14 - STOCK OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS

Options

During the three months ended March 31, 2024, the Company did not grant any options to purchase shares of common stock under the Company’s 2022 performance equity plan.

The following table summarizes stock option activity for the three months ended March 31, 2024:

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $152,339 for the three months ended March 31, 2024. The Company recognized stock option expense of $167,573 for the three months ended March 31, 2023. Unamortized option expense as of March 31, 2024, for all options outstanding amounted to $1,137,358. These costs are expected to be recognized over a weighted average period of .92 years.

A summary of the status of the Company’s nonvested options as of March 31, 2024, is presented below:

Restricted Stock Units

In March 2024, the Company granted 100,000 restricted shares to certain employees under the Company’s 2022 performance equity plan. The restricted shares were vested either immediately or over 3.00 years. The aggregated grant date fair value of all these restricted shares was $220,000.

As of March 31, 2024, there was $166,500 of unrecognized compensation cost related to unvested restricted shares.

Warrants

In connection with certain private placements funded by certain of the Company’s officers and directors prior to the Company’s initial public offering, the Company issued promissory notes and warrants. The warrants were contingent upon, and became effective upon, consummation of the Company’s initial public offering on August 11, 2022. In total, warrants to purchase up to 695,000 shares of the Company’s common stock were issued to certain of the Company’s officers and directors with a weighted average exercise price of $4.20. These warrants are exercisable for five 5 years from date of effectiveness and expire in August 2027.

Also, in conjunction with the initial public offering, the Company issued warrants to purchase up to 135,000 shares of the Company’s common stock to the underwriter of the initial public offering, Maxim Group LLC (“Maxim”), with an exercise price of $4.40. These warrants are exercisable for five 5 years and expire in August 2027.

Also, in connection with certain private placements with Greenle, the Company issued warrants to purchase up to 920,000 shares of the Company’s common stock with an exercise price of $4.00. These warrants are exercisable for five years and expire in August of 2027. In connection with such private placements, the Company also issued warrants to purchase up to 32,000 shares of the Company’s common stock to Maxim (which served as agent for such private placement) at an exercise price of $4.40. These warrants are exercisable for five 5 years and expire in August of 2027.

On September 16, 2022, September 30, 2022, and October 30, 2022 in conjunction with a financing with the same third-party investor, the Company issued warrants to purchase up to 517,500 shares, 352,188 shares, and 366,562 shares of the Company’s common stock, respectively, all of which warrants had an exercise price of $4.00 per share. These warrants were subsequently cancelled and reissued at $2.00 per share in August of 2023.

On February 15, 2023, in conjunction with an advisory agreement, the Company issued warrants to purchase up to 250,000 shares of our common stock with an exercise price of $4.00 per share. These warrants have a term of five years and expire in February 2028. As a result of these transaction, the Company recorded $167,573 in warrant expense.

On April 16, 2023 in conjunction with an agreement with certain lenders, the Company issued warrants to purchase up to 1,000,000 shares of the Company’s common stock with an exercise price of $3.00 per share, and warrants to purchase up to 250,000 shares of our common stock with an exercise price of $4.00 per share. All of these warrants have a term of 5 years and expire in April of 2028. Under this agreement, these lenders would be required to exercise all or a portion of these warrants if the Company’s common stock traded at prices between $3.00 per share and $4.00 per share for a prescribed number of trading days. On June 19, 2023, this agreement was modified to convert all of related outstanding debt in exchange for a reduction in the exercise price of all of these warrants to $2.50 per share. In conjunction with these transactions, the Company recorded non-cash financing expenses of $259,074.

On November 6, 2023, in conjunction with an agreement with certain shareholders to amend agreements to waive registration rights for any currently issued common stock for a period of 12 months and any future issuances for a rolling 12-month period from the date such of issuance of such common stock. As consideration for this waiver, the Company issued 2,000,000 warrants of common stock at an exercise price of $4.00 a share. As a result of these transactions, the Company recorded $4,939,000 in warrant expense.

On December 17, 2023, the Company and certain existing warrant holders entered into an agreement pursuant to which these warrant holders exercised a portion of their existing warrants to purchase an aggregate of 1,000,000 shares of the Company’s common stock. for gross proceeds of $4,000,000. As consideration for this agreement, the Company issued new warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $5.00 per share. As a result of these transactions, the Company recorded $4,187,800 in warrant expense.

On December 27, 2023, the Company and certain existing warrant holders entered into an agreement pursuant to which these warrant holders exercised a portion of their existing warrants to purchase an aggregate of 500,000 shares of the Company’s common stock for gross proceeds of $2,000,000. As consideration for this agreement, the Company issued new warrant to purchase up to 1,000,000 shares of Common Stock at an exercise price of $5.50. As a result of these transactions, the Company recorded $3,081,400 in warrant expense.

On February 16, 2024, LuxUrban Hotels Inc. (“Company”) entered into a letter agreement with Greenle Partners LLC Series Alpha P.S., a Delaware limited liability company (“Greenle Alpha”), and Greenle Partners LLC Series Beta P.S., a Delaware limited liability company (“Greenle Beta” and together with Greenle Alpha, “Greenle”) holders of certain warrants to purchase the Company’s common stock (“Warrants”), which were issued in private placements from time to time as previously reported by the Company. Under the terms of the letter agreement, in consideration of the agreement of Greenle to exercise 50% of the Warrants originally issued by the Company on November 6, 2023 (the “November Warrants”) within three (3) business days of the date of the letter agreement and 50% of the November Warrants on or prior to February 23, 2024, the exercise price of the November Warrants has been reduced from $4.00 to $2.00 and the exercise price of all of the other Warrants held by Greenle has been reduced from $5.00 and $5.50, as applicable, to $2.50. Except as described above, the Warrants remain unchanged.

The following table summarizes warrant activity for the three months ended March 31, 2024:

During the three months ended March 31, 2024, 1,450,000 shares were issued from the exercise of warrants.