Item 2.01 Completion of Acquisition or Disposal of Assets.
As previously announced, the September 30, 2022, CorpHousing Group Inc. (the “Company” or “we” and associated pronouns), has entered into a securities purchase agreement (the “September 2022 Investor Purchase Agreement”) with a private investor under which we have sold, or may sell, in a series of private placements (the “September 2022 Investor Funding”) up to a total of $2,875,000 principal amount of the 15% Initial Issue Discount Notes (“September 2022 Investor Notes”) and five-year warrants (“September 2022 Investor Warrants”) to purchase up to an aggregate of 718,750 common shares of our common stock at an exercise price per share of
$4.00. The September 2022 The Investor Notes bear interest at the rate of 5% per annum, with all accrued interest payable at maturity.
At the time of execution of the September 2022 Investor purchase agreement, we closed the $1,408,750 principal amount of September 2022 Investor Notes (the “First Closing Notes”) and issued September 2022 Investor warrants to purchase 352,188 common shares for gross proceeds of $1,225,000 (giving effect to the 15% discount on the initial issue). The first closing notes mature on
September 30, 2023.
On October 20, 2022we are closing the final tranche of the private placement pursuant to the September 2022 Investor Purchase Agreement, Issuance of a
$1,466,250 principal amount of September 2022 Investor Notes (“Second Closing Notes”) and September 2022 Investor warrants to purchase 366,563 common shares for gross proceeds of $1,275,000 (giving effect to the 15% discount on the initial issue). The second closing notes mature on October 23, 2023.
The September 2022 The Investor Funding continues our existing relationship with the investor to whom we previously sold through private placements 15% Original Issue Discount Notes (“Prior Investor Notes”) and Warrants of five years (“Prior Investor Warrants”). At the date of this current report and taking into account the September 2022 Investor funding, we have approximately $6,500,000
principal amount of September 2022 Investor Notes and Prior Notes outstanding, and warrants to purchase an aggregate of 2,156,251 Shares outstanding.
The whole of the September 2022 The Investor Notes (as well as the Prior Notes) are secured by a first ranking lien on all of our assets until such Notes are redeemed or converted into our preferred shares or common shares under the terms thereof. . The September 2022 The Investor Notes are convertible at the option of the holder into shares of our common stock at a conversion price per share of $4.11. The Senior Notes are also convertible at a conversion price per share of $3.00.
The Notes and Warrants provide for certain conversion and exercise price adjustments in the event that we actually issue shares in future cash financings and in other circumstances at prices per share below then effective conversion or exercise of such Notes and Warrants. On October 10, 2022we concluded an amendment to the September 2022 Investor Purchase Agreement, effective as of September 30, 2022which provides that we will not issue, or be required to issue, on the conversion of the Bonds or the exercise of the Warrants described in this current report, an aggregate of more than 19.99%, being 5,303,230 shares (subject to adjustment for splits, stock dividends and the like), of our common stock (the “Nasdaq Exchange Cap”); provided that such limitation shall not apply in the event that we (A) obtain the approval of our stockholders as required by applicable Nasdaq rules for the issuance of shares of our common stock upon conversion of such Notes and exercise of such Warrants beyond the Nasdaq Exchange Cap or (B) obtain written advice from an attorney external to our company that such approval is not not required.
Section 3.02. Unrecorded sales of Equity securities
The information presented above in point 2.01 of this current report is incorporated herein by reference.
Item 9.01 Financial statements and supporting documents.
4.1† Form of September 2022 Investor Warrant(1)
10.1† Form of September 2022 Investor Note(1)
10.2† Form of September 2022 Investor Purchase Agreement(1)
10.3† Amended and Restated Security and Guaranty Agreement(1)
10.4† Amended and Restated Registration Rights Agreement(1)
10.5 Addendum to September 2022 Investor Purchase Agreement(1)
† Some of the exhibits and schedules to this agreement have been omitted from
accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a
copy of all omitted exhibits and schedules to the SEC upon its request.
(1) Previously filed as an exhibit to the Current Report on Form 8-K, as
previously amended and amended hereby.
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