LuxUrban Hotels (LUXH) S-1/AIPO registration (amended)

Registration No. 333-262114​

This prospectus gives effect to the conversion, as of January 4, 2022, of:

Corphousing LLC, a limited liability company, into CorpHousing Group Inc., a corporation under the laws of Delaware; and

SoBeNY Partners LLC, a limited liability company, into SoBeNY Partners Inc., a corporation under the laws of Delaware.

The conversion had no effect on our business or operations and was undertaken to convert the forms of these legal entities for purposes of operating as a public company. All properties, rights, businesses, operations, duties, obligations and liabilities of the predecessor limited liability companies shall remain those of CorpHousing Group Inc. and SoBeNY Partners Inc.

Our company, CorpHousing Group Inc., is referred to in this prospectus as “CorpHousing,” the “Company,” or “our company” or “we” or similar pronouns. References to “SoBeNY” means SoBeNY Partners Inc., our wholly owned subsidiary. We also operate aspects of our business through LuxUrban RE Holdings LLC, LuxUrban LLC, S-Be Rentals, LLC, and Corphousing UK Limited, each of which is a wholly owned subsidiary of CorpHousing. In connection with revenue sharing arrangements on certain of our properties entered into in connection with our May/June 2022 Bridge Financing (as defined herein), we formed a wholly owned special purpose entity, CorpHousing RSL LLC, in June 2022.

On April 4, 2022, we filed an amendment to the certificate of incorporation of CorpHousing Group Inc., affecting a one-for-four reverse stock split. Unless otherwise noted, all information in this prospectus gives effect to the reverse stock split.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The pandemic resulted in governments imposing wide-reaching restrictions at the federal, state, and local levels, school and business closings, quarantines, “shelter at home” orders, restrictions on travel, limitations on social or public gatherings, and other social distancing measures, which have had and may continue to have a material adverse impact on our industry generally, on travel behavior and demand, and on our business.

In addition to a reduction in the number of bookings, we incurred higher than normal occurrence of refunds and travel credit issuances to guests who cancel for reasons related to COVID-19. In response to the pandemic, we liberalized our cancellation policies, and many of our guests affected by COVID-19 have been eligible to cancel their reservations for a full cash refund or in some cases credit. We intend to continue this policy for the foreseeable future as we believe it is the right approach in current circumstance and believe it reflects our brand’s guests-first message. This approach may not enhance our brand reputation as we intend, and a liberal cancellation policy could have material adverse impact on our business, results of operations, and financial condition.

The COVID-19 pandemic resulted in a halt to the trend of monthly cash flow positive operations that we had since inception. The pandemic required us to take cost-reduction measures, has materially adversely affected our near-term operating and financial results, and will likely continue to materially adversely impact our operating and financial results for the foreseeable future. During the fourth quarter of 2020, another wave of COVID-19 infections emerged, and variants of the virus have continued to emerge through 2021 and into 2022. These circumstances likely could result in continued downward pressure on travel frequency and result in reduced travel bookings.

We cannot predict the COVID-19 pandemic’s continued cumulative and ultimate impact on our industry or on our future business, results of operations, or financial condition. The extent of the impact of the COVID-19 pandemic on our business and financial results will depend largely on future developments, including the duration and extent of the spread of COVID-19 both globally and within the United States, the prevalence of local, national, and international travel restrictions, the impact on capital and financial markets and on the U.S. and global economies, foreign currencies exchange, and governmental or regulatory orders that impact our business, all of which are highly uncertain and cannot be predicted.

Our occupancy rates and revenue per available room (RevPAR) dropped materially in 2020, with occupancy rates decreasing by approximately 23% and RevPAR by approximately 35% year over year from 2019 to 2020 while rebounding by 9% and 18% in 2021. For the three months ended March 31, 2022, our occupancy rates and RevPAR further increased by 14% and 8%, respectively, as compared to the fourth quarter of 2021. While our monthly occupancy rates and RevPAR have been gradually improving since mid-2020, the extent of the recovery is uncertain and will be largely dependent on the effectiveness of COVID-19 prevention (vaccination and continued social distancing) and treatment, infection rates, and governmental responses in the cities and countries in which we operate. In the years ended December 31, 2020 and 2021 and the three months ended March 31, 2022, refunds and allowances were 39%, 34% and 23%,

Our forecasts and projections, including projected revenues, margins, profitability, cash flows, revenue per accommodation unit, lease signing costs and occupancy rates, and our anticipated market opportunity, growth and penetration, are subject to significant uncertainty and are based on assumptions, analyses and estimates developed by our management, including with reference to third-party forecasts, any or all of which may prove to be incorrect or inaccurate. These include assumptions, analyses and estimates about future pricing and occupancy rates, our future acquisition of accommodation units, the timing of lease signings, building openings and development, local regulatory environments, the terms of future leases, and future costs, all of which are subject to a wide variety of business, regulatory and competitive risks and uncertainties. If these assumptions, analyses or estimates prove to be incorrect or inaccurate, our actual results may differ materially from those forecasted or projected, adversely affecting the value of our common stock.

We began our commercial operations in 2017. Our limited operating history may make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, including in building our brand, acquiring scalable mass of accommodation units, and accurately forecasting our industry and planning and implementing our budgets. You should consider our business and prospects in light of the risks and difficulties we may encounter as an early-stage company.

As a result of the COVID-19 pandemic and the resulting impact on the travel industry, our EBITDA and free cash flow turned negative in 2020 and 2021, and we may experience declines in EBITDA and free cash flow as long as the COVID-19 pandemic continues to materially adversely impact our business. We had EBITDA of $(4,037,956) and $(606,819) for the years ended December 31, 2020 and 2021, respectively, and EBITDA of $1,983,570 for the three months ended March 31, 2022. Our free cash flow (Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash) was $(14,528) and $1,106,486 for the years ended December 31, 2020 and 2021, respectively. Our free cash flow (Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash) was $55,191 for the three months ended March 31, 2022. Other adverse developments in our business, including lower than anticipated revenue, higher than anticipated operating expenses, and net unfavorable changes in working capital, could hinder our ability to reverse the recent negative trend in our EBITDA and free cash flow.

We have substantial indebtedness for borrowed money and a material portion of these obligations represented by our May/June 2022 Notes are secured by a first priority lien on all of our assets. If we should default on such indebtedness, it is unlikely we will be able to continue to continue to operate. The existence of these liens will make it difficult for us to secure additional debt or other financing until such times as the May/June 2022 Notes are repaid in full or converted into shares of our preferred stock or common stock. Should we require debt or asset-based financing while the May/June 2022 Notes are outstanding, we will be required to secure such debt on an unsecured basis, which we deemed highly unlikely to be able to do, or convert the May/June 2022 Notes into preferred stock, which may not be desirable at the time of such proposed conversion. The existence of these first priority liens could have a negative effect on our growth to the extent it limits our ability to borrow. Following such time that the May/June 2022 Notes are repaid in full or converted into shares of our preferred stock or common stock, the holders of such notes will continue to have a lien on the equity and assets of our special purpose vehicle, CorpHousing RSL Inc., as security against such holders’ rights to receive an aggregate share, typically 5% to 10% in the first five years of the relevant lease, and 1% thereafter, of the quarterly revenues generated by our New Properties. The revenue shares payable to such investors shall be paid quarterly in cash as described elsewhere in this prospectus. Accordingly, a portion of the cash flow and revenues from such accommodation units will not be available to us.

Our business depends substantially on property owners and managers leasing to us properties that meet our brand criteria on lease terms that work within our business model. Competition for quality properties in desirable, often over-booked, locations can be intense. We may be unable to negotiate satisfactory leases or other arrangements to operate new properties, on board new properties in a timely manner, or renew or replace existing properties on satisfactory terms or at all. We typically lease our properties on one, three, five, six, ten, fifteen and twenty-year terms. The pricing terms under these leases thus become relatively fixed costs and we must achieve occupancy rates at rental prices that enable us to offset the lease, maintenance and operations costs of each property in order for such property to be profitable. Acquiring new units and building our portfolio of accommodations can be time consuming and requires the

From time to time, we may determine that one or more of our leased properties is not performing to our expectation and may elect to terminate the applicable leases early if allowed under the terms thereof. We may also experience breaches of the terms of the leases by the property owners and may elect to terminate the related leased based on such breaches. It is also possible that the owners of properties seek to terminate leases early on their terms in certain circumstances or as a result of our breach, which could include breaches rising from the actions of our guests or employees. It is also likely that a percentage of the leases for our leased properties will not be renewed by us or the property owner as the end of the then current lease term. Historically we have experienced losses of leases from time to time in the above-described circumstances and expect to lose leases from time to time in the future as part of our ordinary course of business. To continue to grow our company, we must add new lease properties to our portfolio faster than we lose leases and the terms of the new leases individually and in the aggregate must be at least as favorable or more favorable to use than the terms of the leases we lose to ensure our continued growth. We may not be able to add new leases in a manner that achieves this and any inability to effectively control churn of leases could adversely affect our business, financial condition and financial results.

When we execute leases for new properties, the landlord or developer may be unable or unwilling to deliver the property on the date initially projected, or we may encounter other unforeseen delays in preparing the property for initial guest bookings. Many newly-leased properties may become available to us only after a considerable period of time, which increases the risk of unforeseen delays in making these units available to our guests. Later than expected property availability results in a delay in generating revenue from such properties, which could cause us to miss our financial forecasts. In addition, the success of any new property will depend on our ability to integrate it into existing operations, which is subject to uncertainties including potential difficulties in integrating guest-facing and back-office systems or in engaging third party vendors to service the properties. Newly-leased properties could be more difficult or expensive to onboard, have undisclosed conditions that result in unanticipated expenses or claims against us for which we may have little or no effective recourse against the landlord, or otherwise may not provide their anticipated benefits.

We typically devote resources to prepare and furnish a newly-leased property and bring it onto our remote management platforms before renting the property to guests. We also expend resources to keep our leased properties in a safe and attractive condition. Although we attempt to have the landlord or developer bear the out-of-pocket opening costs, we are sometimes responsible for all or a portion of such costs. Even where landlords and developers are contractually responsible for some costs, they may dispute or fail to comply with their obligations. In addition, while the majority of our leases require landlords to bear responsibility for the repair and maintenance of building structures and systems, at times we may be responsible for some of these obligations, and in most cases, we are responsible for the repair and maintenance of damage caused by our guests. Our leases may also require that we return the space to the landlord at the end of the lease term in essentially the same condition it was delivered to us, which may require repair work. The costs associated with the preparation, maintenance, repair and return of our leased properties may be significant and may vary from our forecasts. We also periodically refurbish redecorate or install new amenities in our accommodation units to keep pace with the changing needs of guests and to maintain or enhance our brand and reputation. The costs of these actions may be more than we anticipate, may impair guests’ experiences in adjacent units, and may otherwise adversely affect our results of operations and financial condition.

We do not own any of the properties utilized in our business, and we manage and operate them under leases with third-party landlords. At some properties, our accommodation units comprise only a portion of the building and common areas and amenities are shared with other tenants or unit owners. We often

Our rights and responsibilities under our leases may be subject to interpretation, and will from time to time give rise to disagreements, which may include disagreements over the timing and amount of capital investments or improvements, operational and repair responsibilities, rights in circumstances of early termination and unwinding of lease obligations, liability to third parties, a party’s right to terminate a lease, and reimbursement for certain renovations and costs. We and our landlords may be unable to resolve such disagreements amicably and may seek resolution through litigation. To date, we have not had any material lease-related litigations in connection with our operations. Typically, we have settled claims without formal litigation, on favorable economic terms, and reflected all accrued settlement estimates on our financial statements. Disputes may be expensive to litigate, even if the outcome is ultimately in our favor. We cannot predict the outcome of any litigation. An adverse judgment, settlement, or court order in a proceeding could cause significant expenses and constraints for our business operations and expansion plans. Further, disputes with landlords that own numerous properties in a particular city or nationwide could harm our ability to lease properties form that landlord in the future or result in well-publicized negative publicity, which could hurt our reputation with other property owners, making it more difficult to secure leases on economically favorable terms or at all.

We currently lease all of our properties and are committed for the leases’ terms, generally without the right to terminate early. Our obligations to landlords under these agreements extend for years, while we do not have a corresponding source of guaranteed revenue because guests typically stay for less than a week at our properties. Our leases generally provide for fixed monthly payments that are not tied to occupancy rates or revenues, and typically contain minimum rental payment obligations. While we often seek to negotiate leases with lower minimum payments in return for a share of the property’s revenues, or other variable terms, we may be unsuccessful in securing variable or participating lease terms. If we are unable to maintain sufficient occupancy rates and pricing, our lease expenses may exceed our revenue and we may incur losses with respect to some or all of our properties. Leases require substantial time to negotiate and are typically multi-year commitments that can only be revised or terminated with the landlord’s consent. Accordingly, we have limited flexibility to rapidly alter our portfolio of properties and lease commitments in response to changing circumstances.

Our leases may be subject to termination before they are scheduled to expire in certain circumstances, including the bankruptcy of a developer or other landlord, noncompliance with underlying covenants governing the property, or, under some agreements, failure to meet specified financial or performance criteria. Some leases also contain conditions to the landlord’s or our obligations, or permit the landlord to terminate before the scheduled expiration date, typically in the later years of the lease and/or upon payment of specified compensation to us. The termination of leases due to any of the foregoing events would eliminate our anticipated income and cash flows from the affected property, which could have a significant negative effect on its results of operations and liquidity.

Our success depends in large part on our ability to attract and retain high-quality management and employees. Brian Ferdinand, our chief executive officer and chairman of the board, founded our company

Our growth depends on creating repeat business by providing guests with excellent service, attracting new guests by garnering good online reviews and word of mouth recommendations from existing guests, and building a recognized, respected and trusted brand. We must provide timely responses to inquiries from guests, offer a variety of desirable and differentiated accommodations in desired locations at competitive prices that meet or exceed the expectations of guests, and we must deliver exceptional hospitality to our guests. If our platform or the third-party platforms through which our properties are marketed are not easy to navigate, or our listings are not marketed and displayed effectively to potential guests using such platforms, we will be ineffective in booking guests in meaningful numbers, which would materially adversely affect our business, results of operations, and financial condition.

Historically, more than 90% of our revenues have been generated from bookings of our accommodations made by guests through third-party booking portals such as Booking.com, VRBO, Airbnb, and Expedia. A key element of our strategy will be to drive traffic to and book guests through our own online portals at Sobenewyork.com and Corphousinggroup.com to better control bookings and the guest experience. There can be no assurance, however, that we will be able to successfully drive potential guest traffic to our websites. Our reliance on third-party booking portals subjects us to the risk of having our access to such portals limited or eliminated as a result of competitive decisions by such providers. Our use of third-party booking portals reduces our profits generated from bookings as we are required to pay fees and commissions to third-party portal operators. An inability to post our bookings on third-party portals or increases in the fees and commission payable to third-party portal operators could materially harm our business ,results of operations and financial condition.

A critical factor in attracting visitors to our own websites is how prominently we are displayed in response to search queries. Accordingly, we utilize search engine marketing as a means to provide a significant portion of our visitor acquisition. Search engine marketing includes both paid visitor acquisition on a cost-per-click basis and visitor acquisition on an unpaid basis, often referred to as organic search. The various search engine providers, such as Google and Bing, employ proprietary algorithms and other methods for determining which websites are displayed for a given search query and how highly websites rank.

Search engine providers may also launch new features to enhance search results, which may negatively affect the number of visitors to our websites. Search engine algorithms and other methods that determine the display and ranking of results may change from time to time, generally without public announcement or detailed explanation. Therefore, the success of our SEO strategy depends, in part, on our ability to anticipate and respond to such changes in a timely and effective manner through website and content development, which we may not be able to do.

Since our inception, we have experienced rapid growth. As our operations have expanded, we have grown our portfolio to 619 units that are in current operation in nine U.S. cities, with an additional 1,512 units anticipated to come on line by September 30, 2022. As of the date of this prospectus, we had 107 full-time employees and independent contractors. Our business is becoming increasingly complex, especially in light of the continued rapid evolution of our industry and e-commerce, our relatively limited operating history, our need to implement new technologies and utilize big data for our operations, and our reliance on multiple websites and employees located in numerous cities throughout the United States. This complexity and our rapid growth have demanded, and will continue to demand, substantial resources and attention from our management. We expect to continue to increase headcount and to hire more specialized personnel in the future as we grow our business. We will need to continue to hire, train and manage additional property managers and employees, qualified website developers, software engineers, client and account services

In addition to the COVID-19 pandemic, other events beyond our control, such as unusual or extreme weather or natural disasters, such as earthquakes, hurricanes, fires, tsunamis, floods, severe weather, droughts, and volcanic eruptions, and travel-related health concerns, including other pandemics and epidemics, restrictions related to travel, trade or immigration policies, wars, terrorist attacks, sources of political uncertainty, political unrest, protests, violence in connection with political or social events, foreign policy changes, regional hostilities, imposition of taxes or surcharges by regulatory authorities, changes in regulations, policies, or conditions related to sustainability, including climate change, work stoppages, labor unrest or travel-related accidents can disrupt travel globally or otherwise result in declines in travel demand. Because these events or concerns, and the full impact of their effects, are largely unpredictable, they can dramatically and suddenly affect travel behavior by consumers, and therefore demand for our platform and services, which would materially adversely affect our business, results of operations, and financial condition.

We also cannot predict the effects that the wider adoption by businesses of remote working protocols during COVID-19 pandemic will have going forward. It is possible that many businesses believe that continuing these protocols are beneficial in terms of production and cost and many employees may demand continuance at some level of these protocols, all of which could diminish business travel. Our financial performance is also subject to general global economic conditions and their impact on levels of discretionary spending. Some of the factors that have an impact on discretionary spending include unemployment rates, business and consumer debt, fluctuations in exchange rates, taxation, energy prices, interest rates, consumer confidence, tariffs, and other macroeconomic factors.

Our growing portfolio of accommodation units are comprised of leased units in multi-family dwellings and, increasingly, units in entire hotels we lease on a long-term basis. In many cases, the mutli-family dwellings are located in residentially zoned areas of our operating cities. Our hotel units are located in commercially zoned areas. In many cases, the cities in which we operate have evolving regulations that limit or prohibit the short-stay rental of units located in residential communities; these municipalities often require short-stay rentals in residential areas to be for a minimum of 30 days. Conversely, hotel units enjoy the benefits of commercial zoning, allowing for short-stay rentals of any length, even as a short as one day. An integral part of our growth strategy is to increase the number of hotel units comprising our total accommodation unit portfolio. As commercially zoned buildings are not subject to local short-stay length regulation, as we increase our hotel-based units, we will be able to offer a larger portion of our accommodation portfolio with maximum flexibility in terms of stay length and more readily ensure compliance of our total units portfolio with any regulations applicable to residential area accommodations. As of June 30, 2022, 12% of our accommodation units (74 units) are subject to short-stay minimum requirements, while 88% of our accommodation units (545 units) are not. We cannot be certain, however, that we will be able to continue to increase the percentage of hotel rooms comprising our total portfolio. Accommodation units that are located in residential areas will remain subject to the regulations applicable to buildings in these areas and we will need to ensure compliance with all applicable regulations. While our booking platforms are programmed with the type of location of the units being marketed (i.e., residential area or commercial area), and designed to prohibit stay lengths that violate applicable regulations, we cannot be certain that errors will not occur or that zoning changes will not occur ahead of our ability to properly re-identify such units in the programming of our platforms. In the event we breach regulations applicable to our operations with respect to a property, including length-of-stay regulations, typically applicable to accommodation units offered in residentially zone areas, we could face fines from local and state regulatory agencies, and could also be found in breach of the applicable lease, providing the landlord grounds for termination.

We operate in jurisdictions which have various regulatory requirements that can affect our operations or regulate the rental activity of property owners and managers. Since we began our operations in 2017, there have been, and continue to be, regulatory developments that affect the short stay rental industry and the ability of companies to list those rentals online. As noted, some municipalities have adopted ordinances that limit the ability of property owners to rent properties in residentially zoned area for fewer than 30 consecutive days and other cities have introduced or may introduce similar regulations. Some cities also have fair housing or other laws governing the way properties may be rented, which they assert apply to short stay and vacation rentals. Many homeowners, condominium and neighborhood associations have adopted rules that prohibit or restrict short-term rentals. These and other similar developments could reduce our ability to operate our business as intended. In some cities, we operate portfolios of hotel rooms under applicable commercial zoning and hotel regulations, which allow us to offer overnight rentals and rentals shorter than 30 days. These rules may also change over time to limit our ability to do so.

Cities, such as New York City, have been diligent in the implementation and enforcement of short-stay rental regulations to ensure the safety of its residential communities and housing availability and affordability. Although our lease terms with landlords typically provide that ownership of, and responsibility for, the properties remains with the landlords, we generally are obligated to indemnify landlords for any violations

Compliance with laws and regulations of different jurisdictions imposing different standards and requirements is very burdensome for businesses like ours. Our business efficiencies and economies of scale depend on generally uniform treatment of owners, managers and travelers across all jurisdictions in which we operate. Compliance requirements that vary significantly from jurisdiction to jurisdiction impose an added cost to our business and increased liability for compliance deficiencies. In addition, laws or regulations that could harm our business could be adopted, or reinterpreted in a manner that affects our activities, by the U.S. government, state governments, and regulatory agencies or by foreign governments or agencies, including but not limited to the regulation of personal and consumer information and real estate licensing requirements. Violations or new interpretations of these laws or regulations may result in penalties, negatively impact our operations and damage our reputation and business. It may be difficult or impossible for us to investigate or evaluate laws or regulations in all cities, countries, and regions. The application of existing laws and regulations to our business and lease properties can be unclear and may be difficult for us to understand and apply such governance. Even as we take measures to rely more heavily on commercially zoned units, and to comply with regulation in the residentially areas zoned where we operate, such regulation is subject to change, as governments or government agencies seek to apply legacy systems of laws or adopt new laws to new online business models in the travel and accommodations industries, including ours. Uncertain and unclear application of such laws and regulations to our activity and our properties and business could reduce supply and demand for our accommodations offerings and services, increase the costs of compliance with such laws and regulations, and increase the threat of litigation or enforcement actions related to our business, any or all of which would materially adversely affect our business, results of operations, and financial condition.

We are subject to a variety of taxes and tax collection obligations in the United States (federal, state, and local) and, as if we expand internationally as intended, we will become subject to such obligations in numerous foreign jurisdictions. A number of jurisdictions have proposed or implemented new tax laws or interpreted existing laws to explicitly apply various taxes to businesses in the short stay rental industry. Laws and regulations relating to taxes as applied to our business, vary greatly among jurisdictions, and it is difficult or impossible to predict how such laws and regulations will be applied. The application of indirect taxes, such as lodging taxes, hotel, sales and use tax, privilege taxes, excise taxes, VAT, goods and services tax, harmonized sales taxes, business tax, and gross receipt taxes (together, “indirect taxes”) to e-commerce activities such as ours and to our guests is a complex and evolving issue. Some of such tax laws or regulations hold us responsible for the reporting, collection, and payment of such taxes, and such laws could be applied to us for transactions conducted in the past as well as transactions in the future. Many of the statutes and regulations that impose these taxes were established before the adoption and growth of the Internet and e-commerce. New or revised foreign, federal, state, or local tax regulations may subject our business to additional indirect, income, and other taxes, and depending upon the jurisdiction could subject us to significant monetary penalties and fines for non-payment of taxes. An increasing number of jurisdictions are also considering adopting or have adopted laws or administrative practices that impose new tax measures, including digital platform revenue-based taxes, targeting online sharing platforms and online marketplaces, and new obligations to collect income taxes, sales, consumption, value added, or other taxes on digital platforms. We may recognize additional tax expenses and be subject to additional tax liabilities, and our business, results of operations, and financial condition could be materially adversely affected by additional taxes of this nature or additional taxes or penalties resulting from our failure to comply with any reporting, collection, and payment obligations. We accrue a reserve for such taxes when the likelihood is probable that such taxes apply to us, and upon examination or audit, such reserves may be insufficient. New or revised taxes and, in particular, the taxes described above and similar taxes would likely increase the price paid by guests, our lease costs and other costs of doing business, discourage property owners from leasing to us and guests from renting our accommodation offerings , and lead to a decline in revenue, and materially adversely affect our business, results of operations, and financial condition.

As part of our compliance review, we determined that certain state and local tax payments for short-term stays below prescribed tax regulation cutoffs had not been properly collected and applied, either directly by us or the platforms through which customers reservation and payments are made. We have reserved $551,194 to cover such payments on our financial statements for the three-month period ended March 31, 2022. We have taken action that we believe will prevent reoccurrence of this in the future.

Our revenue, expenses, operating results and cash flows have fluctuated from quarter to quarter in the past and are likely to continue to do so in the future. These fluctuations are due to, or may result from, many factors, some of which are outside of our control and many of which are difficult to predict, including:

costs related to acquisitions or licensing of, or investments in, products, services, technologies or other businesses and our ability to successfully integrate and manage these acquisitions;

the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure;

the timing of revenue and expenses related to the development or acquisition and integration of technologies, products or businesses;

the timing and success of changes in our pricing or services;

the introduction and performance of new products or services;

the introduction of new products or services by our competitors;

declines or disruptions in the travel industry, particularly in regions where we generate substantial revenue;

We provide accommodations that we lease from third-party property owners and, in addition to our own employees, utilize third-party services for the cleaning and maintenance of these properties. In addition to our own booking website, Sobenewyork.com, we utilize third-party online portals for guest booking and reservation. We also use third-party security systems, property monitoring systems and data analytic software services in addition to our own data analysis processing and software. We use both internally developed systems and third-party systems for our operations, including transaction and payment processing, and financial and accounting systems. Any inability to maintain our relationships with these service providers on economically reasonable terms, or any inability by these service providers to provide their services to us at a level that is commercially reasonable and dependable could have an adverse effect on our operations. As we grow, we will likely increase our internal capabilities and decrease our reliance on third-party suppliers, but we not be successful in this regard. As we grow our business, we will need to significantly upgrade and expand our transaction and payment processing systems, financial and accounting systems, and other infrastructure. We may not be able to upgrade our systems and infrastructure to accommodate such growth in a timely manner, and depending on the systems affected, our transaction and payment processing, and financial and accounting systems could be impacted for a meaningful amount of time, which could materially adversely affect our business, results of operations, and financial condition.

Our hospitality employees and other guest services personnel are critical to our ability to add properties, maintain our units, enhance the guest experience, and attract and retain guests. If our relationship with employees in any city or at any key property, or within our central guest services function, deteriorates for any reason, our reputation, guest relationships and results of operations may suffer, and we may incur costs to replace and retrain additional personnel or third-party contractors. As we grow, we also may face difficulty in attracting and hiring additional qualified personnel in these areas. In addition, many of the guest services representatives and housekeepers who provide services to our company and guests are employees of third-party agencies or the hotels from which we lease room portfolios on a long-term basis. We do not control such third-party agencies and accordingly, do not directly control the policies, practices or relationships between such agencies and their employees. Our business and reputation could be harmed in the event of any dispute between such agencies and their employees, of if such employees do not provide services that meet our or our guests’ standards and expectations. Labor costs (both direct and through third-party agency fees) are a significant component of our operating expenses, and any increase in the cost of wages, benefits or other employee-related costs could cause our results of operations and cash flow to be lower than anticipated. Certain cities have also adopted re-hiring ordinances and other requirements with respect to hotel and other hospitality employees, and these and other employment regulations may increase our costs and impair our operations.

The technology that powers performance marketing is increasingly subject to strict regulation, and regulatory or legislative changes could adversely impact the effectiveness of our performance marketing efforts and, as a result, our business. For example, we rely on the placement and use of “cookies” — text files stored on a user’s web browser or device — to support tailored marketing to consumers. Many countries have adopted, or are in the process of adopting, regulations governing the use of cookies and similar technologies, and individuals may be required to “opt-in” to the placement of cookies used for purposes of marketing. If regulators start to enforce the strict approach, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs, and subject us to additional liabilities. Widespread adoption of regulations that significantly restrict our ability to use performance marketing technology could adversely affect our ability to market effectively to current and prospective guests, and thus materially adversely affect our business, results of operations, and financial condition.

As of March 31, 2022 and the date of this prospectus, we had aggregate indebtedness of approximately $8.2 million and $13.3 million, respectively. After the consummation of the offering and certain debt to equity conversions as described in this prospectus, our pro forma debt post-offering will be approximately $7.5 million (which assumes 50% repayment of the May/June 2022 Notes as described in this prospectus). Our indebtedness could materially adversely affect our business by:

increasing our vulnerability to general adverse economic and industry conditions;

requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, product development efforts, and other general corporate purposes;

The industries in which we compete are characterized by rapidly changing technology, evolving industry standards, consolidation, frequent new offering announcements, introductions, and enhancements, and changing consumer demands and preferences. In 2018, we began making incremental investments in upgrading our technology platform to a service-oriented architecture, improving data management, and increasing our service reliability. Our future success will depend on our ability to adapt our platforms and services to evolving industry standards and local preferences, and to continually innovate and improve the performance, features, and reliability of our platform and services in response to competitive offerings and the evolving demands of guests. Our future success will also depend on our ability to adapt to emerging technologies such as tokenization, cryptocurrencies, new authentication technologies, such as biometrics, distributed ledger and blockchain technologies, artificial intelligence, virtual and augmented reality, and cloud technologies. As a result, we intend to continue to spend significant resources maintaining, developing, and enhancing our technologies and platform; however, these efforts may be more costly than expected and may not be successful. For example, we may not make the appropriate investments in new technologies, which could materially adversely affect our business, results of operations, and financial condition. Further, technological innovation often results in unintended consequences such as bugs, vulnerabilities, and other system failures. Any such bug, vulnerability, or failure, especially in connection with a significant technical implementation or change, could result in lost business, harm to our brand or reputation, consumer complaints, and other adverse consequences, any of which could materially adversely affect our business, results of operations, and financial condition.

We process a significant volume and dollar value of transactions on a daily basis. If we do not fulfill our obligations to guests, there are fictitious listings or fraudulent bookings for our accommodations, or there are account takeovers, we may incur losses from claims by guests, and these losses could be substantial. Such instances have and can lead to the reversal of payments received by us for such bookings, referred to as a “chargeback.” Our ability to detect and combat fraudulent schemes, which have become increasingly common and sophisticated, could be adversely impacted by the adoption of new payment methods, the emergence and innovation of new technology platforms, including mobile and other devices, and our growth in certain regions, including in regions with a history of elevated fraudulent activity. We expect that technically-knowledgeable criminals will continue to attempt to circumvent anti-fraud systems. In addition, the payment card networks have rules around acceptable chargeback ratios. If we are unable to effectively combat fictitious listings and fraudulent bookings on our platform, or there is fraud committed on a third-party booking site related to our guests or properties, combat the use of fraudulent or stolen credit cards, or otherwise maintain or lower our current levels of charge-backs, we may be subject to fines and higher transaction fees or be unable to continue to accept card payments because payment card networks have revoked our access to their networks, any of which would materially adversely impact our business, results of operations, and financial condition.

Payment platforms are subject to various laws, rules, regulations, policies, legal interpretations, and regulatory guidance, including those governing: cross-border and domestic money transmission and funds transfers; stored value and prepaid access; foreign exchange; privacy, data protection, and cybersecurity; banking secrecy; payment services (including payment processing and settlement services); consumer protection; economic and trade sanctions; anti-corruption and anti-bribery; and anti-money laundering and counter-terrorist financing. As we expand our operations and migrate guests to our own booking platforms, we will become increasingly subject to these laws and regulations. In addition, because we facilitate bookings through third-party payment processors worldwide, one or more jurisdictions may claim that we

In addition, we may not be successful in integrating acquisitions or the businesses we acquire may not perform as well as we expect. While our acquisitions to date have not caused major disruptions in our business, any future failure to manage and successfully integrate acquired businesses could materially adversely affect our business, results of operations, and financial condition. Acquisitions involve numerous risks, including the following:

We hold certain intellectual property rights related to our brand and certain content and design elements of our business, including big data analytics and related algorithms. We rely on a combination of trademark and trade secret laws, international treaties, our terms of service, other contractual provisions, user policies, restrictions on disclosure, technological measures, and confidentiality and inventions assignment agreements with our employees and consultants to protect our intellectual property assets from infringement and misappropriation. Effective intellectual property protection may not be available in every country in which we operate or intend to operate our business. There can be no assurance that others will not offer technologies, products, services, features, or concepts that are substantially similar to ours and compete with our business, or copy or otherwise obtain, disclose and/or use our brand, content, design elements, creative, editorial, and entertainment assets, or other proprietary information without authorization. Our intellectual property assets and rights are essential to our business. If the protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the value of our brand and

We intend to grow our operations in part by expanding our operations in a number of jurisdictions outside of the United States. Laws and business practices that favor local competitors or prohibit or limit foreign ownership of certain businesses, or our failure to adapt our practices, systems, processes, and business models effectively to the traveler and supplier preferences (as well as the regulatory and tax landscapes) of each country into which we expand, could slow our growth, or prevent our ability to compete effectively in certain markets. For example, to compete in certain international markets we may have to adopt locally preferred payment methods, which could increase our costs and instances of fraud. In addition to the other risks described in this prospectus, our company’s international operations would be subject to numerous other risks, including:

Brian Ferdinand, our chief executive officer, entered into an Offer of Settlement with the Securities and Exchange Commission on April 22, 2020, in connection with allegations that he, as a board member of Liquid Holdings Group Inc., (a) reviewed a Form 10-Q and signed a Form 10-K for the fiscal year 2013 that failed to disclose material facts of Liquid’s reliance on a related party entity (a principal customer of Liquid and a company of which Mr. Ferdinand was an owner), and from which Liquid received material subscription fees, and (b) failed to file required Forms 4 and amendments to Schedule 13D to reflect material. changes to his ownership in Liquid’s shares of common stock, causing Liquid to violate Section 13(a), 13(d)(2) and 16(a) of the Exchange Act and related rules thereof. Mr. Ferdinand consented, without admitting or denying any findings, to a cease and desist order from any alleged secondary violations of

Prior to this offering we have operated as a private, closely-held company that was funded primarily by our principals with no third-party investment. As a private company we did not undertake annual audits of our financial statements in the ordinary course, and have not been subject to the rules and regulations that will apply to us following consummation of this offering, including those relating to internal controls and periodic reporting. In connection with the recent audits of our financial statements, we have identified material weaknesses in our internal control over financial reporting with respect to our periodic and annual financial close processes. As historically constituted, our human resources, processes and systems did not enable us to produce accurate financial statements on a timely basis. While we deem this type of material weakness typical in a closely-held, private company, in preparation of becoming a public company, we are implementing a remediation plan which includes the hiring of additional, qualified financial and accounting personnel, and engagement of specialized external resources, including the outsourcing of a portion of our accounting department functions to a qualified accounting firm. We have formed an audit committee of independent directors in connection with this offering. Our remediation plan also includes adopting other entity-level controls, properly segregating duties among appropriate personnel, education and training of applicable management and financial personnel, and improvements in the process and system used to monitor and track the effectiveness of underlying business process controls.

To maintain and improve the effectiveness of our company’s (i) disclosure controls and procedures, and its (ii) internal control over financial reporting, our company will expend significant resources, including accounting-related costs and significant management oversight. We anticipate that the requirements of these rules and regulations will continue to increase our company’s legal, accounting and financial compliance costs, cause the performance of some activities more difficult, time consuming and costly, and place significant strain on our company’s personnel, systems and resources. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our company’s operating results or cause it to fail to meet its reporting obligations under the Exchange Act. The failure to develop or maintain effective internal controls over financial reporting can result in a restatement of our company’s financial statements for prior periods and could subject our company to investigations by the SEC and/or other regulatory scrutiny and sanctions. Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of management evaluations, and in turn, the audits of our company’s internal control over financial reporting that its independent public accounting firm is required to include in our company’s periodic reports filed with the SEC. In addition, if our company is unable to continue to meet these requirements, our company may be unable to remain listed on Nasdaq.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about our company, businesses, market and competitors. Our company does not have any control over these analysts. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading prices and trading volumes of our securities would likely be negatively impacted. In the event analysts initiate coverage, and one or more of these analysts cease coverage of our company or fail to publish reports on our company regularly, our company could lose visibility in the financial markets, which in turn could cause share prices or trading volume to decline. If one or more of the analysts who may cover our company were to downgrade our company’s stock or provide more favorable relative recommendations about our competitors, or if our results of operations do not meet their expectations, the prices or trading volumes of our shares would likely decline.

Our certificate of incorporation provides that, unless our company consents in writing to the selection of an alternative forum, the sole and exclusive forum, to the fullest extent permitted by law, for (a) derivative actions or proceedings brought on our company’s behalf, (b) actions asserting a claim of breach of a fiduciary duty owed by any of its directors, officers, employees or agents or its stockholders, (c) any action asserting a claim against our company’s or any director or officer arising pursuant to any provision of the DGCL, (d) any action to interpret, apply, enforce or determine the validity of our company’s certificate of incorporation or bylaws, or (e) any other action asserting a claim that is governed by the internal affairs doctrine, shall be the Court of Chancery of the State of Delaware or federal court located within the State of Delaware if the Court of Chancery does not have jurisdiction, in all cases subject to the court’s having jurisdiction over indispensable parties named as defendants. A complaint asserting a cause of action under the Securities Act of 1933, as amended, may be brought in state or federal court. With respect to the Exchange Act, only claims brought derivatively under the Exchange Act would be subject to the forum selection clause described above. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation and bylaws has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our company’s certificate of incorporation and bylaws to be inapplicable or unenforceable in such action. Our board of directors believes these provisions benefit our company and stockholders by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against our company’s or its directors and officers. Alternatively, if a court were to find the choice of forum provision contained in our company’s certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, our company may incur additional costs associated with resolving such action in other jurisdictions, which could harm our company’s businesses, financial condition, and operating results. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to this exclusive forum provision but will not be deemed to have waived our company’s compliance with the federal securities laws and the rules and regulations thereunder.

the requirement that a majority of the board of directors consist of independent directors;

the requirement that our nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

the requirement that our compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

the requirement for an annual performance evaluation of our nominating and corporate governance and compensation committees.

provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

obtain a signed and dated acknowledgement from the purchaser demonstrating that the purchaser has received the required risk disclosure documents before a transaction in a “penny stock” can be completed.

Our common stock has been approved for listing on the Nasdaq Capital Market, a national securities exchange, upon completion of this offering. If our common stock is not listed on Nasdaq or another national securities exchange at any time after the date hereof, we could face significant material adverse consequences, including:

a limited availability of market quotations for our common stock;

reduced liquidity with respect to our common stock;

a determination that our common stock is “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

a limited amount of news and analyst coverage for our company; and

a decreased ability to issue additional securities or obtain additional financing in the future.

This is the initial public offering of our shares of common stock. Prior to this offering, and there was no public market for our common stock. Our common stock has been approved for listing on the Nasdaq Capital Market upon completion of this offering. Despite any such listing, we cannot predict the extent to which investor interest in our company will lead to the development of an active trading market in our shares or how liquid that market might become. If such a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at the time you wish to sell them, at a price that is attractive to you, or at all.

The trading market for our common stock in the future could be subject to wide fluctuations in response to several factors, including, but not limited to:

actual or anticipated variations in our results of operations;

our ability or inability to generate revenues or profit;

the number of shares in our public float; and

increased competition.

Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Additionally, moving forward we anticipate having a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock. The offering price per share has been determined through negotiation between us and representatives of the underwriter and may not be indicative of the market prices that prevail after this offering. You may not be able to sell your common stock at or above the per-share offering price.

The initial public offering price of a share is substantially higher than the net tangible book value per share of our common stock. Investors purchasing shares in this offering will pay a price that substantially exceeds the book value of our tangible assets after subtracting our liabilities. As a result, investors purchasing shares in this offering will incur immediate dilution of $4.14 per share, based on the assumed initial public offering price of $4.50 per share.

We may need to raise additional capital through equity and debt financings in order to fund our operations. If we raise capital through equity financings in the future, that will result in dilution to all other

Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales may occur, could materially and adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. The shares of common stock sold in this offering will be freely tradable, without restriction, in the public market, except for any shares sold to our affiliates.

In connection with this offering, we, our officers and directors and the holders of 1% or more of our currently outstanding shares of common stock have agreed, subject to certain exceptions, not to sell or transfer any shares of common stock for 180 days from the date of consummation of this offering, without the prior consent of Maxim Group LLC, the representative of the underwriters. However, Maxim may release these shares from any restrictions at any time. We cannot predict what effect, if any, market sales of shares held by any stockholder or the availability of shares for future sale will have on the market price of our common stock.

new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

50% of the principal and interest thereon under our October 2021 Note, plus a 20% prepayment premium on such principal, will be converted into shares of our common stock at a conversion price equal to 80% of the per-share price in this offering;

100% of the principal and interest under the LF Convertible Note shall be converted into 675,000 shares of common stock;

100% of the principal and interest owed under a $100,000 principal amount promissory note made in December 2018 (the “2018 Convertible Note”) to an unaffiliated lender will be converted at closing into 11,250 shares of our common stock; and

100% of the principal and interest thereon under the 2022 Insider Bridge Notes will be converted at the closing of this offering into 379,259 shares of common stock at a conversion price equal to 75% of the per-share price in this offering.

The following table sets forth our capitalization as of March 31, 2022:

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Dilution in pro forma as adjusted net tangible book value per share to new investors represents the difference between the amount per share paid by purchasers of shares in this offering and the pro forma as adjusted net tangible book value per share of our common stock immediately after completion of this offering.

As of March 31, 2022, our historical net tangible book value (deficit) was ($10.2) million, or ($0.47) per share of common stock. Historical net tangible book value (deficit) per share represents our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of March 31, 2022.

A $1.00 decrease in the assumed initial public offering price of $4.50 per share, which is the midpoint of the price range set forth out the cover page of this prospectus, would decrease, as applicable, the pro forma as adjusted net tangible book value per share after this offering by $0.16 and would decrease, as appropriate, the dilution in the pro forma net tangible book value per share to investors participating in this offering by approximately $0.85 per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

To continue to drive growth we will need to further build our brand and invest in direct-to-consumer marketing and enhanced Search Engine Optimization (SEO) and social media advertising to increase direct bookings. We will also invest in building business-to-business relationships within the travel industry. These relationships diversify our sales. Our existing B2B relationships were excellent sources of additional revenue streams during the pandemic, when we experienced lower occupancy levels and pricing pressure.

We will need to continually invest in technology to ensure we provide guests with the latest technology-based amenities and to regularly enhance the safety and management of our properties. We also will continue to develop and invest in data and analytics to better select our properties and provide dynamic pricing. We also intend to invest in technology to enhance our direct-to-consumer marketing via our own mobile apps, a customer relationship management (CRM) database and system to support a loyalty program and drive repeat business, and a learning management system (LMS) to enhance initial and continuing training of our personnel. We are also presently studying a variety of energy management technologies which will make it possible to not only monitor energy consumption with the utmost accuracy, but adjust and optimize energy consumption in response to real-time consumption patterns.

The ongoing impact of the COVID-19 pandemic on the global economy and the extent to which it will continue to adversely impact us specifically remains uncertain. We believe, based on our historical results prior to COVID-19, the reported results of other companies operating in the travel and accommodation industry during the pandemic, and our improved results (and the improved results of other companies operating in the travel and accommodation industry) following the easing of travel restrictions and other COVID-19 precautions, that our financial results for 2020 and 2021 were materially adversely affected by the COVID-19 pandemic. Since mid 2021, we have seen material improvements in our Occupancy Rates and revenues, trending back towards pre-Covid levels. We cannot be certain, however, that all declines in our operations during the height of Covid were specifically or solely related to Covid or that we will return fully to pre-Covid levels.

While monthly Occupancy Rates and revenue per available room (“RevPAR”) have been gradually improving since the height of the pandemic, we believe that continued improvement will be largely dependent on the effectiveness of COVID-19 prevention (vaccination and continued social distancing) and treatment, infection rates, and governmental responses in the cities and countries in which we operate.

As shown in the table below, we saw Occupancy Rates and RevPAR drop dramatically throughout 2020, with Occupancy Rates dropping by approximately 23% and RevPAR by approximately 35% year over year from 2019 to 2020. In 2021 and 2022, Occupancy Rates and RevPAR rebounded in part, increasing by approximately 18% and 11%, respectively for 2021 and 14% and 8%, respectively for 2022. We expect to see these metrics continue to increase toward pre-Covid results over time, unless new material shutdowns and travel restrictions are put into place.

Utilized relief clauses contained in many of our leases and further negotiated additional rent concessions and deferrals with real estate owners. These efforts provided us with meaningful rent savings compared to its initial 2020 budget;

focused efforts on increasing existing sources of demand and generating new sources of demand during the COVID-19 pandemic; and

Despite travel restrictions, guests continued to utilize our inventory. At the height of COVID-19 lockdowns, many consumers turned to us, including people social distancing from roommates and family members, those who were stranded away from home, and guests taking “staycations” or a change of scenery. We also hosted nurses and other healthcare professionals working in cities away from home or who simply needed to be nearer to their hospitals and health care facilities.

Notwithstanding the foregoing, the extent and duration of the impact of the COVID-19 pandemic over the longer term remain uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the introduction and spread of new variants of the virus, including, for example, the Delta and Omicron variant.

During the height of the pandemic, as a matter of company policy, we provided accommodations to frontline workers who were battling the pandemic, such as doctors, nurses, medical technicians, and other emergency personnel who needed to stay in close proximity to major hospitals to provide health care to those who were suffering from COVID-19. These units were often provided on a “loss basis.” In many cases we provided stays for less than 30 days, which was in violation of New York State and New York City’s sub-30 day rental rules and for which the city implemented no exception for emergency worker housing. Accordingly, the landlords of these buildings were typically fined and we were obligated to indemnify them for such fines.

Cities, such as New York City, have been diligent in the implementation and enforcement of short-stay rental regulations to ensure the safety of its communities and housing availability and affordability. Although our lease terms with landlords typically provide that ownership of, and responsibility for, the properties remains with the landlords, we generally are obligated to indemnify landlords for any violations that may be caused by our activities or those of our guests. This would include any commercial activity deemed in

In response to the ever evolving landscape relating to short-term rentals, we also regularly monitor applicable state and local laws and regulations and strive to operate our business in compliance with such laws and regulations. When required, we have demonstrated flexibility to modify our operations in particular jurisdictions as required, including divesting our company of certain units and acquiring replacement and additional units in hotels and buildings that comply with existing regulations. Although, we may potentially face legal actions, penalties, and information requests from time to time in jurisdictions in which we operate, such as New York City, we are proactively growing our business in compliance with law. As part of our operating strategy, we have conducted a thorough inspection of our New York City inventory to ensure all listings are for 30-day minimums, in compliance with New York City’s current laws. In connection with this strategy, we have, or are in the process of, surrendering back to landlords certain units, which we have determined cannot be operated in compliance with existing law in a profitable manner, and have replaced these units in our portfolio with hotel units and units in buildings licensed for short-stay rentals. We strive to ensure our online listings on third-party sales channels are in compliance with New York State’s and New York City’s laws. Our operations and legal compliance are supervised by our Chief Compliance Officer and other personnel, who work with local counsels as well directly with regulators and agencies in our cities. As a result of our strategy, going forward, we will not host any stay for less than 30 days in any of our residential-zoned units in New York City.

As part of our compliance review, we determined that certain state and local tax payments for short-term stays below prescribed tax regulation cutoffs had not been properly collected and applied, either directly by us or the platforms through which customers reservation and payments are made. We are working with state and local tax authorities to pay all applicable taxes, penalties, and interest. We have reserved amounts to cover such payments on our financial statements for the years ended December 31, 2020 and December 31, 2021 and the three months ended March 31, 2022. We estimate that total payment obligations for these amounts will approximate $296,000. To properly scale our business in a compliant manner, we have implemented a leading tax compliance, filing, and reporting platform into our operations. As a result of these efforts, all tax collection is automated across the entire scope of our operations and portfolios.

We endeavor to maintain a percentage of total revenue and expense in each city in which operate that matches our projected revenue potential of each city. The table below outlines our distribution of revenue and expense across our operating cities during the past three years:

The unaudited information presented for the three months ended March 31, 2022 and 2021 has been presented to reflect recent trends in the results of the Company.

The increase in net rental revenue of 158% for the year ended December 31, 2021 to $21,379,913 as compared to $8,273,859 for the year ended December 31, 2020 was a result of the increase in units available to rent from 330 at December 31, 2020 to 462 at December 31, 2021 as well as better occupancy and ADRs over this period.

For the year ended December 31, 2021, the principal component responsible for the increase in our cost of revenue was rental expenses for our units available to rent, which increased by $8,036,510 or 72%, from $11,232,643 in the year ended December 31, 2020, to $19,269,153 in the year ended December 31, 2021, as a result of the increase in size of our rental unit’s portfolio period over period. As a result of the increase in size of our rental units portfolio period over period, we had other expense, including contracted services fees, which increased by approximately $586,645, or 59%, during the year ended December 31, 2021, as compared to the year ended December 31, 2020, furniture rental fees, which increased by approximately $539,842, or 73%, during the year ended December 31, 2021, as compared to the year ended December 31, 2020, and cleaning fees, which increased by approximately $1,247,752, or 131%, as compared to the year ended December 31, 2020. Additionally, we had an processing fees period over period of approximately, $794,423, or 294%. Our processing fees increased due to higher processing volumes and increased rates charged by our processors. Cable and WIFI fees increased by approximately $293,747, or 144%, period over period.

The increase in our gross profit margins of $5,069,544 to $2,110,760 or approximately 171% for the year ended December 31, 2021 as compared to ($2,958,784) for the year ended December 31, 2020 is primarily attributable to a reduction in Covid-19 government related travel restrictions and shutdowns that reduced our occupancy rates during the three months ended December 31, 2020. We also benefited from non-recurring landlord concessions received as a result of the monumental disruptions caused by COVID in 2020 and 2021.

Total operating costs incurred for the year ended December 31, 2021 increased by approximately 157% to $2,844,637 as compared to $1,107,240 for the year ended December 31, 2020. Operating costs include contracted services, selling and administrative expenses, professional fees, and software fees. During the year ended December 31, 2021 and 2020, our largest operating cost was contracted services of $1,771,004 and $521,993, respectively. The increase in total operating costs from 2020 to 2021 is primarily attributable to the operation of additional units during the period. Selling and administrative expenses increased for the year ended December 31, 2021 to $551,241 as compared to $351,774 for the year ended December 31, 2020 due to additional overhead costs. Professional legal and accounting fees increased for the year ended December 31, 2021 to $164,632 as compared to $61,512 for the year ended December 31, 2020 as a result of increased lease review and business operations. Software fees increased for the year ended December 31, 2021 to $329,952 as compared to $171,961 for the year ended December 31, 2020 as a result of increased unit counts resulting in additional revenue management and sales distribution software needs.

Total other revenue (expense), for the year ended December 31, 2021 was $(1,499,507) as compared to ($549,701) for the year ended December 31, 2020. These expenses are due to interest and financing costs related to borrowings for working capital.

The following table provides information about our liquidity and capital resources as of March 31, 2022 and December 31, 2021:

As of March 31, 2022, our company had total current liabilities of $16,932,754 as compared to $9,519,725 at December 31, 2021. Total current liabilities at March 31, 2022 consisted of accounts payable and accrued expenses of $4,194,965 as compared to $4,209,366 at December 31, 2021, rents received in advance of $2,430,274 as compared to $1,819,943 at December 31, 2021, merchant cash advances of $1,756,183 as compared to $1,386,008 at December 31, 2021, loans payable of $2,205,462 as compared to $2,104,408 at December 31, 2021 and operating lease liability of $6,345,870 compared to a zero balance at December 31, 2021 as a result of the adoption of the ASC 842.

As of March 31, 2022, our company had a working capital deficit of $13,923,215 as compared to $8,240,299 at December 31, 2021. The decrease in working capital of $5,882,916 was primarily attributed to an increase in operating lease liability of $6,345,870 as a result of the adoption of ASC 842 partially offset by an increase in rents received in advance of $610,311 due to an increase in bookings as a result of the reduction in travel restrictions and an increase in merchant cash advances of $370,175.

We have obtained funding through the Small Business Administration (SBA) Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) totaling $815,183 and $800,000, respectively. These funds have been used in our ongoing operations. We intend to repay these loans in accordance with the terms of the respective loan agreements or seek forgiveness, as permitted.

We believe that our current capital resources, together with the net proceeds of this offering and cash flows from operations, will be sufficient to fund our operations and growth initiatives for at least 12 months following consummation of this offering. We believe that our current capital resources are sufficient to fund our operations through the consummation of this offering. Following the offering, if we do not generate cash flows sufficient to fund operations as planned, we may need to raise additional capital through the sale of equity or debt securities or through asset-related sales transactions. We cannot be certain that any such transactions will be available to us on commercially reasonable terms or at all as and when required.

As noted below, from time to time, affiliates of our company have made other loans to our company to fund working capital requirements as required and such parties have advised that they will continue to provide funding as necessary through the consummation of this offering.

Historically, we have operated as a private, closely held company, with our operating capital requirements funded by a combination of related party loans, cash flows from operations, and third-party high-interest merchant cash advances. For the year ended December 31, 2021, we incurred a net loss of ($2,233,384). However, for the three months ended March 31, 2022, we achieved a net income of $1,419,433. Components of the 2021 loss included what we believe are non-ordinary course expenses arising from cancelations due to the COVID-19 pandemic. Prior to the pandemic, for the year ended December 31, 2019, we had aggregate refunds and allowances of $917,084, or 14% of revenue. The following table summarizes the increases in refunds post the pandemic.

We also incurred expenses during the year ended December 31, 2021, including late fees we were required to pay on rents, balances due, bank fee and related interest, aggregating approximately $2,500,000. We also began to incur expenses relating to this offering during the year end ended December 31, 2021. We believe that as our business matures, and we increase our capital resources, including as a result of this offering, we will be able to smooth our operational cash flows and payment cycles and be able to materially reduce or eliminate this expense.

We do not have any institutional credit facilities in place. Since formation we have funded our operations and growth through capital contributions by founding equity holders and loans from affiliates of our company. In October 2021, we sold a $2 million principal amount promissory note (“October 2021 Note”) to THA Family II Limited Liability Company, an entity affiliated with Brian Ferdinand, our Chairman of the Board and Chief Executive Officer. In November 2021, we sold a $500,000 principal amount promissory note (“November 2021 Note”) to EBOL Holdings LLC, an entity controlled by a holder of more than 5% of our common stock. A portion of the October 2021 Note will be converted into shares of common stock as described in this prospectus, and 25% of the principal and interest thereon will be repaid, with a 20% prepayment premium, and the November 2021 Note will be repaid at the closing of this offering.

As of the date of this prospectus, our company had aggregate indebtedness of approximately $13,254,398. Our indebtedness includes related party debt for aggregate cash loans of $5,605,396, including under our October 2021 Note and November 2021 Note and our 2022 Insider Bridge. Our debt also includes short-term merchant cash advances totaling approximately $493,000 bearing interest at a blended rate of 50% with an outside due date of June 1, 2022, long-term Small Business Administration (“SBA”) debt totaling $800,000, bearing interest at an annual rate of 3.75% and maturing 2050, additional SBA debt totaling $815,183, bearing interest at an annual rate of 1% and maturing in May 2022, line of credit of $94,975, negotiated credit card processor indebtedness for payments over time of refunded payments resulting from forced covid-19 pandemic cancelations totaling $1,765,844 and $3,680,000 related to the May 2022 and June 2022 Bridge Financings.

The May/June 2022 Notes are prepayable by us at any time at our election, together with a 15% prepayment premium. As of the date of this prospectus, if we were to elect to prepay the entirety of the outstanding May/June 2022 Notes immediately following consummation of this offering, we would use approximately $4,232,000 of the net proceeds of this offering. The holders of the May/June 2022 Notes have the right to demand prepayment of 50% of the principal and interest then due thereon (up to an aggregate of $2,500,000 principal) by demand made on our company within seven business days following consummation of this offering. If such demand is made, we will be required to use approximately $2,116,000 of the net proceeds of this offering for such repayment.

Following consummation of this offering, we will have the right, exercisable at our option, to convert all of the May/June 2022 Notes into a series of newly issued preferred stock. If we make such an election, all of the May/June 2022 Notes will convert into a series of our preferred stock that will have an aggregate stated value equal to the aggregate principal (and interest then accrued thereon) of the May/June 2022 notes being so converted, and pay dividends at 5% per annum on such stated value (accruing and payable at maturity or redemption of the preferred stock) and will be senior in right of liquidation to all our common stock and other securities classified as junior securities. Any such preferred stock issued upon conversion of the May/June 2022 Notes shall, in turn, at the election of the holder, be convertible into that number of shares of our common stock determined by dividing (a) the aggregate stated value (and accrued and unpaid dividends thereon) of the preferred stock being converted by (b) a conversion price of $3.375 per share (75% of the per-share offering price in this offering, based on an offering price of $4.50, the midpoint of the range set forth on the cover of this prospectus).

The May/June 2022 Notes are convertible into shares of our common stock at the option of the holders thereof at any time at a conversion price of $3.375 per share (75% of the per-share offering price in this offering, based on an offering price of $4.50, the midpoint of the range set forth on the cover of this prospectus).

In May 2022, SuperLuxMia LLC, an entity controlled by our founder, chairman of the board and chief executive officer, Brian Ferdinand, provided $568,000 in financing to our company for general operating expenses relating to the launch of our Marriott Herald Square property. This loan is evidenced by an unsecured, 24-month note, bearing interest at 6% per annum, with interest payable at maturity. We may prepay this note at any time without prepayment penalty, subject to the terms of our other existing debt.

During the year ended December 31, 2021, we incurred a net loss of $2,233,384 that was increased by a net increase in operating assets and liabilities of $433,971 for a total of $2,667,355 in net cash used by operating activities. During the three months ended March 31, 2022, we achieved a net income of $1,419,433 that was increased by a net increase in rents received in advance of $610,331 and a net increase in operating lease liability of $1,038,907 and decreased by processor retained funds of $1,590,117, accounts payable and accrued liabilities of $14,401, deferred rent of $951,185 and other smaller items for a total of $237,713 in net cash provided by operating activities.

During the year ended December 31, 2021, net cash provided in financing activities of $3,785,341 included net proceeds from loans of $4,970,338, reduced by distributions, net of contributions, totaling

Our operations are not impacted by the effect of fluctuating exchange rates. We anticipate that we will be affected by exchange rates when we launch our international operations in 2022.

We do not currently have any off-balance sheet arrangements.

In the ordinary course of business, we include limited indemnification provisions under certain agreements with parties with which we have commercial relations of varying scope and terms.

Under these contracts, we may indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with breach of the agreements, or intellectual property infringement claims made by a third party, including claims by a third party with respect to our domain names, trademarks, logos and other branding elements to the extent that such marks are applicable to its performance under the subject agreement. It is not possible to determine the maximum potential loss under these indemnification provisions due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

To date, no significant costs have been incurred, either individually or collectively, in connection with any indemnification provisions.

In addition, we have entered into indemnification agreements with our directors, executive officers and certain other employees that require us among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, executive officers, or employees.

The following table summarizes our contractual obligations and commitments as of March 31, 2022 (in thousands):

In October 2021, we issued the October 2021 Note to THA Family II, an affiliate of our chief executive officer, in the principal amount of $2 million. As part of the note purchase we also issued the THA Contingent Warrants, the issuance and exercisability of which are contingent on an initial public offering. The THA Contingent Warrants will be exercisable at a per-share price equal to the per-share price in this offering. The October 2021 Note was amended in January 2022. The October 2021 Note has a maturity date of April 15, 2023, and bears interest at the rate of 6% per annum, with such interest payable monthly in arrears in cash. The obligations under the October 2021 Note are senior obligations of our company and are secured by a lien on all of our assets. At the closing of this offering, 25% of the principal and interest on the October 2021 Note (and a prepayment premium of 20% of such repaid principal) shall be paid, and 50% of the principal and interest thereon (and a prepayment premium of 20% of such principal) shall be converted into

In November 2021, we issued the November 2021 Note to EBOL Holdings LLC, an entity controlled by a holder of more than 5% of our common stock, in the principal amount of $500,000. As part of the note purchase we also issued the EBOL Contingent Warrants, the issuance and exercisability of which are contingent on an initial public offering. The EBOL Contingent Warrants will entitle the holder to purchase $500,000 of our common stock at an exercise price per share equal to the price per-share in this offering. The November 2021 Note was amended in January 2022. The November 2021 Note has a maturity date of May 15, 2023, and bears interest at the rate of 6% per annum, with such interest payable monthly in arrears in cash. The obligations under the November 2021 Note are senior obligations of our company. As amended, the November 2021 Note may be prepaid by us at any time. At the closing of this offering, the November 2021 Note shall be repaid in its entirety.

In November 2021, the Company entered into a letter of credit for $1,000,000 to provide a security deposit for a fifteen-year lease for 118 rooms in a hotel located in New York City.

In the 2022 Insider Bridge Financing, we issued 2022 Insider Bridge Notes to certain of our insiders having an aggregate principal amount of $1.38 million, together with 2022 Insider Bridge Warrants to purchase an aggregate of 284,444 shares of our common stock at a per-share exercise price equal to 105% of the per-share price in this offering. All of the 2022 Insider Bridge Notes will be converted at the closing of this offering into units at a price equal to 75% of the public offering price in this offering, resulting in the issuance of 379,259 shares, assuming a public offering price of $4.50, the midpoint of the range in this prospectus.

In May 2022, SuperLuxMia LLC, an entity controlled by our founder, chairman of the board and chief executive officer, Brian Ferdinand, provided $568,000 in financing to our company for general operating expenses relating to the launch of our Marriott Herald Square property. This loan is evidenced by an unsecured, 24-month note, bearing interest at 6% per annum, with interest payable at maturity. We may prepay this note at any time without prepayment penalty, subject to the terms of our other existing debt.

We utilize third-party payment processors to process guest transactions via credit card. 98% of our reservations are processed through credit card transactions in which we pay a processing fee between 3% to 6.5% of the transaction amount. As we have has grown and evolved, from time to time, we have had short-term difficulty in securing and maintaining the necessary processing relationships. As of the date of this prospectus, we maintain satisfactory relationships with all necessary third-party payment processors. As noted in our financial statements, we maintain significant cash under “Processor retained funds” on our balance sheet as of March 31, 2022. These reserved funds are cash reserves held back by our processors to offset chargebacks and refunds due to guests. These reserves are intended to provide protection for both our guests and credit card processor with respect to cancellations and refunds. As part of our growth strategy, the large majority of our accommodation units are rented on a nonrefundable basis, in order to minimize cancellation and refund exposures.

As a smaller reporting company, we are not required to provide disclosure regarding quantitative and qualitative market risk.

We are exposed to interest rate risk related primarily to our outstanding debt. Changes in interest rates affect the interest earned on our total cash as well as interest paid on our debt.

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this prospectus, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Our revenue is derived primarily from the rental of units to our guests. We recognize revenue when obligations under the terms of a contract are satisfied and control over the promised goods and services is

Prior to the pandemic, the vast majority of our reservations had been non-refundable based on strict non-refund policies that were part of our terms of use, and the terms of use of the third-channel listing sites utilized by us. During the pandemic, third-party sales channels, as well as credit card companies and processors, enacted force majeure circumstances outside the policies originally stated on the websites on which we sold inventory. As a user of these third party sites, we became bound by these changed policies, even for booking made under the original policies. This resulted in abnormal, and pandemic-related, refund rates. In response to these requirements, we adopted more flexible cancelation policies, resulting in refunds on booked stays that were originally booked under non-refundable terms.

Current and future reservations for most of our accommodation units require prepayment upfront. Approximately 70% of our reservations require full prepayment at the time the reservation is placed, with the remaining 30% charged at check-in. Payments are processed through third-party credit card processors and marketing and reservation channels. We typically offer both a refundable and nonrefundable rates on each accommodation unit, with approximately 50% of bookings, on average, choosing the nonrefundable rate. As we are required to only reserve 10% of prepayments under our third-party processor agreements, nonrefundable booking prepayments provide us with operating cash flow. Any advanced reservation, irrespective of when charged, is taken as revenue in the period in which the stay happens, if in a future period is reflected in deferred revenue, and if cancelled is not ultimately realized as revenue.

Refunds are treated as a reduction of our net revenue and are taken in the period of which the cancelation or refund occurred. We have multiple refund policies in place across different sales channels, which vary by price. Some require a deposit at the time of booking, which would be forfeited in part or whole in the event of cancelation through varying periods of time prior to check-in. Some of our policies require full prepayment at time of booking (but allow for a full refund if booking is cancelled within required parameters). Some of our bookings are on nonrefundable basis, in which cancellations results in forfeiture of entire amount. In connection with some of our bookings, the third party sales channel handles payments, cancelations, and the refunds to guests. As of the date of this prospectus, we have moved most of our larger units offerings to non-refundable cancelation policies.

With respect to bookings for our accommodation units made through third-party booking platforms, in the event a refund is required to be made to a customer, under the terms of our agreements with such third-party platforms, we are required to make the refund to the customer (to the extent we have received the proceeds through the platform). If we fail to make any required refund, the customer’s recourse is against the third-party booking platform, and in turn, we are required to reimburse the booking platform. Within this structure, the (a) customer is protected, and (b) the booking party bears the credit risk with respect to the customer.

We account for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method. We did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial.

Payment received for the future use of a rental unit is recognized as a liability and reported as rents received in advance on the balance sheets. Rents received in advance are recognized as revenue after the rental unit is occupied by the customer for the agreed upon length of time. The rents received in advance balance as of December 31, 2021 and 2020 and March 31, 2022, was $1,819,943, $858,538 and $2,430,274 respectively, and is expected to be recognized as revenue within a one-year period.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from those estimates.

As disclosed in Note 3, we have chosen to account for the loan under FASB ASC 470, Debt. Repayment amounts due within one year are recorded as current liabilities, and the remaining amounts due in more than one year, if any, as long-term liabilities. In accordance with ASC 835, Interest, no imputed interest is recorded as the below market interest rate applied to this loan is governmentally prescribed. If we are successful in receiving forgiveness for those portions of the loan used for qualifying expenses, those amounts will be recorded as a gain upon extinguishment as noted in ASC 405, Liabilities.

We are subject to income taxes in the United States and foreign jurisdictions in which we operate.

We account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carry-forwards.

A valuation allowance is recorded for deferred tax assets if it is more likely than not that the deferred tax assets will not be realized.

We are subject to the continuous examination of its income tax returns by tax authorities that may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes.

Stock-based compensation expense attributable to equity awards granted to employees will be measured at the grant date based on the fair value of the award. To data, has been no stock - based compensation.

The expense will be recognized on a straight-line basis over the requisite service period for awards that vest, which is generally the period from the grant date to the end of the vesting period.

We will estimate the fair value of stock option awards granted using the Black-Scholes-Merton option pricing model.

This model requires various significant judgmental assumptions in order to derive a fair value determination for each type of award, including the fair value of our common stock, the expected term, expected volatility, expected dividend yield, and risk-free interest rate.

All grants of stock options will have an exercise price equal to or greater than the fair value of our common stock on the date of grant. We will account for forfeitures as they occur.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with

Prior to this offering we have operated as a private, closely-held company that was funded by our principals with no third-party investment. As a private company we did not undertake annual audits of our financial statements in the ordinary course, and have not been subject to the rules and regulations that will apply to us following consummation of this offering, including those relating to internal controls and periodic reporting. In connection with our recent audits of our financial statements, we have identified material weaknesses in our internal control over financial reporting with respect to our periodic and annual financial close processes. As historically constituted, our human resources, processes and systems did not enable us to produce accurate financial statements on a timely basis. While we deem this type of material weakness typical in a closely-held, private company, in preparation of becoming a public company, we are implementing a remediation plan which includes the hiring of additional, qualified financial and accounting personnel, and engagement of specialized external resources, including the outsourcing of a portion of our accounting department functions to a qualified accounting firm. We also will form an audit committee of independent directors in connection with this offering. Our remediation plan also includes adopting other entity-level controls, properly segregating duties among appropriate personnel, education and training of applicable management and financial personnel, and improvements in the process and system used to monitor and track the effectiveness of underlying business process controls.

We believe that most travelers select their travel accommodations based on the following criteria:

convenience

We ensure that each unit is thoroughly cleaned after every stay and provide additional cleaning materials for guests to use during their stays. We also provide COVID-related safety items such as masks, gloves, hand sanitize, and handy-wipes.

We constantly strive to provide guests with exceptional service via our Heroic Service program. Under our program, we employ and train employees and concierges who live near or on-site, and consistently offer “Heroic Service” — which is our branded service that endeavors to provide quests with 24/7 service and hospitality that exceeds their expectations.

We ensure guests are afforded all the comfort and convenience of staying at home, including large spaces, amenities (e.g., pool, gym, business center), and easy access to the local community and local experiences. Additionally, we provide fully stocked kitchens and the ability to buy and store groceries, so guests do not feel as though they are “held captive” by having to dine at expensive in-hotel restaurants.

CorpHousing provides well-maintained and aesthetically pleasing furnishings, decorations, linens and towels in each unit.

By maintaining a very lean corporate structure with minimum overhead, we provide guests with exceptional value for the price compared to many hotels, motels and private units available through other online platforms.

Owners of hotels that experienced significant declines of business during COVID-19 or otherwise can benefit from leasing their entire hotels to us under long term-leases. Under the terms of our arrangements with hotels, we often obtain the entire room availability of the hotels, while the hotel owners remain responsible for unionized labor, food and beverage services, and other services and maintenance of the hotels. We believe that we provide a quick and convenient way for hotel owners to create cash flow streams and to benefit from our marketing platforms through which we can drive a customer base to these hotels that might not have otherwise considered or found their way to such hotels.

Individual and smaller property owners looking to rent units to travelers through typical online platforms face challenges. They must lease units at occupancy rates sufficient to generate a profitable return on their real estate investment while, at the same time, maintaining their property’s value through security, maintenance, and cleanliness.

Individual property owners generally cannot meet all of the travelers’ criteria outlined above. Individual property owners typically rent out their homes to travelers and then are not available or equipped to provide quality, 24/7 customer service. They do not have management and legal systems in place to stay apprised of changing government safety standards and protocols. They do not have the operating scale required to implement professional cleaning services on a cost effective basis.

Within the short-term stay industry, it is not uncommon for individuals to lease properties from owners and then turn around and sublet such units to others for short-term stays, whether authorized or not. This distances the property owner from the true customer and exposes the property owners to challenges associated with unsupervised “bad guests” who have not been screened and do not have concern or motivation for maintaining the unit in the best possible condition.

We believe that we provide a quick and convenient way for property owners to increase occupancy, lock in occupancy rates, and secure predictable returns on their investment by entering into one, three, five, ten, fifteen and twenty-year leases with such owners for portfolios of multiple units at a time. In most of our leases we are provided an early termination provision after 24 months if a particular property is not meeting our standards or projected return on investment. At the same time we endeavor to maintain the value of property owners’ investments by ensuring each unit we lease is consistently cleaned and inspected, needed repairs are quickly reported and made, and maintenance is supervised and properly addressed.

We maintain the value of property owners’ investments by ensuring each unit we lease is consistently cleaned and inspected, needed repairs are quickly reported and made, and maintenance is supervised and properly addressed.

We are able to minimize property owners’ safety and security risks by conducting thorough background and security checks on guests, including through the use of artificial intelligence (AI), to ensure “bad guests” are minimized.

CorpHousing trains and employs property managers, each of whom live near or at our properties. We refer to these managers in our Company culture “as Heroes” and provide them with the knowledge and resources to effectively oversee properties and minimize management challenges.

This offering and the proceeds therefrom will help fuel our growth strategy. Key elements of our growth strategy include:

Acquiring additional units that meet the entirety of traveler criteria in highly desirable locations in cities across the United States through data-driven acquisition analysis, including entire hotels and portfolios of multiple units located predominantly in commercially zoned areas;

Acquiring units and launching commercial operations in, target international cities, with emphasis on accommodation units located in commercially zoned properties that are not subject to short-stay minimums or regulations;

Shifting our marketing and sales focus from third-party channels to our own proprietary platforms;

Extending the guest-friendly cancellation policies adopted during the Covid pandemic into normal operations, which we believe send an important message to guests and will increase brand loyalty and increase popularity of our offerings;

Improving our technology platforms, including development of proprietary company-owned technologies, to further improve our ability to help guests find our quality accommodations at high-value price points, enhance data and guest safety, and provide highly-rated guest and landlord experiences; and

We believe we are well-positioned to accelerate our growth by exploiting key advantages that we believe we have over many competitors, including:

Unlike many start-ups, we have focused on generating positive cash flow since inception. From the launch of our commercial operations in 2017 until the 2020 nationwide travel halts and shutdowns due to the Covid pandemic, we generated positive cash flow annually. This cash flow positive approach enabled us to operate through the pandemic and return to current cash flow positive and we believe will allow us to adapt to both opportunities and challenges as they arise in the future.

We believe that most significant competitors in the travel rental industry waste capital on large and unnecessary physical corporate headquarters and attempt to minimize expenses at the tactical level by replacing the “personal touch” with technology, We believe in the opposite approach.

We operate with relatively small amounts of corporate overhead compared to many competitors in the industry. CorpHousing has no physical corporate headquarters. All strategic and operational leadership, planning, coordination, and management is done on a remote and virtual basis.

We maintain very few assets as our properties are leased rather than owned, and utilize what we believe is a highly effective and efficient virtual remote property management system. By not carrying burdensome corporate overhead expenses, we are able to reduce our costs of goods sold and increase profit margins. This affords us the flexibility to invest in acquiring more leased units and other real estate that will generate revenue as opposed to being a cost center. This approach also enables us to out-price competitors with a comparable or better product while attracting and investing in the best talent.

Our approach of doing more with less sets the example for, and promotes a corporate mindset which values, thoughtful and conservative use of funds in a manner intended to maximize stockholder value.

Most companies employ a traditional, centralized control, overly restrictive, management style. We believe this hinders continuous improvement and impedes truly exceptional guest service.

We train, and encourage, each team member, from CEO to our most junior employee, to think and act as a “Servant Leader.” The employee must be ready, willing, and able to address issues, problem solve, and facilitate success for others whenever and wherever necessary. To instill and enhance “Servant Leadership” throughout our company, our management personnel:

By delegating tactical leadership and decision-making authority to the most junior competent team members for day-to-day operations and guest interactions, as opposed to maintaining centralized control at, and direction from, a remote corporate headquarters which is detached from the situation on the ground, we not only expedite problem solving and enhance the guest experience, but also work more effectively and efficiently throughout a distributed organizational structure.

While our junior personnel are given a tremendous amount of authority, it does not relieve our senior leaders of the responsibility for results. CHG’s senior leaders and executive officers maintain situational awareness and stand ready to step in to address issues as required. However, it has been our continued experience that, with the proper training of each carefully selected team member, the necessity for senior leadership to step in is rare and becomes less frequent as junior personnel gain more and experience.

CorpHousing leverages the latest technology across the spectrum of the guest experience, including our proprietary:

big data analytics for property selection; and

advanced data science for revenue management and dynamic pricing.

We also utilize proprietary and third-party software applications for:

global sales distribution across dozens of direct to consumer and B2B sales pipelines;

background and security screening/verification;

internal and external communication security and retention; and

customer-centric technology to facilitate convenience and access to information.

Most of our units include:

WIFI services;

bathrooms with plush towels, soap, shampoo, and lotions; and

bedrooms with high-quality linens, blankets, and replacements in the closet.

Boston: 3 buildings

Denver: 2 buildings

We believe the lease terms for each of these properties conservatively work within our model of securing properties on terms that provide robust margins based on our anticipated occupancy rate and room rental rates. As part of our growth strategy, we will continue to seek additional leases for units to increase our portfolio. These acquisitions will likely include long-term lease rights to entire hotels, as we avail ourselves of opportunities created by downturns in the hotel and travel markets that resulted from the pandemic.

All of the foregoing letters of intent are nonbinding. We will be required to negotiate and execute definitive documentation for the described leases. The acquisition of long-term lease rights to entire hotels, such as those described above is an important part of our accommodation units acquisition strategy to avail ourselves of opportunities created by the current hotel and travel market. We believe the lease terms for each of these properties conservatively work within our model of securing properties on terms that provide robust margins based on our anticipated occupancy rate and room rental rates.

Because we operate with minimal corporate overhead and highly-efficient management systems, CorpHousing is able to provide a similar quality product for less than it costs our competitors or we are able provide a better quality product for the same price it would cost competitors to provide a lesser quality product. We believe we can provide guests with comparable accommodations at a price to consumer that is often 30% to 40% less than that offered by our competitors.

We closely monitor the economics of our units to ensure the price, referred to as Average Daily Rate (ADR), is highly competitive so as to drive high occupancy rates which together exceed our revenue to expenses break-even point. Below is a general example of monthly expenses relating to one of our units and break-even occupancy rates as associated with potential ADRs.

As additional consideration to investors in the May/June 2022 Bridge Financing, under the terms of the securities purchase agreements, we granted revenue participation rights to the investors, as a group. Under this arrangement, we entered into leases for our New Properties through our wholly owned special purpose entity, CorpHousing RSL LLC (“CRSL”) and granted a lien to such investors in all of our membership interests in CRSL as security for all revenue sharing payments. The investors are entitled to receive an aggregate share, typically 5% to 10% in the first five years of the relevant lease, and 1% thereafter, of the quarterly revenues generated by us through each of the New Properties through certain prescribed periods — typically, the initial term of the subject lease relating to such property (typically 15 years, plus any prescribed extension thereof). Our obligation to pay such revenue share commences with the quarter ending September 30, 2022, and shall continue for each calendar quarter thereafter during the term of the applicable lease. Such payment shall be made within 10 days of the filing of our quarterly report on Form 10Q or annual report on Form 10K, as applicable. In the event we terminate a lease for one or more of the New Properties prior to the end of the prescribed term for any reason, we are obligated to provide the investors continued revenue sharing rights in a substantially similar property within our portfolio. From time to time, we may determine to enter into similar revenue sharing arrangements or joint ventures with respect to our properties.

We presently use dozens of third-party booking channels, which have historically generated more than 90% of our sales. Part of our strategy will be to migrate away from these channels to our own booking platforms in order to reduce commission we pay to third parties and drive better margins. Our main third-party booking channels include, Marriott, Booking, Expedia, VRBO, Airbnb, and Direct Bookings.

Recently, after intensive evaluation and assessment of online ratings, reviews, and feedback, Marriott — Homes & Villas selected a few of the best performing vacation rental providers with which to partner. In April 2021, we entered into an agreement with Marriott — Homes & Villas pursuant to which we are permitted to list our units on their exclusive Bonvoy Rewards site. This site allows Marriott’s Bonvoy Reward members to book accommodations using reward points. CorpHousing recently placed 81 of our units on the Bonvoy Rewards site and are monitoring and evaluating the efficacy of this relationship.

We believe our Heroic Service is:

key to providing guests with an exceptional experience;

the foundation of ensuring our leased properties are maintained to the highest standards;

critical to our overall success;

important to the building of our brand; and

a significant differentiator between us and competitors.

Most importantly, our team members must demonstrate empathy. Special concern must be demonstrated when engaging guests and business partners. Team members are trained to search for ways to “delight” guests and business partners, to gain their trust, and enhance brand loyalty.

We have developed, purchased and tailored various technology for our operations. Our use of technology and continuing implementation of additional technologies is an important part of ensuring efficient operations, the provision of high quality guest experiences and reduction of operation costs. A key component of our growth strategy will be to leverage the latest technology across the spectrum of our guests’ experience — from the quality of the accommodations to the pricing thereof to the guests’ safety and enjoyment of the properties.

We use our proprietary big data analytics to identify neighborhoods and specific properties for acquisition. We use this data to identify in-demand locations that are underserved by supply and to identify the specific property characteristics desired by typical travelers to that location. We also use our data analytics for determining lease economics and other terms of our leases.

An important part of our growth strategy is to increases the percentage of our portfolio that comprised of units located in hotels and other commercially zoned buildings. As commercially zoned buildings are not typically subject to local short-stay length regulation (e.g. NYC prohibits stays of less than 30 days in many residential zones), we will be able to offer a larger number of our units for stays as short as one day, providing us with maximum booking. Accordingly, in our property selection during the past year, we have focused almost exclusively on securing long-term leases for units in hotels and other commercially zoned buildings.

We use our proprietary data science and algorithms to manage revenue and create dynamic pricing for our accommodation units. Using our technology we strive to maximize occupancy rates through attractive pricing and target marketing to potential guests.

We use our corporate website as a marketing tool to reinforce our reputation when partnering with and acquiring units from leading development firms, commercial real estate advisors, real estate investors, property managers and property owners.

We use our SoBeNY consumer-focused website as a marketing and direct sales tool for our accommodations. It provides information about the units and affords guests an opportunity to book stays directly from the web site.

CorpHousing uses a third-party, end-to-end property management platform. By streamlining the workflow and simplifying daily operational needs of the business, this platform allows us to:

Manage incoming requests in one booking pipeline

Sync with dynamic pricing to maximize revenue

Avoid double bookings with a central calendar

Manage payments including pre-auth and security deposit

Direct bookings site

Communicate with guests through email and SMS

We will use a portion of the proceeds of this offering to:

further integrate all of the technology used in our operations on an Internet of Things (IoT) basis to more efficiently manage our properties, team member and guest experiences and to minimize expenses, including through energy management and water consumption.

Many of our competitors have a longer operating history, and well-funded and have portfolios of units that are significantly larger than ours. According to Grand View Research, a market research and consulting company, many leading hotel chains are diversifying their service offerings towards the growing vacation rental market. An example is Marriott International’s Homes & Villas platform, which offers more than 2,000 premium and luxury homes located in over 100 destinations throughout the United States, Europe, Caribbean, and Latin America. Travel accommodations are offered through numerous well-established online travel platforms, such as Airbnb, Expedia, Hotelplan, MakeMyTrip, Oravel Stays, TripAdvisor and Wyndham Destinations.

In additional to well-known, large hotel chains, there are a. growing number of short-stay accommodation specialist companies similar to ours, such as AvantStay, Sextant Stays, Kasa and Sonder. Some of these have had several rounds of financing and have built larger portfolios of units than ours.

We have filed for eight trademarks, including “CorpHousing Group,” “CorpHousing,” “LuxUrban,” and “SoBeNY.” We intend to use these and other trademarks in building our brand, proprietary corporate philosophies in creating our operations and guests experiences, and certain proprietary technology, applications and data bases and know how in our operations. As a result, our success depends in part on our ability to operate without infringing upon the proprietary rights of others, and to prevent others from infringing upon our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. trademark and copyright applications, nondisclosure and assignment of invention agreements with employees, and enforcing our rights as applicable. We also rely on trade secrets, know-how, and continuing technological innovation and may rely on licensing opportunities to develop and maintain our proprietary position. We believe there is a nonoperating company using the name “CorpHousing” which was formed after the date of our formation and which has not conducted any material commercial business. We are in the process of making a cease and desist demand on the entity to the extent same is still in legal existence.

We must ensure regulatory compliance in our operations across numerous jurisdictions.