CORPHOUSING GROUP INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with the section entitled "Selected
Consolidated Financial Data" and our consolidated financial statements and the
related notes included elsewhere in this quarterly report on SEC Form 10-Q
("Quarterly Report"). This discussion contains forward-looking statements that
involve risks and uncertainties about our business and operations. Our actual
results and the timing of selected events may differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those we describe under "Risk Factors" and elsewhere in this Quarterly
Report. See "Note on Forward-Looking Statements." Additionally, our historical
results are not necessarily indicative of the results that may be expected
for
any period in the future.

Overview

We utilize a long-term lease, asset-light business model to acquire and manage a
growing portfolio of short-term rental properties in major metropolitan cities.
Our future growth focuses primarily on seeking to create "win-win" opportunities
for owners of dislocated hotels, including those impacted by COVID-19 travel
restrictions, while providing us with favorable operating margins. We operate
these properties in a cost-effective manner by leveraging technology to
identify, acquire, manage, and market them in our operating cities to business
and vacation travelers through dozens of third-party sales and distribution
channels, and our own online portal. Guests at our properties are provided
Heroic Service™ under our consumer brands, including SoBeNY and LuxUrban. Our
Heroic Service™ provides guests a hassle-free experience which exceeds their
expectations with "Heroes" who respond to any issue in a timely, thoughtful, and
thorough manner.

An important part of our growth strategy is to increase the percentage of our
portfolio that is 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. New York City prohibits stays of less
than 30 days in many residential areas), we will be able to offer a larger
number of our units for stays as short as one day, providing us with maximum
booking flexibility. Our portfolio growth strategy also includes divesting older
leases for properties located in residential areas, in order to further diminish
the portion of our operations that could be subject to short-stay length
regulation. To this end, in late 2021, we began to wind down portions of our
portfolio comprising apartments and residential area units through negotiated
surrender and release agreements, while still growing our total portfolio of
accommodation units.

Given the complexity of short-stay regulations in the cities in which we
operate, we seek to complete the wind-down of our non-performing, residential
area-located apartment inventory by the end of the third quarter of 2022. As a
result of this, we have ceased operations in certain cities in which we operated
during 2021 and in which we maintained principally residentially zoned
accommodation units, including Ft. Lauderdale and Miami. We plan to operate and
maintain our accommodation units portfolio at a ratio of between 85% to 95% of
commercially zoned hotel room inventory and 5% to 15% residential area-located
apartment inventory. As of the date of this Quarterly Report, our accommodation
units portfolio is comprised of over 90% hotel units located in commercially
zoned areas and not subject to short-stay length regulations or contractual
provisions and the balance apartment units subject to such regulations. We
estimate that more than 90% of our revenues are now generated by
accommodation units located in properties that are not subject to any short-stay
length regulation or contractual or lease provisions. As our portfolio growth
strategy involves (a) adding, almost exclusively, commercially zoned properties
that are not subject to short-stay length regulations and (b) divesting older
leases for residential area properties, we expect the vast majority of our
revenues to be generated through properties allowing for guest stays of any
length desired.

As of June 30, 2022, we operated 590 accommodation units across seven cities in
the United States. We also plan to launch international operations prior to the
end of 2022 and are currently evaluating London and Paris for launch of our
first commercial international operations.

We identify and acquire lease rights to hotels and multi-family apartments and
hotels with multiple rooms (which we refer to as "units"), directly from real
estate developers and property owners through multi-year leases in high-density,
urban core, major metropolitan cities located in close proximity to convention
centers, universities, hospitals, cultural venues, and annual events.

An integral part of our operations is to secure longer-term leases with economic
terms that allow us to make a profit on each accommodations unit individually
and on our portfolio of units in the aggregate at projected rental and occupancy
rates. In this regard we use proprietary data analytics to select and
dynamically price our accommodations offerings. We continually focus on profit
margins, by both increasing revenue and minimizing costs, in order to maintain
flexibility to invest in acquiring more accommodations units as they become
available on attractive terms. This flexibility also enables us, we believe, to
out price our competitors while providing comparable or better accommodations
and experiences to our guests.

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As of the date of this quarterly report, we operate in seven cities:

 ? Boston;


 ? Denver;


 ? Los Angeles;


 ? Miami Beach;


 ? New York;


 ? Seattle;


 ? Washington, D.C.

We use our own and third-party technology across the full spectrum of our operations and customer experience, including

? Our proprietary data analytics for property selection;

? Our proprietary data systems for revenue management and dynamic pricing;

? global sales distribution through dozens of direct-to-consumer and B2B sales

third-party sales pipelines;

? third-party AI guest background and security screening and verification; and

proprietary and third-party technologies integrated to manage our operations

? remotely, including internal employee communications, asset monitoring and

   analysis.


Key Drivers

Supply Growth
A key driver of our expected revenue growth will be our ability to continue
signing leases for hotel properties on compelling commercial terms. In late 2020
and early 2021, we sought to take advantage of the supply glut of short-stay
accommodations presented by the Covid-19 pandemic to rapidly grow our portfolio.
As 2021 progressed and the country began to emerge from the pandemic, we sought
to bring newly acquired units "online" to scale our business in an environment
of rising occupancy rates and ADR, which ensured added units would be accretive
to growth from the start. As part of our growth strategy, we will continue to
seek additional leases for units to increase our portfolio.

Attraction of guests

Another key driver of our expected revenue growth is our ability to continue
attracting new guests through various channels. We source demand from a variety
of channels, including Online Travel Agencies ("OTAs"), such as Booking.com,
Expedia, and Airbnb, as well as directly through Sobenewyork.com and
our SoBeNY and LuxUrban apps. Bookings made through OTAs incur channel fees,
requiring us to pay a certain percentage of the revenue booked on the OTA in
order to compensate the OTA for its listing services. In general, direct
bookings are more financially advantageous to us as they do not incur channel
fees.

Service

Our “Hero Division” is our core service component, which is operated in a service-oriented and customer-centric manner, with each team member trained and expected to adhere to delivering high-quality customer experiences.

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Operational Efficiency

We maximize operational efficiency by maintaining only a nominal physical
headquarters and leveraging technology to oversee and communicate with our
property-based team members (Heroes). Each is supported by the entire
organization and given authority to act as a host/concierge to provide
exceptional experiences for our guests. Each of Our Heroes act as resident
manager to protect and maintain value for our property owners, and as a business
development representative to identify ways to increase profit margins for our
company. While our units which are distributed across the United States, within
each city, they are clustered in close proximity to one another to enhance and
expedite effective execution of ground operations.

Pricing

To compete with other providers and attract guests, we must provide our
accommodations at pricing points that are perceived by our guests as providing
value. This is a function of the quality of the accommodations, the location,
the then-current demand for such accommodations, and the pricing of
accommodations available from our competitors. Because we strive to incur
minimal corporate overhead by operating with only nominal physical corporate
headquarters and on an asset-light basis (with our only material assets being
our leases and intellectual properties) we believe we are able to provide a
similar quality product for less than our competitors or provide a better
quality product for the same price, while remaining profitable. We closely
monitor the economics of our units to ensure the price, referred to as Average
Daily Rate (ADR), is highly competitive in order to drive high occupancy rates.

Marketing

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.

Technology

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.

Management Opinion on the Business Impact of COVID-19

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 the full years 2021 and

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0% and 13%, respectively for the six months ended June 30, 2022. We expect these metrics to continue to increase toward pre-Covid results over time, unless new physical closures and travel restrictions are put in place.

Year                                     OCC    REVPAR
2018                                      86 %     160
2019                                      84 %     157
2020                                      61 %     103
2021                                      72 %     122

2022 (Six months ended June 30, 2022) 72% 138

The COVID-19 pandemic transformed how society works, connects, and travels,
while at the same time creating incredible challenges, particularly for the
hospitality industry. In early March 2020, we began to experience the early
effects of the COVID-19 pandemic. As the world locked down, we acted to reduce
costs and bolster revenues to mitigate the impacts of the COVID-19 pandemic. As
part of our COVID-19 response strategy, we:

We used the relief clauses contained in many of our leases and negotiated them further

? additional rent concessions and deferrals with property owners. These

efforts have allowed us to achieve significant rent savings compared to its first 2020

budget;

? focused its efforts on increasing existing sources of demand and generating new ones

sources of demand during the COVID-19 pandemic; and

? kept our doors open to serve guests ensuring their stay was clean and safe;

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.

Regulations governing short-term rentals

We launched our New York City operations in late 2019. Cities, such as New York,
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. Typically these regulations prohibit rentals having durations of
less than 30 days. As the COVID-19 global pandemic, and related travel
restrictions and shutdowns, emerged, New York City implemented unprecedented
eviction moratoriums. As a result of our operations and the pandemic, we
historically experienced violations of short-term rental regulations in some of
our units located in residentially zoned areas, including those caused by
subtenants who illegally occupy some of our units beyond their rental term
(i.e., "squatters"), and, in some cases, illegally "sublet" our units to others.
In these circumstances, we took legal measures to reclaim our units, including
filing lawsuits seeking orders of removal, and notifying the applicable
authorities. Given existing state and local government policy, as well as
pandemic-affected resource limitations within the courts, we received limited
relief. As part of our going-forward strategy, we have divested ourselves of all
leases of residentially zoned properties in New York City and only operate
properties that are not subject to these short-stay regulations. In conjunction
with this divestiture, we have worked with New York City's DOB and OSE to settle
any past short-term stay violations, with any settlement expected by management
to be nonmaterial.

As our business has grown, we have implemented additional measures to avoid or
minimize the incurrence of such violations in all of our operating cities. These
measures include our strategy to build our growing portfolio of
accommodation units with the acquisition of long-term leases for hotels and
other buildings that are commercially zoned and not subject to the regulations
applicable to residentially zoned areas. We also continuously refine our booking
platforms and related software and data to properly identity each type of unit
being marketed on our platforms and to systematically prohibit rental lengths
that do not comply with existing regulations in the municipalities in which
such units are located.

Given the complexity of short-stay regulations in the cities in which we
operate, we seek to complete the wind-down of our non-performing, residential
area-located apartment inventory by the end of the third quarter of 2022. We
plan to operate and maintain our accommodation units portfolio at a ratio of
between 85% to 95% of commercially zoned hotel room inventory and 5% to 15%%
residential area-located apartment inventory. As of the date of this Quarterly
Report, our accommodation units portfolio is comprised of over 90% hotel units
that are not subject to short-stay length regulations or contractual provisions
and the balance apartment units

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that are subject to such restrictions. Our portfolio growth strategy involves
(a) adding, almost exclusively, commercially zoned properties that are not
subject to short-stay length regulations and (b) divesting older leases for
residential area properties. As a result, the need to comply with local or
contractual short-stay length regulations or requirements, and the costs related
thereto, have become increasingly immaterial to our operations.

Local tax compliance and monitoring

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
six months ended June 30, 2022. We estimate that total payment obligations for
these amounts will approximate $866,409. 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.

Revenue and expenditure by city

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:

                      Annual % of Revenue By City
                    2021         2020         2019
Boston                  18 %          6 %          -
DC                       3 %         15 %         13 %
Denver                   7 %          1 %          7 %
Fort Lauderdale          2 %          -            -
Los Angeles             11 %          6 %          -
Miami                    6 %         16 %         10 %
Miami Beach             24 %         21 %         23 %
New York                23 %         30 %         18 %
Seattle                  6 %          5 %         16 %
Nashville                -            -           13 %
Total                  100 %        100 %        100 %


                     Annual % of Expenses By City
                    2021         2020         2019
Boston                  10 %          8 %          -
DC                       6 %         15 %         14 %
Denver                   3 %          3 %         10 %
Fort Lauderdale          2 %          -            -
LA                      17 %         10 %          -
Miami                    7 %         15 %         14 %
Miami Beach             29 %         13 %         25 %
New York                21 %         34 %         15 %
Seattle                  4 %          3 %         14 %
Nashville                -            -            8 %
Total                  100 %        100 %        100 %

Non-GAAP Financial Measures

To supplement the summary consolidated financial statements, which are prepared in accordance with GAAP, we use EBITDA as a non-GAAP financial measure.

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The following table provides a reconciliation of net income and EBITDA:

                                  Three Months Ended June 30, (unaudited)   

Semester completed June 30th(unaudited)

                                      2022                     2021                   2022                     2021
Net Income (loss)              $          762,409      $         

(1,133,132) $2,181,842 $(2,440,038)
Provision for income taxes $750,000

                   -    $         750,000      $                  -
Interest and Financing cost    $          595,742      $             542,764    $       1,159,879      $            660,007
Depreciation Expense           $                -      $                  
-    $           2,556      $                  -
EBITDA                         $        2,108,151      $           (590,368)    $       4,094,277      $        (1,780,031)


EBITDA is defined as net income or loss before the impact of interest, taxes and
depreciation and amortization. EBITDA is a key measure of our financial
performance and measures our efficiency and operating cash flow before financing
costs, taxes and working capital needs. We utilize EBITDA because it provides us
with an operating metric closely tied to the operations of the business.

Operating results

Unaudited information presented for the quarters and half-years ended
June 30, 2022 and 2021 have been presented to reflect recent trends in the Company’s results.

                                      Three Months Ended June 30, 

(unaudited) Semester ended June 30th(unaudited)

                                        2022               2021         % change         2022             2021         % change
Gross Rental Revenue               $    12,656,540     $   6,728,686          88 %  $   24,419,439    $  11,688,873         109 %
Refunds                            $     2,455,202     $   2,545,820         (4) %  $    5,118,676    $   4,199,978          22 %
Net Rental Revenue                 $    10,201,338     $   4,182,866         144 %  $   19,300,763    $   7,488,895         158 %
Cost of Revenue                    $     7,344,720     $   4,035,238          82 %  $   13,930,882    $   7,920,531          76 %
Gross Profit (Loss)                $     2,856,618     $     147,628      

1,835% $5,369,881 $(431,636) (1,344)% Total operating costs

              $       885,621     $     738,430        

20% $1,865,227 $1,348,862 38% Operating Income / (Loss) $1,970,997 $(590,802) (434)% $3,504,654 $(1,780,498) (297) % Total Other (Expenses)

              $     (458,588)     $   (542,330)        

(15)% $(572,812) ($659,540) (13) % of income (loss) before provision for taxes

                          $     1,512,409     $ (1,133,132)       

(233)% $2,931,842 $(2,440,038) (220)% Provision for income taxes $750,000 $

           -           -    $      750,000    $           -           -
Net Income (Loss)                  $       762,409     $ (1,133,132)       (167) %  $    2,181,842    $ (2,440,038)       (189) %

Three months completed June 30, 2022 compared to the three months ended June 30, 2021

Net rental income

The increase in net rental revenue of 144% for the three months ended June 30,
2022 to $10,201,338 as compared to $4,182,866 for the three months ended June
30, 2021 was a result of the increase in average units available to rent from
376 at June 30, 2021 to 565 at June 30, 2022 as well as better occupancy rates
and ADRs over this period.

Cost of Revenue

For the three months ended June 30, 2022, the principal component responsible
for the increase in our cost of revenue was rental expenses for our units
available to rent, which increased by $3,309,482, or 82%, from $4,035,238 in the
three months ended June 30, 2021, to $7,344,720 in the three months ended June
30, 2022, as a result of the increase in size of our rental unit's portfolio
period over period as well as related increases in furniture rentals, cleaning
costs, cable / WIFI costs and credit card processing fees.

Gross profit (loss)

The increase in our gross profit margins of $2,708,990 to $2,856,618, or
approximately 1835% for the three months ended June 30, 2022, as compared to
$147,628 for the three months ended June 30, 2021 is primarily attributable to a
reduction in the impact of Covid-19 as well as greater unit counts and better
occupancy rates and ADRs over this period..

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Total Operating Costs

Total operating costs incurred for the three months ended June 30, 2022
increased by approximately 20% to $885,621 as compared to $738,430 for the three
months ended June 30, 2021. Operating costs include contracted services, selling
and administrative expenses, professional fees, and software fees all of which
increased over these periods primarily attributable to the operation of
additional units.

Total other expenses

Total other expense, for the three months ended June 30, 2022 was $458,588 as
compared to $542,330 for the three months ended June 30, 2021. These expenses
are primarily due to interest and financing costs related to borrowing for
working capital.

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

Net rental income

The increase in net rental revenue of 158% for the six months ended June 30,
2022 to $19,300,763 as compared to $7,488,895 for the six months ended June 30,
2021 was a result of the increase in units available to rent from 423 at June
30, 2021 2020 to 584 at June 30, 2022 as well as better occupancy and ADRs
over
this period.

Cost of Revenue
For the six months ended June 30, 2022, the principal component responsible for
the increase in our cost of revenue was rental expenses for our units available
to rent, which increased by $6,010,351 or 76%, from $7,920,531 in the six months
ended June 30, 2021, to $13,930,882 in the six months ended June 30, 2022, as a
result of the increase in size of our rental unit's portfolio period over period
as well as related increases in furniture rentals, cleaning costs, utilities,
cable / WIFI costs and credit card processing fees.

Gross profit (loss)

The increase in our gross profit margins of $5,801,517 at $5,369,881 i.e. approximately 1,344% for the half-year ended June 30, 2022 compared to a negative gross margin of ($431,636) for the six months ended June 30, 2021 was primarily due to a reduction in travel restrictions and government-related Covid-19 closures which reduced our occupancy rates during the period.

Total operating costs

Total operating costs incurred for the six months ended June 30, 2022 increased
by approximately 38 % to $1,865,527 as compared to $1,348,862 for the six months
ended June 30, 2021. Operating costs include contracted services, selling and
administrative expenses, professional fees, and software fees all of which
increased over these periods primarily attributable to the operation of
additional units.

Total other expenses

Total other expense, for the six months ended June 30, 2022 was $572,812 as
compared to $659,540 for the six months ended June 30, 2021. These expenses are
primarily due to interest and financing costs related to borrowings for working
capital.

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Cash and capital resources

The following table provides information about our liquidity and capital resources at June 30, 2022 and December 31, 2021:

                             As of June 30,      As of December 31,
                                  2022                  2021
Cash                         $           566    $              6,998
Other Current Assets         $     6,640,637    $          1,272,428
Total Current Assets         $     6,641,193    $          1,279,426
Total Current Liabilities    $    25,143,248    $          9,519,725
Working Capital (Deficit)    $  (18,502,055)    $        (8,240,299)


As of June 30, 2022, our cash balance was $566 as compared to $6,998 at December
31, 2021, and total current assets were $6,641,193 as compared to $1,279,426 at
December 31, 2021.

As of June 30, 2022, our company had total current liabilities of $25,143,248 as
compared to $9,519,725 at December 31, 2021. Total current liabilities at June
30, 2022 consisted of accounts payable and accrued expenses of $5,301,053 as
compared to $4,209,366 at December 31, 2021, rents received in advance of
$4,071,095 as compared to $1,819,943 at December 31, 2021, merchant cash
advances of $575,489 as compared to $1,386,008 at December 31, 2021, loans
payable of $7,263,230 as compared to $2,104,408 at December 31, 2021 and
operating lease liability of $7,182,381 compared to a zero balance at
December 31, 2021 as a result of the adoption of the ASC 842.

As of June 30, 2022, our company had a working capital deficit of $18,502,055 as
compared to $8,240,299 at December 31, 2021. The decrease in working capital of
$10,261,756 was primarily attributed to an increase in operating lease liability
of $7,182,381 as a result of the adoption of ASC 842 partially as well as an
increase in rents received in advance of $2,251,152 due to an increase in
bookings as a result of the reduction in travel restrictions and an decrease in
merchant cash advances of $810,519.

On August 11, 2022we priced an IPO bearing $13.5 million
before costs ($11.4 million after costs).

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
our initial public offering ("IPO") and cash flows from operations, will be
sufficient to fund our operations and growth initiatives for at least 12 months
following consummation of our IPO. We believe that our current capital resources
are sufficient to fund our operations through the consummation of our IPO.
Following the IPO, 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 our IPO.

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 six months ended June 30, 2022, we achieved a net
income of $2,181,842. 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.

                 As of 6/30/22    2021    2020
Total Refunds             21.0 %  33.7 %  38.9 %


We believe that the pandemic, the necessary closure and the growth of traveler caution are causing a significant reduction in the number of travelers, especially in the cities, where we operate our accommodation units. During the post-pandemic periods in which Covid infection and hospitalization rates have declined, we have experienced measurable improvement in our occupancy rates and reductions in

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our cancellation rates. Accordingly, we expect our reimbursement and compensation rates to normalize over time to at or slightly above 2019 levels as the pandemic subsides and provided further physical closures and travel restrictions do not occur. are not implemented.

We record cash collected prior to stays as "rents received in advance" on our
balance sheet as a liability. These collections are either recognized as revenue
when guests stay at our properties or refunded in accordance to our cancelation
policies. In addition, a portion of our "processor retained funds" on our
balance sheet is related to refunds as processors, under certain situations, get
involved in customer refunds. As processors retain funds related to customer
refunds, this can delay the actual refund as the processor wants to ensure we
have not refunded the customer (avoiding double refunds). The recent increase in
both of these accounts in partially related to the exit of some apartment units.
In addition, we incurred a greater amount of relocation expenses related to this
exit, which we expect to continue into the third quarter of 2022.

Credit facilities

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, loans from affiliates of our company, third-party investor
financings, and our initial Public offering consummated in August 2022.

2022 Insider Bridge Funding

In a private placement consummated on April 8, 2022 ("Insider Bridge Financing")
we issued promissory notes ("2022 Insider Bridge Notes") to certain of our
officers and directors having an aggregate principal amount of $1.33 million,
together with warrants to purchase an aggregate of 320,000 shares of our common
stock at a per-share exercise price of $4.20. All of the 2022 Insider Bridge
Notes were converted at the closing of our IPO into 426,667 shares of our common
stock.

Bridge financing investors 2022

In May, June and September 2022, we entered into security purchase agreements
with certain private investors under which we sold, in a series of private
placements through the date of this prospectus (collectively, the "2022 Investor
Bridge Financing"), an aggregate $5,750,000 principal amount of 15% original
issue discount notes ("2022 Investor Bridge Notes") and five-year warrants
("2022 Investor Bridge Warrants") to purchase an aggregate of 1,437,500 shares
of our common stock at a per-share exercise price of $4.00. The 2022 Investor
Bridge Notes bear interest at 5% per annum, with all accrued interest payable at
maturity. The 2022 Investor Bridge Notes mature on May 27, 2022, June 30, 2023
and September 19, 2023. All of the 2022 Investor Bridge Notes are secured by a
first priority security interest in all of our assets until such time as such
notes are repaid or converted into our preferred stock or common stock under the
terms thereof.

As of the date of this Quarterly Report, we have received $5,000,000 aggregate
gross proceeds under the 2022 Investor Bridge Financing, after giving effect to
the original issue discount. In connection with our August 2022 IPO, we repaid
an aggregate principal amounts of $2.2 million of the 2022 Investor Bridge Notes
($2.5 million inclusive on prepayment penalty). Accordingly, as of the date of
this Quarterly Report , an aggregate principal amount of $3.6 million of the
2022 Investor Bridge Notes remains outstanding. The outstanding 2022 Investor
Bridge Notes are prepayable by us at any time at our election, together with a
15% prepayment premium.

We have the right, exercisable at our option, to convert all of the 2022
Investor Bridge Notes into a series of newly issued preferred stock. If we make
such an election, all of the 2022 Investor Bridge 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 2022 Investor
Bridge 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 2022 Investor Bridge 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 $3.00 per share. Additionally, the 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 $3.00 per share.

As additional consideration to investors in the 2022 Investor Bridge Financing,
we granted revenue participation rights to the investors providing them, as a
group, with 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, during the initial term of the subject lease relating to
such property (including any prescribed extensions thereof). Our obligation to
pay such revenue share commences with the quarter ending

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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 connection with the 2022 Investor Bridge Financing, we paid Maxim Group LLC
("Maxim"), the lead-book-running manager of our IPO, agency fees of $256,000 and
issued Maxim five-year warrants (the "Bridge Agent Warrants") to purchase an
aggregate of 32,000 shares of our common stock at a per-share exercise price of
$4.40 per share. We have granted Maxim certain registration rights with respect
to the shares underlying the Bridge Agent Warrant, including the right to
include such shares on the registration statement filed on behalf of the
investors in the 2022 Investor Bridge Financing and customary piggyback
registration rights.

Exceptional Insider Funding

In May 2022, SuperLuxMia LLC, an entity controlled by our founder, chairman 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.

In June 2022, Mr. Ferdinand personally provided us with an additional $750,000
of financing via a credit facility for operating expenses relating to the launch
of certain of our newer properties, including the Astor Hotel and 1000 29th
Street. 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. In October 2021, we issued a promissory note (the "October 2021 Note") to
THA Family II LLC, an affiliate of our chief executive officer, in the principal
amount of $2 million. As part of the note purchase we also issued warrants to
purchase 250,000 shares of our common stock at an exercise price of $4.20. 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.
At the close of our IPO $1.0 mm of principal balance of this note converted into
312,500 shares of our stock and remaining balance was repaid.

In November 2021, we issued a promissory note (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 investor warrants to purchase 125,000 shares of our common stock at
an exercise price of $4.20 per share. EBOL Contingent Warrants, the issuance and
exercisability of which were contingent on an initial public offering. The
November 2021 Note had a maturity date of May 15, 2023. At the closing of our
IPO, $200,000 of the November 2021 Note was repaid, with $300,000 unpaid
principal (and accrued interest thereon) remaining outstanding as of the date of
this Quarterly Report.

Cash flow from operating activities

During the six months ended June 30, 2021, we incurred a net loss of $2,440,038
that was increased by a net increase in operating assets and liabilities of
$1,868,389 for a total of $571,649 in net cash used by operating activities.
During the six months ended June 30, 2022, we achieved a net income of
$2,181,842 that was increased by a net increase in rents received in advance of
$2,251,152 and a net increase in operating lease liability of $1,202,902 and
decreased by processor retained funds of $4,559,397, accounts payable and
accrued liabilities of $1,091,687, deferred rent of $951,185 and other smaller
items for a total of $406,284 in net cash used by operating activities.

Cash flow from financing activities

During the six months ended June 30, 2021, net cash provided in financing
activities of $579,006 included net proceeds from loans of $1,583,705, reduced
by distributions, net of contributions, totaling $954,699. During the six months
ended June 30, 2022, net cash provided by financing activities of $1,101,267
included loans proceeds of $2,374,332, offset by payments on merchant cash
advances of $810,519 and deferred offering costs of $462,546.

Exchange rate effect

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

Off-balance sheet arrangements

We currently have no off-balance sheet arrangements.

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Indemnification Agreements

In the normal course of our business, we include limited indemnification clauses in certain agreements with parties with whom we have business relationships of varying scope and duration.

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 material costs have been incurred, individually or collectively, with respect to 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.

Contractual obligations and commitments

The following table summarizes our contractual obligations and commitments as of
June 30, 2022 (in thousands):

                                                               Payments Due by Period
                                                                                                   More than
                                         Total       1 Year      2 - 3 Years      4 - 5 Years       5 Years
Loans payable                          $  10,149    $  6,844    $       2,543    $          32    $       730
Operating Lease Obligations(1)           120,738       9,731           20,023           18,211         72,773
Total                                  $ 130,887    $ 16,575    $      22,566    $      18,243    $    73,503

Obligations under operating leases primarily represent the initial contractual term(1) of the leases of our revenue-generating apartment and hotel units, not including

    any future optional renewal periods.


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Third Party Payment Processors

We utilize third-party payment processors to process guest transactions via
credit card. Over 95% 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 Quarterly Report, 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 June 30, 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.

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