Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 17, 2023

LuxUrban Hotels Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware

001-41473

82-3334945

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

2125 Biscayne Blvd, Suite 253, Miami, Florida		33137
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (833) 723-7368

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	LUXH	The Nasdaq Stock Market LLC
13.00% Series A Cumulative Redeemable Preferred Stock, $0.00001 par value per share	LUXHP	The Nasdaq Stock Market LLC

Item 1.01

Entry into a Material Definitive Agreement.

On November 17, 2023, LuxUrban Hotels Inc. (the “Company” or “we” and related pronouns), entered into a non-dilutive financing agreement with THA Holdings LLC, an entity controlled and operated by the Company’s Chairman, Co-Chief Executive Officer (“Co-CEO”) and largest stockholder, Brian Ferdinand (the “Lender”), pursuant to which the Company agreed to issue to the Lender an unsecured, advancing term promissory note (the “Note”). Under the Note, the Company is able to borrow, and the Lender has committed to lend, up to an aggregate principal amount of $10,000,000 (the “Initial Principal Amount”) to be funded in increments of $1,000,000 upon the Company’s request by the sale, from time to time, of shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), owned by the Lender (the “Sales”). The Sales will be consummated either in compliance with Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the volume limitations thereto or under another available exemption from the registration requirements of the Securities Act. All the proceeds of the Sales, less tax liabilities, are expected to be used to fund the Note.

The interest on the Note will be compounded annually on any amounts borrowed at a rate of 1% per annum. Any amounts borrowed and interest accrued under the Note is repayable at maturity on November 16, 2026. The Company may prepay the outstanding principal and accrued interest on the Note at its option, upon approval of the Board of Directors. There is no penalty for prepayment of the Note. The Note also provides for certain customary events of default. The Company may terminate the commitment under the Note at any time.

The Company has agreed to issue the Note to the Lender, an accredited investor, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company will rely on this exemption from registration based in part on representations made by the Lender. The Company intends to use the net proceeds from the issuance of the Note for growth capital to lease additional accommodation units and to accelerate the Company’s ability to build density in existing markets. Neither this Current Report on Form 8-K (this “Report”) nor any exhibit attached hereto shall constitute an offer to sell or the solicitation of an offer to buy the Note, the Common Stock or any other securities of the Company.

The foregoing summary of the Note does not purport to be complete and is qualified in its entirety by reference to the Note attached as Exhibit 4.1 hereto and incorporated herein by reference.

This Report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this Report that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Report may include, for example, statements with respect to contemplated sales of the Common Stock owned by the Company’s Chairman and Co-CEO to fund the Note, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this Report are based on current expectations and beliefs concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the Securities and Exchange Commission (the “SEC”), including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this Report are made as of the date of this Report, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Report, to the extent required by this Item 2.03, is incorporated herein by reference.

Item 8.01 Other Events.

The Company issued a press release on November 17, 2023 announcing the above-described transaction. A copy of the press release is attached hereto as Exhibit 99.1. The information contained in this Item 8.01 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and shall not be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Exchange Act or the Securities Act whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits:

Exhibit Number		Description
4.1		Promissory Note, dated as of November 17, 2023, by and between LuxUrban Hotels Inc. and THA Holdings LLC.
99.1		Press release, dated November 17, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 17, 2023	LUXURBAN HOTELS INC.

	By:	/s/ Shanoop Kothari
		Name:	Shanoop Kothari
		Title:	President, Co-Chief Executive Officer, Chief Financial Officer and Secretary

Exhibit 4.1

PROMISSORY NOTE

$10,000,000.00

Date: November 17, 2023

For value received, the undersigned LuxUrban Hotels Inc of 2125 Biscayne Blvd Suite 253, Miami, Florida 33137 (the “Borrower”), promises to pay to the order of THA Holdings LLC of 2125 Biscayne Blvd, Miami, Florida 33137 (the “Lender”), the sum of up to $10,000,000.00 with interest from November 16, 2023, on the unpaid principal at the rate of 1% per annum. Borrower may request up to $10,000,000 from time-to-time in increments of $1,000,000 subject to lenders availability of funds resulting from the sale of up to 2,500,000 shares of LUXH common stock owned by Lender from time-to-time at prices and on terms/conditions to be determined by Lender in its sole discretion, such sales to be in compliance with all applicable laws/regulations governing such sales.

I. TERMS OF REPAYMENT

A. Payments

The unpaid principal and accrued interest shall be payable in full on November 16, 2027 (the “Due Date”).

B. Application of Payments

All payments on this Note shall be applied first in payment of accrued interest and any remainder in payment of principal.

C. Acceleration of Debt

If any payment obligation under this Note is not paid when due, the remaining unpaid principal balance and any accrued interest shall become due immediately at the option of the Lender.

II. PREPAYMENT

The Borrower reserves the right to prepay this Note (in whole or in part) prior to the Due Date with no prepayment penalty subject to board approval.

III. COLLECTION COSTS

If any payment obligation under this Note is not paid when due, the Borrower promises to pay all costs of collection, including reasonable attorney fees, whether or not a lawsuit is commenced as part of the collection process.

IV. DEFAULT

If any of the following events of default occur, this Note and any other obligations of the Borrower to the Lender, shall become due immediately, without demand or notice:

the failure of the Borrower to pay the principal and any accrued interest when due;

the liquidation or dissolution of the Borrower;

the filing of bankruptcy proceedings involving the Borrower as a debtor;

the application for the appointment of a receiver for the Borrower;

the making of a general assignment for the benefit of the Borrower’s creditors;

the insolvency of the Borrower; or

the sale of a material portion of the business or assets of the Borrower.

V. SEVERABILITY OF PROVISIONS

If any one or more of the provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions shall remain fully operative.

VI. MISCELLANEOUS

All payments of principal and interest on this Note shall be paid in the legal currency of the United States. The Borrower waives presentment for payment, protest, and notice of protest and demand of this Note.

No delay in enforcing any right of the Lender under this Note, or assignment by Lender of this Note, or failure to accelerate the debt evidenced hereby by reason of default shall be construed as a waiver of the right of Lender to thereafter insist upon strict compliance with the terms of this Note without notice being given to Borrower. All rights of the Lender under this Note are cumulative and may be exercised concurrently or consecutively at the Lender’s option.

This note may not be amended without the written approval of the holder.

VII. GOVERNING LAW

This Note shall be construed in accordance with the laws of the State of Florida.

VIII. SIGNATURES

This Note shall be signed by Shanoop Kothari on behalf of LuxUrban Hotels Inc, and Brian Ferdinand on behalf of THA Holdings LLC.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, this Agreement has been executed and delivered in the manner prescribed by law as of the date first written above.

Signed this 17th day of November, 2023, at 8 a.m., Eastern Time.

Borrower:

LuxUrban Hotels Inc

By:	/s/ Shanoop Kothari		Date: November 17, 2023
	Shanoop Kothari

Lender:

By:	/s/ Brian Ferdinand	Date: November 17, 2023
	THA Holdings LLC
	Brian Ferdinand, Manager

Exhibit 99.1

LuxUrban Hotels Announces Non-Dilutive Financing of Up to $10 Million to Accelerate Growth

MIAMI, FL, - November 17, 2023 - LuxUrban Hotels Inc. (or the “Company”) (Nasdaq: LUXH), which utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in these properties in key major metropolitan cities, today announced that it has entered into a non-dilutive financing agreement of up to $10 million sponsored by the Company’s Chairman and Co-Chief Executive Officer, Brian Ferdinand.

The financing will take the form of a 36-month unsecured advancing term promissory note (the “Note”) that bears interest at rate of 1% annually, is prepayable at the Company’s option upon approval of the Board of Directors, has no prepayment penalties or restrictions, defers interest until maturity or repayment, and must be used for growth capital. The Note will be funded through the sale, from time to time, of shares of the Company’s common stock controlled by Mr. Ferdinand (the “Sales”). The Sales will be consummated either in compliance with Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the volume limitations thereof or under another available exemption from the registration requirements of the Securities Act. 100% of the proceeds of these Sales, less tax liabilities, will be used to fund the Note.

“We continue to pursue significant opportunities to enter into long-term operating leases with hotels across the United States, and soon internationally,” said Mr. Ferdinand. “We have been pleased with our growth to date and with the pipeline of new lease prospects; at the same time, we acknowledge that there is a limited window of opportunity to capture these premier assets. As the Company’s largest shareholder, I share the view of our executive team and Board of Directors that this Note represents the most efficient, least expensive, and, importantly, non-dilutive way to access additional growth capital. In combination with proceeds generated from our recently closed offering of 13.00% Series A Cumulative Redeemable Preferred Stock and the ongoing support of Wyndham Hotels & Resorts, we believe that proceeds from the Note will accelerate our ability to build density in existing markets and enter new destination locations. I will continue to align my interests with those of the Company’s shareholders and remain focused on delivering long-term shareholder value.”

“This new, non-dilutive Note financing is not required to achieve the Company’s previously issued, and recently reiterated, 2023 and 2024 guidance with respect to net rental revenue, EBITDA, and hotel rooms under long-term Master Lease Agreements,” said Shanoop Kothari, the Company’s President, Co-Chief Executive Officer and Chief Financial Officer.

LuxUrban Hotels Inc.

LuxUrban Hotels Inc. utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in the properties it leases to business and vacation travelers through the Company’s online portal and third-party sales and distribution channels. The Company currently manages a portfolio of hotel rooms in New York, Washington D.C., Miami Beach, New Orleans and Los Angeles. As of November 8, 2023, the Company had 2,032 hotel rooms under lease, including properties not yet available for rent, and seeks to rapidly build its portfolio on favorable economics through the acquisition of additional accommodations that were dislocated or are underutilized as a result of the pandemic and current economic conditions. In late 2021, the Company commenced the process of winding down its legacy business of leasing and re-leasing multifamily residential units, as it pivoted toward its new strategy of leasing hotels. This transition has been substantially completed.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to contemplated sales of shares of our common stock controlled by the Company’s Chairman and Co-CEO to fund the Note, financial and operational guidance, the success of the Company’s collaboration with Wyndham Hotels & Resorts, scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and beliefs concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

Contact
Shanoop Kothari President, Co-Chief Executive Officer and Chief Financial Officer LuxUrban Hotels Inc. shanoop@luxurbanhotels.com		Devin Sullivan Managing Director The Equity Group Inc. dsullivan@equityny.com

		Conor Rodriguez, Analyst crodriguez@equityny.com

Cover	Nov. 17, 2023
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 17, 2023
Entity File Number	001-41473
Entity Registrant Name	LuxUrban Hotels Inc.
Entity Central Index Key	0001893311
Entity Tax Identification Number	82-3334945
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	2125 Biscayne Blvd
Entity Address, Address Line Two	Suite 253
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33137
City Area Code	(833)
Local Phone Number	723-7368
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Common Stock Par Value 0. 00001 Per Share [Member]
Title of 12(b) Security	Common Stock, par value $0.00001 per share
Trading Symbol	LUXH
Security Exchange Name	NASDAQ
Series A Cumulative Redeemable Preferred [Member]
Title of 12(b) Security	13.00% Series A Cumulative Redeemable Preferred Stock, $0.00001 par value per share
Trading Symbol	LUXHP
Security Exchange Name	NASDAQ