SCH** | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104** | Cover Page Interactive Data File | [Signatures](index=56&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and Chief Financial Officer on September 26, 2022 - The report was signed by Brian Ferdinand, Chief Executive Officer and Chairman of the Board, and Shanoop Kothari, Chief Financial Officer, on September 26, 2022[217](index=217&type=chunk)[218](index=218&type=chunk)