LuxUrban Hotels faces Nasdaq compliance issue

MIAMI - LuxUrban Hotels Inc. (NASDAQ: LUXH), a company specializing in securing long-term operating rights for hotels, disclosed today that it has received a notice from Nasdaq regarding non-compliance with the exchange's listing rules. The notice, dated August 20, 2024, was issued because the company failed to file its quarterly report (Form 10-Q) for the period ending June 30, 2024, by the required deadline of August 14, 2024.

The company had previously acknowledged its delay in filing the Form 10-Q in a Form 12b-25 filed with the Securities and Exchange Commission (SEC) on the due date. The Nasdaq notification does not immediately impact the trading of LuxUrban's securities but requires the company to submit a plan to regain compliance within 60 calendar days of receiving the notice. If Nasdaq accepts the plan, the company may be granted an extension of up to 180 calendar days from the original due date, or until February 18, 2025, to file the overdue report and comply with the listing rules.

LuxUrban Hotels Inc. has indicated that it is working diligently to complete the Form 10-Q and expects to file it as soon as possible. There is no certainty that Nasdaq will accept the company's compliance plan or that LuxUrban will be able to meet the requirements within any extension period granted. If the plan is not accepted, the company has the right to appeal the decision to a Nasdaq hearings panel.

LuxUrban Hotels operates by entering into Master Lease Agreements (MLA) with hotel owners, allowing them to retain asset equity while LuxUrban manages the cash flows from the hotel operations. The company aims to build a portfolio of hotel properties in destination cities by leveraging current market dislocations and debt maturity challenges faced by asset owners.

This information is based on a press release statement from LuxUrban Hotels Inc. and does not include any subjective assessments or promotional content. The company's forward-looking statements regarding its operational and financial strategies are subject to risks, uncertainties, and assumptions as detailed in its SEC filings.

In other recent news, LuxUrban Hotels Inc. faces potential delisting from the Nasdaq due to non-compliance with listing standards, specifically the timely filing of financial reports. The company is preparing a plan to regain compliance and intends to appeal the decision. In parallel, LuxUrban Hotels has announced its intention to sell up to $5 million in senior notes due 2027 and has successfully closed a follow-on public stock offering, managed by Alexander Capital, L.P., generating roughly $5.1 million in gross proceeds.

Adding to its financial strategy, LuxUrban has partnered with London-based firm HotelRez to enhance its global distribution capabilities, potentially extending its reach to over 500,000 travel agencies worldwide. The company also implemented a cost reduction program expected to save around $2 million annually and streamlined its property portfolio.

In terms of leadership changes, LuxUrban appointed Robert Arigo as CEO and Mike James as Chief Financial Officer. However, after the termination of its franchise agreement with Wyndham, Jones Trading downgraded LuxUrban's stock from Buy to Hold. These are the recent developments in LuxUrban's ongoing strategy to adapt to market dynamics.

InvestingPro Insights

In light of LuxUrban Hotels Inc.'s recent non-compliance notice from Nasdaq, examining the company's financial health and market performance becomes even more crucial for investors. According to InvestingPro data, LuxUrban has a market capitalization of $9.01 million USD, which reflects the size of the company in the marketplace. The data also shows a significant revenue growth of 77.03% in the last twelve months as of Q1 2024, indicating that despite compliance issues, the company has been expanding its top-line earnings.

However, this revenue growth is contrasted by a sharp quarterly revenue decline of 50.57% in Q1 2024, suggesting potential volatility or operational challenges in the short term. Additionally, with a gross profit margin of -16.67% in the same period, LuxUrban's profitability from its core business activities seems to be under pressure, which aligns with the InvestingPro Tips highlighting the company's weak gross profit margins and significant cash burn.

InvestingPro Tips also point out that LuxUrban operates with a significant debt burden and may have trouble making interest payments, which is a crucial consideration for investors, especially when the company is facing compliance issues with Nasdaq. With the stock price having fallen significantly over the last three months, down by a staggering 79.95%, and the company not expected to be profitable this year, investors should be aware of the risks associated with this stock. For those interested in a deeper dive, InvestingPro offers additional tips and data, including 18 more InvestingPro Tips for LuxUrban, available through the platform.

These insights underscore the importance of keeping a close eye on both the operational strategies and financial metrics of LuxUrban Hotels Inc., especially in the context of its current challenges with Nasdaq compliance. Investors may find these data points and tips from InvestingPro to be valuable resources in assessing the company's future prospects and investment potential.

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