| Item 1.01 |
Entry into a Material Definitive Agreement. |
On December 20, 2022,
LuxUrban Hotels Inc. (“Company” or “we” or similar pronouns), and our chairman and chief executive officer,
Brian Ferdinand (“Ferdinand”), entered into a Note Extension and Conversion Agreement with Greenle Partners LLC Series
Alpha PS (“Greenle Series Alpha”) and Greenle Partners LLC Series Beta P.S., a Delaware limited liability company
(“Greenle Beta” and, together with Greenle Alpha, “Greenle”). Greenle was the purchaser of 15% OID senior
secured notes (the “Notes”) and warrants to purchase our common stock (“Warrants”) under certain securities
purchase agreements and loan agreements between us and Greenle, including the Securities Purchase Agreement dated as of September
30, 2022, as amended by the letter agreement dated October 20, 2022, and the Loan Agreement dated as of November 23, 2022, all of
which were previously disclosed, and filed as exhibits, under Current Reports on Form 8-K.
Under the terms of the
Note Extension and Conversion Agreement, Greenle has agreed to convert from time to time up to $3,000,000 aggregate principal amount
of the Notes into up to 1,000,000 shares of our common stock (the “Conversion Shares”) at the conversion price of $3.00
per share prescribed by the Notes. Additionally, Greenle has agreed that the payment date of certain of our notes in the aggregate
principal amount of $1,250,000, maturing on January 30, 2023, shall be extended to March 1, 2023. On the date of any such conversion
we shall issue to Greenle a number of credits under our existing revenue share agreements with them (as previously disclosed in our
Current Reports on Form 8-K) equal to fifteen percent (15%) of the principal amount of the Notes so converted.
In connection with advisory and investment communications
services, we have agreed to issue to (a) Acorn Management Partners (“Acorn”) 87,000 shares of or our common stock and (b)
Force Family Office LLC (“Force”) 87,000 shares of Common Stock. Notwithstanding the terms of the Notes and Warrants that
provide for price adjustments upon our issuance of common stock at prices below the current conversion and exercise prices in such Notes
and Warrants, Greenle has agreed that with respect to the Notes being converted under the Note Extension and Conversion Agreement, the
conversion price thereof shall not reset and shall remain $3.00, and the conversion prices of all other convertible promissory notes of
the Company and the exercise prices of all warrants of the Company, in each case owned by Greenle Alpha or Greenle Beta shall reset only
to $2.00 per share, subject to further adjustment as provided by the terms of such notes and warrants.
Ferdinand has
agreed to personally and individually pay to Greenle, without cost to the Company, any difference in the aggregate amount Greenle
realizes in public or private sales of the Conversion Shares and the $3 million purchase price (“Make Whole”) through
the delivery to Greenle of up to 1,000,000 shares of our common stock currently owned by Ferdinand (all of which have been placed in
escrow to secure such obligation) and thereafter, if any such shortfall is not fully covered by delivery of such shares, cash. Mr.
Ferdinand continues to own such shares and vote such shares until such time, if ever, that this Make Whole obligation is
triggered.
Assuming full conversion
of the subject Notes into Conversion Shares, of which there is no assurance, the transactions discussed above, along with scheduled
debt repayments in early January 2023, we will reduce our overall current debt by approximately 40%. Management expects that as a
result of this debt reduction and expected improvement in revenues, our company will have additional cash flow available for funding
growth and working capital in 2023.
This Current Report
on Form 8-K contains forward-looking statements, including with respect to projected debt reduction, revenue improvements and cash flow
availability. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those set forth
under the caption Risk Factors” in the prospectus forming part of the Company’s Registration Statement on Form S-1 (File No.
333-262114), declared effective by the Securities and Exchange Commission (“SEC”) on August 11, 2022. Generally, such forward-looking
information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or variations of such words
and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might"
or "will be taken", "will continue", "will occur" or "will be achieved".