# EDGAR Filing Document

**Accession Number:** 0001627282
**File Stem:** 0001104659-23-005085
**Filing Date:** 2023-1
**Character Count:** 974837
**Document Hash:** 0c2e8017b487edafe2231ac42071c6be
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-005085.hdr.sgml**: 20230119

**ACCESSION NUMBER**: 0001104659-23-005085

**CONFORMED SUBMISSION TYPE**: S-1/A

**PUBLIC DOCUMENT COUNT**: 14

**FILED AS OF DATE**: 20230119

**DATE AS OF CHANGE**: 20230119

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CaliberCos Inc.
- **CENTRAL INDEX KEY:** 0001627282
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE

**FILING VALUES:**
- **FORM TYPE:** S-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-267657
- **FILM NUMBER:** 23538317

**BUSINESS ADDRESS:**
- **STREET 1:** 8901 E. MOUNTAIN VIEW RD.
- **STREET 2:** SUITE 150
- **CITY:** SCOTTSDALE
- **STATE:** AZ
- **ZIP:** 85258
- **BUSINESS PHONE:** 480-295-7600

**MAIL ADDRESS:**
- **STREET 1:** 8901 E. MOUNTAIN VIEW RD.
- **STREET 2:** SUITE 150
- **CITY:** SCOTTSDALE
- **STATE:** AZ
- **ZIP:** 85258

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CaliberCo Inc.
- **DATE OF NAME CHANGE:** 20141205

As filed with the Securities and Exchange Commission on January 19, 2023

Registration No. 333-267657

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 **AMENDMENT NO. 5 TO FORM S-1**

**REGISTRATION STATEMENT**

**UNDER THE SECURITIES ACT OF 1933**

**CALIBERCOS INC.**

**(Exact name of Registrant as specified in its charter)**

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| | | |
|:---|:---|:---|
| **Delaware** | **6282** | **47-2426901** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(Primary Standard Industrial**<br> **Classification Code Number)** | **(I.R.S. Employer Identification No.)** |

---

**8901 E. Mountain View Rd. Ste. 150**

**Scottsdale, AZ, 85258**

**(480) 295-7600** 

**(Address including zip code, telephone number, including area code, of Registrant's Principal Executive Offices)**

**John C. Loeffler, II**

**Chairman and Chief Executive Officer**

**8901 E. Mountain View Rd. Ste. 150**

**Scottsdale, AZ 85258**

**(480) 295-7600** 

**(Name, address including zip code, telephone number, including area code, of agent for service)**

***Copies To:***

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| | |
|:---|:---|
| &nbsp;&nbsp;**Thomas J. Poletti. Esq.<br> Veronica Lah, Esq.**<br> **Manatt, Phelps & Phillips LLP<br> 695 Town Center Drive, 14<sup>th</sup> Floor**<br> **Costa Mesa, CA 92626**<br> **(714) 371-2500** | &nbsp;&nbsp;**Louis A. Bevilacqua, Esq.**<br> **Bevilacqua PLLC**<br> **1050 Connecticut Avenue, NW, Suite 500**<br> **Washington, DC 20036**<br> **(202) 869-0888** |

---

**Approximate date of commencement of proposed sale to the public:** As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. ◻

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ◻

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ◻

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer<br> ◻ Accelerated filer<br> ◻ Non-accelerated filer<br> ⌧ Smaller reporting company<br> ⌧ Emerging growth company<br> ⌧

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ◻

**The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.**

**The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.**

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| | |
|:---|:---|
| **PRELIMINARY PROSPECTUS** | **SUBJECT TO COMPLETION, DATED January 19, 2023** |

---

**1,600,000 Shares**

![](tm2230806d1_s1aimg009.jpg)

**CALIBERCOS INC.**

**Class A common stock**

 **$5 per share**

This is the initial public offering of shares of Class A common stock of CaliberCos Inc. Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price is expected to be $5.00 per share.

We have applied to have our shares of Class A common stock listed on the Nasdaq Capital Market under the symbol "CWD". The closing of this offering is contingent upon our listing on the Nasdaq Capital Market.

We are an "emerging growth company," as defined under the federal securities laws and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "Prospectus Summary— Implications of Being an Emerging Growth Company."

After completion of this offering, John C. Loeffler, II, our Chief Executive Officer, and Jennifer Schrader, our President and Chief Operating Officer, through ownership of all our outstanding shares of Class B common stock, will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of Nasdaq and are eligible for certain exemptions from these rules, though we do not intend to rely on any such exemptions. See "*Risk Factors – We will be a 'controlled company' within the meaning of the listing rules of Nasdaq and, as a result, can rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies*" on page 30 for more information.

**Investing in our Class A common stock involves a high degree of risk. See the section entitled "Risk Factors" beginning on page 14 to read about factors you should consider before buying shares of our Class A common stock.**

Neither the Securities and Exchange Commission in the United States nor any other regulatory body has approved or disapproved of these common shares or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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| | | |
|:---|:---|:---|
|  | **Per Share** | **Total** |
| Initial public offering price | $5.00 | $8000000 |
| Underwriting discounts and commissions <sup>(1)</sup> | 0.40 | 640000 |
| Proceeds, before expenses | 4.60 | 7360000 |

---

(1) See "Underwriting" for additional disclosure regarding underwriting discounts and commissions and estimated offering expenses payable to Revere Securities LLC and Spartan Capital Securities, LLC, the joint representatives of the underwriters.

We have granted the underwriters a 45-day option to purchase up to 240,000 additional shares of Class A common stock from us at the initial public offering price less the underwriting discounts and commissions, solely to cover the underwriters' option to purchase additional shares. Up to 10% of the shares offered hereby have been reserved for sale at the initial public offering price to specified persons under our directed share program.

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| | |
|:---|:---|
| **Revere Securities LLC** | **Spartan Capital Securities, LLC** |

---

The underwriters expect to deliver the shares of Class A common stock to purchasers against payment in New York, New York on or about , 2023.

Prospectus dated , 2023

**Table of Contents**

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| | |
|:---|:---|
|  | **Page** |
| [Prospectus Summary](#b_005) | [1](#b_005) |
| [The Offering](#a_001) | [10](#a_001) |
| [Risk Factors](#b_011) | [14](#b_011) |
| [Cautionary Statement Concerning Forward-Looking Statements](#sp3-007) | [33](#sp3-007) |
| [Industry and Market Data](#sp3-006) | [34](#sp3-006) |
| [Use of Proceeds](#sp3-005) | [35](#sp3-005) |
| [Dividend Policy](#sp3-004) | [35](#sp3-004) |
| [Capitalization](#sp3-003) | [36](#sp3-003) |
| [Dilution](#sp3-002) | [37](#sp3-002) |
| [Management's Discussion and Analysis of Financial Condition and Results of Operations](#b_012) | [39](#b_012) |
| [Business](#c_001) | [61](#c_001) |
| [Management](#c_002) | [70](#c_002) |
| [Principal Stockholders](#c_003) | [78](#c_003) |
| [Certain Relationships and Related Party-Transactions](#c_004) | [80](#c_004) |
| [Description of Securities](#c_005) | [82](#c_005) |
| [Shares Eligible for Future Sale](#c_006) | [85](#c_006) |
| [Material US Federal Income Tax Considerations](#aa_001) | [87](#aa_001) |
| [Underwriting](#c_007) | [92](#c_007) |
| [Legal Matters](#c_008) | [94](#c_008) |
| [Experts](#c_009) | [94](#c_009) |
| [Where You can Find Additional Information](#c_010) | [94](#c_010) |
| [Index to Financial Statements](#q1_a_001) | [F-1](#q1_a_001) |

---

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the underwriters take responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Through and including ____, 2023 (the 25<sup>th</sup> day after the date of this prospectus), all dealers that buy, sell or trade in our common shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside of the United States neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States. See the section of this prospectus entitled "*Underwriting*" for additional information on these restrictions.

Unless otherwise indicated, information in this prospectus concerning economic conditions, our industries and our markets is based on a variety of sources, including information from third-party industry analysts and publications and our own estimates and research. This information involves a number of assumptions, estimates and limitations. The industry publications, surveys and forecasts and other public information generally indicate or suggest that their information has been obtained from sources believed to be reliable. None of the third-party industry publications used in this prospectus were prepared on our behalf. The industries in which we operate are subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "*Risk Factors*" in this prospectus. These and other factors could cause results to differ materially from those expressed in these publications.

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our businesses. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks and trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

![](tm2230806d1_s1aimg001.jpg)

**Caliber seeks to be a wealth building engine for investors**

We are an alternative asset manager on a mission to build wealth for our investors, communities, and team by developing impactful projects and companies.

Caliber applies the established private equity business model to proven asset classes, such as real estate and private credit, and strives to differentiate itself as a leader in the underserved, middle-market segment.

We serve a broad set of customers that includes accredited investors, investment advisers, family offices, and institutions. We believe many investors and their investment advisors are seeking to increase their allocations to alternative assets and yet these prospective Caliber customers are finding access to quality alternative investments as a substantial hurdle to achieving their allocation goals.

Caliber solves this problem with creativity, hard work, and uncompromising dedication to the ultimate success of our investors. We create attractive investment products, endeavor to manage them well, and, in doing so, create broad access to alternatives.

When my co-founders and I took the first steps toward building the business that would eventually become Caliber, the economy was in chaos.

In the throes of the Great Recession of 2007-2009, the banking and real estate industries were in disarray and investors from all walks of life were left with savings and investments that had been decimated. They were looking for an alternative way to rebuild their financial foundation.

Against this backdrop we saw opportunity – meaningful opportunity – to create value in a disrupted real estate market by building a platform for those investors who were seeking different ways to grow their wealth.

**Opportunity**

Brick by brick, we have built Caliber to ***provide*** wealth development opportunities to investors who previously have been excluded from alternative asset classes. We ***find*** investment opportunities that are often overlooked by the rest of the market due to their size or location. Also, we ***create*** incremental return opportunities by managing the full life cycle of many of our investments. 

Early on, we recognized two meaningful gaps in the alternative assets marketplace. First, accredited investors were hungry for the opportunity to invest outside of traditional stocks, bonds and insurance products. Yet, an accessible and trusted avenue to alternative asset classes simply didn't exist. Second, real estate investment opportunities in the middle market – which we define as projects in the $5 million to $50 million range – often lacked sufficient funding. We stepped into these gaps and saw our business grow quickly as we met the needs of the market and our investors.

**The Democratization of Alternative Assets**

For years, access to the alternative asset space was limited to financial institutions or a select group of ultra-high-net-worth investors. We believe this left the vast majority of investors at a significant disadvantage when it came to tax planning, diversification and inflation hedging, as well as missing out on potentially higher return opportunities.

We built Caliber to change that dynamic and democratize access to alternative assets.

When public solicitation of private securities became a viable strategy in 2012, we became an early adopter of the new rules and saw the opportunity to bring alternative assets to a broader range of accredited investors. We start with a focus on education, helping our investors understand the market for alternative investments and the strategies that are effective in that segment, and then we take the time to understand their investing goals and match them to the investment that best fits their needs.

Everything we do is grounded in our commitment to accountability, respect and transparency and maintaining open lines of communication with our investors – something that often gets lost in other institutions. We want to build trust with every investor with the goal that they continue to invest with us indefinitely. This focus on education and transparency is a key part of the Caliber experience. We strive to know what our customers need, what drives them to make an investment decision, and what it takes to earn and keep their trust.

**The Middle Market Opportunity**

From the beginning, our team has focused on finding opportunity where others see only barriers. This is due, in part, to our expertise and our vertically integrated business model. That mindset has enabled us to pursue many projects from the ground up, even in under-resourced locations and in challenging times. Caliber has a track record of finding a path forward where others may not.

We believe that the opportunity to invest in, develop and manage real estate projects in middle markets has never been stronger. The middle market segment tends to be highly fragmented due to a mismatch we have found that exists between the size and complexity of middle market assets, the inability of smaller firms to compete for those assets, and the lack of competition from traditional institutions that may be focused more on larger projects.

We have also found opportunities in middle-market geographies, specifically in real estate investments in the Southwest and Mountainwest regions of the United States Caliber focuses on business-friendly locations with strong, multi-year demographic trends. In many locations, we have boots on-the-ground to help us manage projects and capture diverse revenue streams.

We have a rule at Caliber: do what is best for the asset. When we do that, we believe we ultimately do what is best for the investor and for Caliber. Sometimes this requires us to change course, but we believe that adaptability is a strength and a competitive edge in today's world and is a meaningful component of Caliber's culture.

We believe our focus on the middle market also allows us to participate in meaningful projects that are helping to transform communities while providing our investors with tax-advantaged returns. This is a critical component to Caliber's strategy as an impact investor and goal to build the wealth of communities we operate in.

Caliber was an early innovator in the creation of Qualified Opportunity Zone (QOZ) funds, which offer investors the ability to reduce and eliminate short and long-term capital gain tax liabilities by investing in a professionally managed real estate fund that completes new developments that are impactful to the designated communities within each zone. Created in 2017 as part of the Tax Cut and Jobs Act, these funds are purposed to help stimulate economic growth in distressed communities across the country.

The Caliber Tax-Advantaged Fund was launched in 2018 and included investments in QOZ communities in Arizona and Texas. With the launch of our second fund in July 2022, Caliber is poised to be one of the largest and most active Opportunity Zone investors in our regions.

**The Vision**

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| | |
|:---|:---|
| We often tell the marketplace that we don't have a five-year plan—we have a 100-year plan. Over the last 14 years, we have built our business property by property and investor by investor, resulting in a team and business system poised for growth. <br>We believe that the opportunities for growth in our existing real estate verticals are substantial and our deal pipeline is robust. From a fundraising perspective, we estimate that we currently serve a fraction of potential high-net-worth households in the United States alone. That leaves us a substantial opportunity to expand within this investor base. <br>At Caliber, we have always believed that if you put money into the hands of good people, they will do good things with it. This belief underscores our commitment to build wealth for our employees, our fund investors and our shareholders, and we hope will ultimately be our company's legacy. <br>| <br> ![](tm2230806d1_s1aimg002.jpg)  |

---

We welcome you to join us as a co-owner of this growing business – a platform we are excited to build together long into the future.

Chris Loeffler, CEO

**PROSPECTUS SUMMARY**

*This summary highlights certain significant aspects of our business and this offering and is a summary of information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our Class A common stock. You should read the entire prospectus carefully, including "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and our financial statements and related notes thereto included in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms "Caliber", "Company", "we", "us" and "our" refer to CaliberCos Inc., a Delaware corporation, and "this prospectus" refers to the offering contemplated this prospectus.*

 *Unless otherwise indicated, all share and per share information in this prospectus gives effect to (i) a 1-for-1.6820384 reverse stock split effected in January 2023 and (ii) the automatic conversion of all 1,650,215 outstanding shares of Series B Preferred Stock into an equal number of shares of Class A common stock on the effective date of this offering.*

**General**

Caliber is a leading vertically integrated asset management firm whose primary goal is to enhance the wealth of investors seeking to make investments in middle-market assets. We strive to build wealth for our investor clients by creating, managing, and servicing proprietary products including middle-market investment funds, private syndications, and direct investments. Our funds include investment vehicles focused primarily on real estate, private equity, and debt facilities. We earn asset management fees calculated as a percentage of managed capital in our Funds and Offerings. We market our services through direct sales to private investors, wholesaling to investment advisers, direct sales to family offices and institutions, and through in-house client services.

We believe that we provide investors attractive risk-adjusted returns by offering a balance of (i) structured offerings and ease of ownership, (ii) a pipeline of investment opportunities, primarily projects that range in value between $5 million and $50 million, and (iii) an integrated execution and processing platform. Our investment strategy leverages the local market intelligence and real-time data we gain from our operations to evaluate current investments, generate proprietary transaction flow, and implement various asset management strategies.

**Market Opportunity**

Our focus is on offering investors access to investments in alternative asset classes. According to Preqin, total alternative global assets under management ("AUM") is expected to reach $17.2 trillion by 2025. Preqin's 2020 investor survey indicated that 81% of investors surveyed intended to either increase or significantly increase their investments into alternative assets. Caliber's current product offerings offer a broad range of alternative real estate investments and its established business model is designed for growth into multiple alternative asset classes. Caliber's roadmap includes expanding into a full suite of credit products and adding business equity products such as private equity and venture capital. We believe that Caliber's ability to move with the market and cater to investor interests, supported with our innovative product team, drives growth in our AUM.

**Caliber's Integrated Model**

While we primarily act as an alternative asset manager, we also offer a full suite of support services and employ a vertically integrated approach to investment management. Our asset management activities are complemented with transaction and advisory services including development and construction management, acquisition and disposition expertise, and fund formation, from which we derive revenue, which we believe differentiates us from other asset management firms. We believe our model allows us to acquire attractive projects, reduce operating costs and deliver services to our funds that enhance net returns to investors. We integrate our expertise and knowledge across these verticals to successfully manage our investment platform.

The following table summarizes the fees we are scheduled to earn by investment phase and distinguishes between fees that are incurred one time and fees that are earned throughout the investment life cycle.

![](tm2230806d1_s1aimg003.jpg)

We follow a rigorous diligence process to identify and qualify each of our investments. We source and analyze our investment opportunities through the strong relationships and networks we have developed in our target markets. We utilize and consider both qualitative and quantitative data in the identification and selection of our investment opportunities. We consider data from varying sources including proprietary market analytics, cost of capital, and internal financial modeling projections. We also consider portfolio exposure or concentrations in any one asset class and other laws and requirements that are either outlined in our fund operating agreements or other limitations required by law. We primarily focus on direct investments into real estate and credit (lending) into real estate investments.

Real Estate – Our real estate expertise was formed in the wake of the 2008 financial crisis and encompasses hospitality, residential, and commercial asset types and vertical and horizontal projects. Our asset management team specializes by asset type, allowing for collaboration of different real estate verticals to gain pricing and capital deployment efficiencies as well purchasing power over materials and supplies to increase cash flows and returns. Our real estate products include: core plus, value add, distressed and opportunistic investing. Our opportunity zone fund also provides access to tax efficient deployment of capital.

Credit – Our credit products are designed to meet our investors' needs for stable, cash flowing, investments. We deploy and enhance investing in both mezzanine and preferred equity strategies based on the capital requirements of the underlying investment. Each investment decision involves a number of factors and criteria that are focused on the subject asset's ability to perform in the near term, its plans and projected capabilities, and its long-term return profile, among others.

*Assets Under Management*. AUM refers to the assets we manage or sponsor. We monitor two types of information with regard to our AUM:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Managed Capital – we define this as the total
 equity capital raised from investors in our funds at any point in time. We use this information to monitor, among other things, the
 amount of 'preferred return' that would be paid at the time of a distribution and the potential to earn a performance
 fee over and above the preferred return at the time of the distribution. Our asset management fees are based on a percentage of Managed
 Capital and monitoring the change and composition of Managed Capital provides relevant data points for Caliber management to further
 calculate and predict future earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Fair
Value ("FV") AUM – we define this as the aggregate fair value of the real estate assets we manage and from which we
derive management fees, performance revenues and other fees and expense reimbursements. We estimate the value of these assets quarterly
to help make sale and hold decisions and to evaluate whether an existing asset would benefit from refinancing or recapitalization. This
also gives us insight into the value of our carried interest at any point in time. We also utilize the FV AUM metric to predict the percentage
of our portfolio which may need development services in a given year, fund management services (such as refinance), and brokerage services.
As we control the decision to hire for these services, our service income is generally predictable based upon our current portfolio AUM
and our expectations for AUM growth in the year forecasted. As of September 30, 2022, we had total FV AUM of approximately $686 million.

![](tm2230806d1_s1aimg004.jpg)

**Business Segments**

Our operations are organized into three reportable segments for management and financial reporting purposes: Fund Management, Development, and Brokerage.

Fund Management — This segment represents our fund management activities along with back office and corporate support functions including accounting and human resources. It includes the activities of Caliber Services, LLC and its subsidiaries, ("Caliber Services"), which acts as an external manager of our funds, which have diversified investment objectives. It also includes the activities associated with Caliber Securities, LLC ("Caliber Securities"), a wholly-owned Arizona registered issuer-dealer, which generates fees from set up services and fund formation. We earn fund management fees for services rendered to each of the funds by Caliber Services as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Asset Management Fee*. We receive an annual asset management fee typically equal to 1.0% - 1.5% of the
 non-affiliated capital contributions related to the assets owned by the particular fund to
 compensate us for the overall administration of that fund. These management fees are payable
 regularly, generally on a monthly basis, pursuant to our management agreement with each fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Carried Interest.* We are entitled
 to an allocation of the income allocable to the limited partners or members of each fund for returns above accumulated and unpaid
 priority preferred returns and repayment of preferred capital contributions (the "Hurdle Rate"). Income earned with
 respect to our carried interest is recorded as Performance Allocations. Performance Allocations are an important element of our
 business and have historically accounted for a material portion of our revenues. Depending on the fund, we typically receive
 a carried interest of 20% - 35%, depending on the fund, of all cash distributions from (i) the operating cash flow of each fund
 above the Hurdle Rate and (ii) the cash flow resulting from the sale or refinancing of any investments held by our funds after
 payment of the related fund's investors unpaid priority preferred returns and Hurdle Rate. Our funds' preferred returns
 range from 6% - 12%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Financing Fee.* We earn a fee upon the closing of a loan by our investment funds with a third-party
 lender to compensate us for the services performed and costs incurred in securing the financing.
 This is typically a fixed fee arrangement which approximates no more than 1% of the total
 loan and will not exceed 3% of the total loan after considering all other origination fees
 charged by lenders and brokers involved in the transaction. Financing fees are recorded under
 Transaction and Advisory Fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Set-Up Fee.* We charge an initial one-time fee related to the initial formation, administration and
 set-up of the applicable fund. Set-up fees can be flat fees or a percentage of capital raised, typically 1.5% of capital raised or
 less. These fees are recorded under Transaction and Advisory Fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Fund Formation Fee.* Through Caliber Securities,
we earn non-affiliated fees from raising capital for our funds. Our contracts with our funds are typically fixed fee arrangements which
approximate no more than 3.5% on capital raised. These fees are recorded under Transaction and Advisory Fees. Based on the contractual terms of the relevant
 funds we manage, in addition to the fees noted above, Caliber is entitled to be reimbursed for its expenses, which are not to exceed
 non-affiliated third-party costs, related to services provided to the funds.

Development — This segment represents our activities associated with providing real estate development services as their principal developer. These services include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by our funds. Revenues generated by this segment are generally based on 4% of the total expected costs of the development or 4% of the total expected costs of the construction project. Caliber Development, LLC ("Caliber Development"), a wholly-owned subsidiary of Caliber Services and an Arizona licensed general contractor, acts as either the developer, development manager, and/or construction manager on our funds' projects.

We have a number of development, redevelopment, construction, and entitlement projects that are underway or are in the planning stages, which we define as Assets Under Development ("AUD"). This category includes projects we are planning to build on undeveloped land and projects to be built and constructed on undeveloped lands which are not yet owned by our funds but are under contract to purchase. Completing these development activities may ultimately result in income-producing assets, assets we can sell to third parties, or both. As of September 30, 2022, we are actively developing 2,460 multifamily units, 2,300 single family units, 2.5 million square feet of commercial and industrial, and 1.3 million of office and retail. If all of these projects are brought to completion, the total cost capitalized to these projects, which represents total current estimated costs to complete the development and construction of such projects, is $2.2 billion, which we expect would be funded through a combination of undeployed fund cash, third-party equity, project sales, tax credit financing and similar incentives, and secured debt financing. We are under no obligation to complete these projects and may dispose of any such assets at any time. There can be no assurance that assets under development will ultimately be developed or constructed because of the nature of the cost of the approval and development process and market demand for a particular use. In addition, the mix of residential and commercial assets under development may change prior to final development. The development of these assets will require significant additional financing or other sources of funding, which may not be available.

Brokerage — This segment is involved in the buying, selling and leasing of all our funds' assets. For the nine months ended September 30, 2022 and 2021, our brokerage segment completed approximately $63.1 million and $46.8 million in transactions generating approximately $0.9 million and $0.6 million of brokerage fees, respectively.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Segment Analysis" for a discussion of activities by segment for the nine months ended September 30, 2022.

**Structure of Funds**

We are focused on enhancing wealth for our clients by providing access to high quality alternative investments. We believe that capital organized privately into structured funds offers investors an attractive balance of risk-adjusted return and investment performance. By allowing minimum investments as low as $50,000, we provide investors, who may not otherwise have been able to purchase a large asset, a variety of alternative investment strategies, including typical real estate investment solutions.

Our funds are typically structured as limited partnerships or limited liability companies which have a specified period during which clients can subscribe for limited partnership units or membership interests in the funds. Once the client is admitted as a limited partner or member, that client generally cannot withdraw its investment and may be required to contribute additional capital if called by the general partner or managing member. These funds can have a single investment purpose or the ability to invest in a broad range of asset types. As funds liquidate their investments, they typically distribute the proceeds to the funds' investors, however, and in particular with our multi-asset funds, the funds have the ability to retain the proceeds to make additional investments.

We act as an external manager of our funds, which have diversified investment objectives and include investment vehicles focused on real estate, private equity and debt facilities. The consolidated investment funds are variable interest entities in which Caliber has been determined to be the primary beneficiary for accounting purposes since we have the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. Our chief operating decision maker does not regularly review the operating results of these investment funds for the purpose of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds. Outside of our interests as the manager or general partner of these funds, our benefits in these entities are limited to Caliber's direct membership or partnership interests, if any. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates" for discussion of our consolidation and segment accounting policies.

**Investment Process and Risk Management**

We maintain a rigorous investment process across all our funds. Each fund has investment policies and procedures that generally contain investment parameters and requirements, such as limitations relating to the types of assets, industries or geographic regions in which the fund will invest. An investment committee reviews and evaluates investment opportunities in a framework that includes a qualitative and quantitative assessment of the key opportunities and risks of investments.

Our investment professionals are responsible for the full life cycle of an investment, from evaluation, through execution, to exit. Investment professionals generally submit investment opportunities for review and approval by our investment committee. The investment committee is comprised of executives and senior leaders of the Company. When evaluating investment opportunities, the investment committee may consider, without limitation and depending on the nature of the investment and its strategy, the quality of the asset in which the fund proposes to invest, likely exit strategies, factors that could reduce the value of the asset at exit, and a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the asset's business operations. Our investment committee also incorporates, to the extent appropriate, environmental, social and governance ("ESG") factors into the investment decision-making process.

Existing investments are reviewed and monitored on a regular basis by investment and asset management professionals. In addition, our investment professionals and asset managers work directly with our portfolio companies' directors, executives and managers to drive operational efficiencies and growth.

**Capital Invested In and Alongside Our Investment Funds**

To further align our interests with those of investors in our investment funds, we have invested our own capital and that of certain of our personnel in the investment funds that we sponsor and manage. Minimum general partner capital commitments to our investment funds are determined separately with respect to each of our investment funds and, generally, are less than 5% of the limited partner commitments of any particular fund. We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs.

Investors in many of our funds also receive the opportunity to make additional "co-investments" with the investment funds. Our employees, as well as Caliber itself, also have the opportunity to make investments, in or alongside our funds and other vehicles we manage, in some instances without being subject to management fees, carried interest or incentive fees. In certain cases, limited partner investors may pay additional management fees or carried interest in connection with such co-investments.

**Competition**

The alternative asset management industry is intensely competitive, and we expect it to remain so. For investments, we compete primarily on a regional, industry and asset basis. For capital and fund investors, we compete nationally and occasionally accept capital from international investors.

We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies, and financial markets. We compete for outside investors based on a variety of factors, including investment performance, investor perception of investment managers' drive, focus and alignment of interest, quality of service provided to and duration of relationship with investors, business reputation, and the level of fees and expenses charged for services. We also compete on investor preference, as alternative investments gain favor over traditional investments.

We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price.

We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers, and other parties. Many of these competitors are substantially larger and have considerably greater financial, technical, and marketing resources than are available to us. Many of these competitors have similar investment objectives to ours, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment.

We also compete within market segments. Caliber targets the middle-market segment, which includes investments generally too large or complex for smaller investors and too disaggregated or specialized for large investors. For investors, Caliber competes to gain investment from high net worth individuals, registered investment advisors, broker-dealers, family offices, and other institutions. Generally, we target the middle-market segment of those investors, offering access to alternative investments to investors who may not have traditionally had access in the past. For these investors, Caliber competes with all other sources of potential investment for their capital, including other alternative investments and traditional investments.

**Strategy and Competitive Strengths**

We manage and administer investment vehicles that allow investors to diversify their holdings into asset classes that would not be readily accessible to them otherwise. Caliber's approach is to offer investors, and their wealth managers, products managed by a team aligned with their success by tying our financial success to a percentage of distributions enjoyed by our customers. Caliber's strategy is grounded by a commitment to investor education, making the process of choosing alternative investments approachable and simple to understand.

Our competitive strengths include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Extensive relationship and sourcing network.*** We leverage
 our relationships in order to source deals for our funds. In addition, our management has extensive relationships with major industry
 participants in each of the markets in which we currently operate. Their local presence and reputation in these markets enables them
 to cultivate key relationships with major holders of property inventory, in particular, financial institutions, throughout the real
 estate community

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Targeted market opportunities.*** We primarily focus on business and investment-friendly markets
 that have a long-term trend of population growth and job growth with a particular focus on Arizona, Colorado, Nevada, Texas and Utah.
 We generally avoid engaging in direct competition in over-regulated and saturated markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Structuring expertise and speed of execution.*** We believe
 we have developed a reputation of being able to quickly execute, as well as originate and creatively structure acquisitions, dispositions
 and financing transactions. We have experience in a variety of investment strategies, including direct property investments, joint
 ventures, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Vertically integrated platform for operational enhancement*** . We believe in a hands-on
 approach to real estate investing and possess local expertise in brokerage, development management, and investment sales, which we
 believe enable us to invest successfully in select submarkets. Our goal is to optimize the use of in-house services for high margin,
 low volume tasks while using third-party services for high volume, low margin tasks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Focus on the middle market.*** We believe our focus on middle market opportunities offers our
 investors significant alternatives to traditional institutions providing alternative investments. This focus has allowed us to offer
 a diversified range of alternative investment opportunities, particularly for accredited investors

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Risk protection and investment discipline.*** We underwrite our investments based upon an examination
 of investment economics and an understanding of market dynamics and risk management strategies. We conduct an in-depth sensitivity
 analysis on each of our fund investments. This analysis applies various economic scenarios that include, where appropriate, changes
 to rental rates, absorption periods, operating expenses, interest rates, exit values and holding periods.

**Our Growth Strategy**

We aim to continue building wealth for our investors by expanding our business with the following strategies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Organic growth with our existing high net worth investor base.*** We estimate that we currently service less than 1% of the current high net worth investor base in the
 United States. Using our established direct sales method, we intend to attract additional high net worth individuals to expand our
 number of customers and our assets under management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Expansion into additional distribution channels*** . We intend
 to expand Caliber's recent, early success in accessing institutional channels by further expanding our fundraising activities
 directed to registered investment advisers (RIA), broker-dealers, family offices, and boutique institutions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***New funds and platforms*** . We intend to grow our AUM by
 expanding the number of available funds and products we offer. We will look for complementary products and vehicles that utilize
 our existing vertically integrated infrastructure to allow us to continue to capture attractive risk-adjusted returns. These areas
 of investment could include public funds, such as REITs, private credit, venture capital and private equity. We expect these new
 funds and platforms will attract new investors, in addition to leveraging our existing investor base and offering them access to
 a broad set of high-quality alternative investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Accretive acquisitions*** . We plan to evaluate potential
 accretive acquisition opportunities to expand our customer base and distribution of investments, our geographic reach, and our internal
 capabilities to execute on specific investment strategies. Our acquisition strategy focuses on two categories – acquisitions
 of alternative fund sponsors and asset managers who generally operate a similar business to Caliber's and who are seeking to
 gain access to the benefits of being owned by a public company and strategic acquisitions of other entities to expand our distribution
 capabilities, product offerings, and services provided.

**Implications of Being an Emerging Growth Company**

We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). As an emerging growth company, we are eligible to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies and may elect to take advantage of other exemptions from reporting requirements in our future filings with the Securities Exchange Commission ("SEC"). In particular, in this prospectus, these exemptions include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· presenting
 only two years of audited financial statements and only two years of related selected financial data and Management's Discussion
 and Analysis of Financial Condition and Results of Operations disclosure in our registration statement of which this prospectus forms
 a part;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· reduced
 disclosure about our executive compensation arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· exemption
 from the requirements to hold non-binding advisory votes on executive compensation ("Say on Pay");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· extended
 transition periods for complying with new or revised accounting standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· exemption
 from the auditor attestation requirement in the assessment of our internal controls over financial reporting pursuant to Section 404(b) of
 the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· exemption
 from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board ("PCAOB") regarding
 mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and
 the financial statements (i.e., an auditor communication regarding critical audit matters).

We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1 billion of non-convertible debt securities over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of certain reduced reporting obligations in this prospectus. Further, pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock, and our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. See "Risk Factors—Risks Related to this offering and Ownership or Our Class A Common Stock" which describes that we are an emerging growth company, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.

**Implications of being a "controlled company" within the meaning of Nasdaq listing standards and the rules of the SEC**

After completion of this offering, John C. Loeffler, II, our Chief Executive Officer, and Jennifer Schrader, our President and Chief Operating Officer, through ownership of all our outstanding shares of Class B common stock, will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" but may elect not to comply with certain corporate governance requirements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the requirement
 that a majority of our Board of Directors consist of "independent directors";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the requirement
 that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's
 purpose and responsibilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the requirement
 that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter
 addressing the committee's purpose and responsibilities.

Notwithstanding the foregoing, following this offering, we do not intend to utilize these exemptions. As a result, we will have a majority of independent directors, and our nominating and corporate governance committee and compensation committee will consist entirely of independent directors. Accordingly, you will have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

**Summary of Risks Related to Our Business**

Our business is subject to numerous risks and uncertainties, including those described in "Risk Factors" and elsewhere in this prospectus. You should carefully consider these risks before making an investment. These risks include, among others, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Our
 business depends in large part on our ability to raise capital for our real estate funds
 from investors. If we were unable to raise such capital, we may be unable to grow our asset
 management fees and our transaction fees may be materially impacted. The inability to deploy
 such capital into fund investments may materially reduce our revenues and cash flows and
 adversely affect our financial condition.

· Changes
 in prevailing interest rates may reduce our profitability, and we may not be able to adequately
 anticipate and respond to changes in market interest rates.

· Inflation
 can have an adverse impact on our business and on our customers.

· A
 decline in the pace of growth or size of investment made by our funds may adversely affect
 our revenues.

· Our
 revenue, earnings, net income, and cash flows can all vary materially, which may make it
 difficult for us to achieve steady earnings growth on a quarterly basis and may cause the
 price of our Class A common stock to decline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We
 may need additional capital, and financing may not be available on terms acceptable to us,
 or at all.

· The
 global outbreak of the novel coronavirus, or COVID-19, has caused severe disruptions to global
 economies and has adversely impacted, and may continue to adversely impact, our performance,
 and results of operations.

· We
 could lose part or all of our investments, which could have a material adverse effect on
 our financial condition and results of operations.

· The
 historical returns attributable to our funds should not be considered as indicative of the
 future results of our funds or of our future results or of any returns expected on an investment
 in our Class A common stock.

· We
 may be subject to litigation risks and may face liabilities and damage to our professional
 reputation as a result of investment decisions on behalf of investors in our funds.

· Actions
 of any joint venture partners that we may have could reduce the returns on joint venture
 investments.

· Our
 reliance on third-parties to operate and to develop certain of our properties may harm our
 business.

· Changes
 in relevant tax laws, regulations, treaties, or an adverse interpretation of these items
 by tax authorities could adversely impact our effective tax rate and tax liability.

· Conflicts
 of interest exist between our Company and related parties.

· Risk
 management activities may adversely affect the return on our funds' investments.

· Our
 real estate funds are subject to the risks inherent in the ownership, development, and operation
 of real estate.

· Investments
 by our investment funds may rank junior to investments made by others.

· Rapid
 growth of our businesses may be difficult to sustain and may place significant demands on
 our administrative, operational, and financial resources.

· We
 depend on our founders, senior professionals, and other key personnel, and our ability to
 retain them and attract additional qualified personnel is critical to our success and our
 growth prospects.

· Our
 management team has limited public company experience.

· We
 may expand into new investment strategies, geographic markets and businesses, each of which
 may result in additional risks and uncertainties in our businesses.

· We
 may not be successful in competing with companies in the asset management industry, some
 of which may have substantially greater resources than we do.

· If
 we are unable to maintain and protect our intellectual property, or if third parties assert
 that we infringe their intellectual property rights, our business could suffer.

· Our
 business could be adversely affected by security breaches through cyber-attacks, cyber intrusions,
 or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· If
 we are unable to implement and maintain effective internal control over financial reporting
 in the future, investors may lose confidence in the accuracy and completeness of our financial
 reports and the market price of our Class A common stock may decline.

· The
 consolidation of investment funds or operating businesses of our portfolio companies could
 make it more difficult to understand the operating performance of the Company and could create
 operational risks for the Company.

· Our
 Bylaws have an exclusive forum for adjudication of disputes provision which limits the forum
 to the Delaware Court of Chancery for certain stockholder litigation matters actions against
 the Company, which may limit an investor's ability to seek what they regard as a favorable
 judicial forum for disputes with the Company or its directors, officers, employees, or stockholders.

· If
 we were deemed to be an "investment company" under the Investment Company Act,
 applicable restrictions could make it impractical for us to continue our businesses as conducted
 and could have a material adverse effect on our businesses.

· Extensive
 regulation of our businesses affects our activities and creates the potential for significant
 liabilities and penalties. The possibility of increased regulatory focus could result in
 additional burdens on our business. Changes in tax law and other legislative or regulatory
 changes could adversely affect us.

· The
 dual class structure of our common stock has the effect of concentrating voting control with
 our executive officers, which will limit your ability to influence the outcome of important
 transactions.

· We
 may not be able to satisfy listing requirements of Nasdaq or obtain or maintain a listing
 of our Class A common stock on Nasdaq.

· No
 public market for our Class A common stock currently exists, and an active trading market
 may not develop or be sustained following this offering.

· Our
 share price may be volatile, and you may be unable to sell your shares at or above the offering
 price.

· Future
 sales and issuances of our Class A common stock or rights to purchase Class A common stock,
 including pursuant to our equity incentive plans, could result in additional dilution of
 the percentage ownership of our stockholders and could cause the stock price of our Class
 A common stock to decline.

· Future
 sales of our Class A common stock in the public market could cause our share price to fall.

· We
 expect to incur significant additional costs as a result of being a public company, which
 may adversely affect our business, financial condition and results of operations.

· Our
 disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

· If
 we fail to implement and maintain an effective system of internal control, we may be unable
 to accurately report our operating results, meet our reporting obligations, or prevent fraud.

· We
 are an emerging growth company, and we cannot be certain if the reduced reporting requirements
 applicable to emerging growth companies will make our Class A common stock less attractive
 to investors.

· We
 will be a "controlled company" within the meaning of the listing rules of Nasdaq
 and, as a result, can rely on exemptions from certain corporate governance requirements that
 provide protection to stockholders of other companies.

· Our
 management has broad discretion in the use of the net proceeds from this offering and may
 not use the net proceeds effectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· If
 securities or industry analysts do not publish research or publish unfavorable research about
 our business, our stock price and trading volume could decline.

· If
 you purchase shares of our Class A common stock in this offering, you will incur immediate
 and substantial dilution.

· We
 have never paid dividends on our capital stock, and we do not intend to pay dividends for
 the foreseeable future. Consequently, any gains from an investment in our Class A common
 stock will likely depend on whether the price of our common stock increases.

· Our
 charter documents and Delaware law and the voting control exercised by our founders could
 prevent a takeover that stockholders consider favorable and could also reduce the market
 price of our stock.

· Claims
 for indemnification by our directors and officers may reduce our available funds to satisfy
 successful third-party claims against us and may reduce the amount of money available to
 us.

**Corporate Information**

Our Company was originally founded as Caliber Companies, LLC, organized under the laws of Arizona, and commenced operations in January 2009. In 2014, the Company was reorganized as CaliberCos Inc., as a Nevada corporation. In June 2018, we reincorporated in the state of Delaware. Our corporate office is located at 8901 E. Mountain View Rd. Ste 150, Scottsdale, Arizona 85258. Our telephone number is (480) 295-7600. Our website address is www.caliberco.com. We do not incorporate information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through our website as part of this prospectus.

**Nasdaq Listing**

We intend to list our common stock on Nasdaq. There is no assurance that our listing application will be approved by Nasdaq. The approval of our listing on Nasdaq is a condition of closing. If our application to Nasdaq is not approved or we otherwise determine that we will not be able to secure the listing of the common stock on Nasdaq, we will not complete the offering.

**The Offering**

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Shares of Class A common stock offered by us** | 1,600,000 shares |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Class A common stock to be outstanding after this Offering** | 14,183,587 shares |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Class B common stock outstanding** | 7,416,413 shares |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Class A common stock and Class B common stock to be outstanding after this Offering** | 21,600,000 shares |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Option to purchase additional shares of Class A common stock** | 240,000 shares |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Use of Proceeds** | We estimate that our net proceeds from the sale of our Class A common stock that we are offering will be approximately $6.1 million (or approximately $7.2 million if the underwriters' option to purchase additional shares of our Class A common stock from us is exercised in full), assuming an initial public offering price of $5.00 per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses. <br>The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our Class A common stock. As of the date of this prospectus, we currently intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures. We may also use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. However, we do not have agreements or commitments to enter into any acquisitions at this time. See the section titled "Use of Proceeds" for additional information. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Voting Rights** | We have two classes of common stock: Class A common stock and Class B common stock. Class A common stock is entitled to one vote per share and Class B common stock is entitled to 10 votes per share.<br>Holders of Class A common stock and Class B common stock generally vote together as a single class, unless otherwise required by law or our amended and restated certificate of incorporation. The holders of our outstanding Class B common stock hold approximately 84% of the voting power of our outstanding shares following this offering and will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. See the sections titled "Principal Stockholders" and "Description of Capital Stock" for additional information.  |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Risk Factors** | Investing in our Class A common stock involves a high degree of risk. You should carefully read and consider the information set forth under "Risk Factors" and all other information in this prospectus before investing in our Class A common stock. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Lock-up Agreements** | We, and all of our directors and officers have agreed, or will agree, with the underwriters that, until 180 days after the date of this prospectus (the "restricted period"), subject to certain exceptions, we and they will not, without the prior written consent of Revere Securities LLC and Spartan Capital Securities, LLC (together, the "Representatives"), offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any of our shares of common stock, any options or warrants to purchase any of our shares of common stock or any securities convertible into or exchangeable for or that represent the right to receive shares of our common stock; the Representatives may release any of the securities subject to these lock-up agreements at any time, subject to applicable notice requirements.  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Listing** | We intend to apply to list our Class A common stock on the Nasdaq Capital Market under the symbol "CWD." We believe that upon the completion of this offering, we will meet the standards for listing on Nasdaq. The closing of this offering is contingent upon the successful listing of our common stock on the Nasdaq Capital Market. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directed Share Program | At our request, the underwriters have reserved up to 10% of the shares of Class A common stock offered in this offering for sale at the initial public offering price to certain persons who are our directors, officers and employees, and certain friends and family members of these persons, and certain clients and prospective clients, through a directed share program. Any sales made through the directed share program will be made by the underwriters. We do not know if these persons will choose to purchase all or any portion of these reserved shares of Class A common stock, but any purchases they do make will reduce the number of shares of Class A common stock available to the general public. Any directed shares not purchased will be offered by the underwriters to the general public on the same terms as all other shares of Class A common stock offered by this prospectus. Shares purchased through the directed share program by Caliber's directors and officers, who will sign a lock-up agreement in connection with the offering, will be subject to the lock-up period and restrictions as described in "Underwriting-Directed Share Program." |

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The number of shares of Class A common stock that will be outstanding after this offering set forth above is based on 14,183,587 shares of Class A common Stock outstanding as of November 23, 2022, after giving effect to the conversion of all shares of Series B Preferred Stock into Class A common stock which will occur on the effective date of this offering, and (i) does not give effect to (x) the conversion of Class B common stock to Class A common stock, (y) the conversion of convertible debt securities into Class A common stock, and (z) the exercise of any warrants or stock options or vesting of restricted stock units outstanding as of the date hereof and (ii) excludes shares of Class A Common Stock reserved for future grant or issuance under our 2017 Plan.

Unless specifically stated otherwise, all information in this prospectus assumes no exercise of the underwriters' over-allotment option.

**Summary of Financial Data**

*The following table sets forth our summary financial data as of the dates and for the periods indicated and gives effect to the 1-for-1.6820384 reverse stock split effected in January 2023. We have derived the summary statement of operations data from our audited annual financial statements for the years ended December 31, 2021 and 2020 and our unaudited interim consolidated financial statements for the nine months ended September 30, 2022 and 2021 included elsewhere in this prospectus. In our opinion, the unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with our audited annual consolidated financial statements and contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such financial statements.*

*The historical results presented below are not necessarily indicative of the results to be expected for any future period and our interim results are not necessarily indicative of the results that may be expected for a full year. The following summaries of our financial data for the periods presented should be read in conjunction with the sections of this prospectus entitled "Risk Factors," "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes included elsewhere in this prospectus.*

**Consolidated Statements of Operations** (Amounts in thousands, except per share data)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** | **2021** | **2020** |
| Revenue | $62489 | $36072 | $56033 | $37877 |
| Consolidated funds revenue | 48672 | 30854 | 46158 | 31409 |
| Operating costs | 8421 | 6045 | 9685 | 10972 |
| Consolidated funds expenses | 50932 | 43718 | 61531 | 49227 |
| Interest expense | 685 | 546 | 712 | 736 |
| Other income, net | (241) | (856) | (1653) | (86) |
| Net income (loss) attributable to CaliberCos Inc. | 4489 | (256) | (698) | (5446) |
| Net income (loss) attributable to noncontrolling interests | 14561 | (16603) | (20469) | (20099) |
| Basic net income (loss) per share | $0.25 | $(0.01) | $(0.03) | $(0.32) |
| Diluted net income (loss) per share | $0.23 | $(0.01) | $(0.03) | $(0.32) |
| Weighted average shares outstanding - basic | 18033 | 17816 | 17824 | 17474 |
| Weighted average shares outstanding - diluted | 19878 | 17816 | 17824 | 17474 |
| Pro forma basic net income (loss) per share <sup>(1)</sup> | $0.23 |  | $(0.03) |  |
| Pro forma diluted net income (loss) per share <sup>(1)</sup> | $0.21 |  | $(0.03) |  |
| Pro forma weighted average shares outstanding - basic <sup>(1)</sup> | 19683 |  | 19978 |  |
| Pro forma weighted average shares outstanding - diluted <sup>(1)</sup> | 21528 |  | 19978 |  |

---

**Consolidated Balance Sheet** (Amounts in thousands)

---

| | | | |
|:---|:---|:---|:---|
|  | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** |
|  | **Actual** | **Pro Forma <sup>(2)</sup>** | **Pro Forma As<br> Adjusted <sup>(3)</sup>** |
| Cash | $4731 | $4731 | $10876 |
| Restricted cash | 23 | 23 | 23 |
| Real estate investments, net | 2030 | 2030 | 2030 |
| Real estate assets held for sale |  |  |  |
| Assets of consolidated funds | 238038 | 238038 | 238038 |
| Total assets | 260251 | 260251 | 266396 |
| Notes payable | 13444 | 13444 | 13444 |
| Notes payable - related party | 365 | 365 | 365 |
| Buyback obligation | 12469 |  |  |
| Due to related parties | 25 | 25 | 25 |
| Other liabilities | 353 | 353 | 353 |
| Liabilities of consolidated funds | 153457 | 153457 | 153457 |
| Total liabilities | 182647 | 170178 | 170178 |
| Treasury stock | (13626) |  |  |
| Stockholders' (deficit) equity attributable to CaliberCos Inc. | (829) | 11640 | 17785 |
| Stockholders' equity attributable to noncontrolling interests | 78433 | 78433 | 78433 |
| Total stockholders' equity | 77604 | 90073 | 96218 |

---

(1) Gives effect to the automatic conversion of all shares of Series B
 Preferred Stock into Class A common stock on the effective date of this offering.

(2) Pro forma basis gives effect to (i) the automatic conversion of all
 outstanding shares of Series B Preferred Stock into Class A common stock on the effective date of this offering and (ii) the termination
 of the Company's obligation to repurchase shares of a non-participating founder's shares of common stock, which obligation
 terminates on the effective date of this offering, resulting in the elimination of a previously booked contingent liability from
 such obligation and a corresponding addition to stockholders' equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Pro forma as adjusted amounts reflect the sale of 1,600,000 shares
 in this offering at the assumed initial public offering price of $5.00 per share and after deducting the estimated underwriting
 discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public
 offering price of $5.00 per share would increase (decrease) the pro forma as adjusted amount of each of cash, working capital, total
 assets and total stockholders' equity by approximately $1.5 million, assuming that the number of shares offered by us, as set
 forth on the cover of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and
 estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares offered by us would increase
 (decrease) the net proceeds to us from this offering by approximately $4.6 million, assuming the assumed initial public offering
 price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable
 by us.

**RISK FACTORS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Investing in our Class A common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether to invest in shares of our Class A common stock. If any of the following risks actually occurs, our business, results of operations and financial condition could be materially adversely affected. In this case, the trading price of our Class A common stock would likely decline, and you might lose part or all your investment in our Class A common stock.*

**Risks Related to Our Business**

***Our business depends in large part on our ability to raise capital for our funds from investors. If we were unable to raise such capital, we may be unable to grow our asset management fees and our transaction fees may be materially impacted. The inability to deploy such capital into investments, may materially reduce our revenues and cash flows and adversely affect our financial condition.***

We depend on the capital markets to grow our Assets Under Management, ("AUM"), and we depend on third-party equity and debt financings to acquire properties for our funds. We intend to continue to raise a significant amount of equity and debt to acquire various alternative investments for our funds in the ordinary course of our business. Our debt financing depends on a combination of seller financing, the assumption of existing loans, government agencies, and financial institutions. We depend on equity financing from equity partners, which may include public or private companies, pension funds, family offices, financial institutions, endowments, high net worth individuals, and money managers. Our access to capital funding for our funds is uncertain. Our inability to raise additional capital for our funds on terms reasonably acceptable to us could jeopardize the future growth of our business.

Our ability to raise capital from investors in our funds depends on several factors, including many that are outside our control. Investors may downsize their investment allocations to alternative asset managers, including private funds and hedge funds, to rebalance a disproportionate weighting of their overall investment portfolio among asset classes. Poor performance of our funds could also make it more difficult for us to raise new capital. Our investors and potential investors continually assess our funds' performance independently and relative to market benchmarks and our competitors, and our ability to raise capital for existing and future funds depends on our funds' performance. The financial markets are affected by many factors, such as U.S. and foreign economic conditions and general trends in business and finance that are beyond our control, which could be adversely affected by changes in the equity or debt marketplaces, unanticipated changes in currency exchange rates, interest rates, inflation rates, the yield curve, financial crises, changes in regulation, war, terrorism, natural disasters and other factors that are difficult to predict. Recently, markets have been affected by the COVID-19 pandemic, inflation in the United States, the imposition of sanctions and the escalation of hostilities between Russia and Ukraine. In the event that the U.S. or international financial markets suffer a severe or prolonged downturn or increased volatility, our funds' investments may lose value and investors may choose to withdraw assets from our funds and use the assets to pay expenses or transfer them to investments that they perceive to be more secure, such as bank deposits and Treasury securities. If economic and market conditions deteriorate, we may be unable to raise sufficient capital to support the investment activities of future funds. If we are unable to successfully raise capital, our revenues and cash flows would be reduced, and our financial condition would be adversely affected.

***Changes in prevailing interest rates may reduce our profitability, and we may not be able to adequately anticipate and respond to changes in market interest rates.***

The majority of our funds' assets are monetary in nature and subject to risk from changes in interest rates. Our earnings and cash flows depend to a great extent upon the difference between the interest our funds pay on loans and borrowings and the value of fixed-rate debt investments made by our funds. Depending on the terms and maturities of our assets and liabilities, a significant change in interest rates could have a material adverse effect on our profitability. In addition, rising interest rates, coupled with periods of significant equity and credit market volatility may potentially make it more difficult for us to find attractive opportunities for our funds to exit and realize value from their existing investments.

Interest rates remained at relatively low levels on a historical basis and the U.S. Federal Reserve maintained the federal funds target range at 0.0% to 0.25% for much of 2020 and 2021. During approximately the first ten months of 2022, the Federal Reserve raised interest rates by an aggregate of 375 basis points. The consensus is that rates will be increased additional times during 2022. Additionally, the current geopolitical environment in Europe provides yet another layer of uncertainty around the actions that the Federal Reserve might take. Market interest rates are affected by many factors outside of our control, including governmental monetary policies, domestic and international economic conditions, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. Rising interest rates create downward pressure on the price of real estate, increase the cost and reduce the availability of debt financing for the transactions our funds pursue and decrease the value of fixed-rate debt investments made by our funds, each of which may have an adverse impact on our business.

Increased costs of borrowing could also cause us to reconsider the purchase of certain real estate assets, the terms of any such purchase or the mix of debt and equity we employ in connection with such purchase. Such issues are expected to be more prevalent in a continued rising interest rate environment. A higher interest rate environment may lead to a significant contraction or weakening in the market for debt financing or have other adverse changes relating to the terms of debt financing (such as, for example, higher equity requirements and/or more restrictive covenants), particularly in the area of acquisition financings for private equity and real estate transactions, which could have a material adverse impact on our business. In a rising interest rate environment, the financing of acquisitions or the operations of our funds' portfolio companies with debt may also become less attractive due to the cost of capital or limitations on the deductibility of corporate interest expense. If our funds are unable to obtain committed debt financing for potential acquisitions, can only obtain debt financing at an increased interest rate or on unfavorable terms, or the ability to deduct corporate interest expense is substantially limited, our funds may face increased competition from strategic buyers of assets who may have an overall lower cost of capital or the ability to benefit from a higher amount of cost savings following an acquisition, or may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than would otherwise be the case, each of which could lead to a decrease in our revenues.

In addition, if our funds are unable to obtain committed debt financing for potential acquisitions, can only obtain debt financing at an increased interest rate or on unfavorable terms, this would require us to employ a higher mix of equity to acquire real estate assets. The cost of equity in a rising interest rate environment may also become more expensive; we may be required to offer a higher rate of return on equity in order to finance such assets. This in turn would adversely affect our profitability from such assets. While to date our funds' borrowing costs have not substantially increased, as rates continue to increase, our ability to use leverage as a financing tool or to pass along any increased costs of borrowing or financing will become more difficult, all of which could have an adverse effect on our profitability.

***Inflation can have an adverse impact on our business and on our customers.***

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 7.7% in October 2022. As a result, during approximately the first ten months of 2022, the Federal Reserve has increased the federal funds rate by 375 basis points and has indicated its intention to continue to increase interest rates in an effort to combat inflation. For project execution, inflation has increased the cost of nearly all building materials and labor types, increasing the cost of construction and renovation of our funds' assets. Furthermore, third parties we do business with, such as developers and contractors, are also affected by inflation and the rising costs of goods and services used in their businesses. A significant and continued increase in interest rates and inflation would be expected to have a negative impact on their ability to do business with us, which would affect our profitability.

***A decline in the pace of growth or size of investment made by our funds may adversely affect our revenues.***

Revenues we derive from our asset management and related services are driven in part by the pace at which our funds make investments and the size of those investments. A decline in the pace or the size of such investments may reduce our revenues. The pace of our investments could decline due to, among other factors, the market environment for private equity transactions, which has at times been characterized by relatively high prices, and such market changes make the deployment of capital more difficult. In addition, many other factors could cause a decline in the pace of investment, including the inability of our investment professionals to identify attractive investment opportunities, competition for such opportunities among other potential acquirers, decreased availability of capital on attractive terms, and our failure to consummate identified investment opportunities because of business, regulatory or legal complexities or uncertainty and adverse developments in the U.S. or global economy or financial markets. In addition, if our funds are unable to deploy capital at a pace that is sufficient to offset the pace of realizations, our fee revenues could decrease.

***Our revenue, earnings, net income, and cash flows can all vary materially, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of our Class A common stock to decline.***

We have in the past and may in the future experience fluctuations in our results, including our revenue and net income, from quarter to quarter due to a number of other factors, including timing of realizations, changes in the amount of distributions or interest paid in respect of investments, changes in our operating expenses, the degree to which we encounter competition and general economic and market conditions. Achieving steady growth in net income and cash flow on a quarterly basis may be difficult, which could in turn lead to large adverse movements or general increased volatility in the price of our Class A common stock. We also do not provide any guidance regarding our expected quarterly and annual operating results. The lack of guidance may affect the expectations of public market analysts and could cause increased volatility in our Class A common stock price.

Our revenue, net income, and cash flows can all vary materially due to Performance Allocations (income earned with respect to our carried interest is recorded as Performance Allocations) in any fiscal period. Performance Allocations depend on our funds' performance and opportunities for realizing gains, which may be limited. Our cash flow may fluctuate significantly due to the fact that we receive Performance Allocations from our carry funds only when portfolio companies make distributions in excess of preferred return hurdles, or when investments are realized and achieve a minimum preferred return. It takes a substantial period of time to identify attractive investment opportunities, to raise all the funds needed to make an investment, to manage the performance of the investment, and then to realize the cash value (or other proceeds) of an investment through a sale, public offering, recapitalization or other exit. Even if an investment proves to be profitable, it may be several years before any profits can be realized in cash (or other proceeds). We cannot predict with certainty exactly when, or if, any Performance Allocations will or may occur.

In addition, upon the realization of a profitable investment by any of our funds and prior to our receiving any Performance Allocations in respect of that investment, 100% of the net proceeds from such realization must generally be paid to the investors in that fund until they have achieved a certain return on all realized investments by that fund. A particular realization event may have a significant impact on our results for that particular quarter that may not be replicated in subsequent quarters. We recognize revenue on investments in our investment funds based on our allocable share of realized gains (or losses) reported by such investment funds, and a decline in gains, or an increase in losses, would adversely affect our revenue and possibly cash flow, which could further increase the volatility of our quarterly results. Because our carry funds have preferred return thresholds to investors that need to be met prior to our receiving any Performance Allocations, substantial declines in the carrying value of the investment portfolios of a fund can significantly delay or eliminate any Performance Allocations paid to us in respect of that fund since the value of the assets in the fund would need to recover to their aggregate cost basis plus the preferred return over time before we would be entitled to receive any Performance Allocations from that fund.

The timing and receipt of Performance Allocations also varies with the life cycle of our funds. During periods in which a relatively large portion of our assets under management are attributable to funds and investments in their "optimized" period, our funds would make larger distributions than in the fundraising or investment periods that precede the optimized period. During periods in which a significant portion of our assets under management is attributable to funds that are not in their optimized periods, we may receive substantially lower Performance Allocations.

***We may need additional capital, and financing may not be available on terms acceptable to us, or at all.***

We use cash to (a) provide capital to facilitate the growth of our existing businesses, which principally includes funding our general partner and co-investment commitments to our funds, (b) provide capital for business expansion and (c) pay operating expenses and other obligations as they arise, including servicing our debt. There is no guarantee that in the future we will generate enough working capital to support our business. Although we believe that our anticipated cash flows from operating activities, together with cash on hand and the proceeds of this offering, will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next twelve months, we cannot assure you this will be the case. We may need additional cash resources in the future if we experience changes in business conditions or other developments. If the global economy and conditions in the financing markets worsen, our fund investment performance could suffer, resulting in, for example, the payment of less or no Performance Allocations to us. This could materially and adversely affect the amount of cash we have on hand, including for, among other purposes, the payment of dividends to our stockholders. Having less cash on hand could in turn require us to rely on other sources of cash (such as the capital markets, which may not be available to us on acceptable terms) for the above purposes. Furthermore, during adverse economic and market conditions, we might not be able to renew all or part of our existing credit facility or find alternate financing on commercially reasonable terms. As a result, our uses of cash may exceed our sources of cash, thereby potentially affecting our liquidity position.

We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue additional equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

***The global outbreak of the novel coronavirus, or COVID-19, has caused severe disruptions to global economies and has adversely impacted, and may continue to adversely impact, our performance, and results of operations.***

The COVID-19 pandemic and related shutdowns or limitations in the operations of certain non-essential businesses have created economic and financial disruptions that have adversely impacted, and may continue to adversely impact, our business, financial condition, results of operations, liquidity and prospects materially. The pandemic has also exacerbated many of the other risks discussed in this "Risk Factors" section. Although an economic recovery is partially underway, it continues to be uneven and characterized by dispersion across sectors and regions, with uncertainty regarding its ultimate length and trajectory.

The longer the pandemic impacts activity levels in the locations and sectors in which we and our funds operate, the more likely it is to have a sustained, material impact on the economy and on us. In particular, issues with respect to the distribution or adoption of vaccines or the spread of variants of the virus could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. These and other factors may delay a return to pre-pandemic, ordinary course economic activity, or cause the U.S. economy or other major global economies to experience a recession.

If, and when, the COVID-19 pandemic subsides, the market turmoil and other changes associated with the pandemic may have lasting effects on our business and operations. The proliferation of remote working may result in long-term changed market, consumer and workplace practices that could negatively impact us and our business. Increased adoption of and familiarity with remote work practices could result in continued decreased demand for business and leisure travel, hotel stays, conference facilities, and select U.S. urban residential and office assets. In addition, consumer practices and demands may permanently, or for an extended period, change from what they were prior to the onset of COVID-19, including avoiding activities where people are in proximity to each other, which could adversely affect certain of our investments. Failure of our investment strategies to adapt to these and other changes, including potential future global pandemics, could adversely impact the returns on our investments.

Adverse impacts on our business as a result of the COVID-19 pandemic include, and may in the future include, but are not limited to:

**Asset Management Fees**. While the market recovery since the onset of the COVID-19 pandemic has contributed to capital deployment, realization, and fundraising activity, a potential market downturn may cause us to experience a decline in the growth of our assets under management and our existing investments' ability to pay their current asset management fees to us. The pandemic slowed our anticipated fundraising pace for new or successor funds from March through October of 2020 and slowed our expected fee growth. We may experience another such decline in the pace of our investments and of our recovery. If our funds are unable to deploy capital at a pace that is sufficient to offset the pace of our realizations, our asset management fee revenues could decrease. In addition, COVID-19 had a dramatic impact on our hospitality portfolio by limiting earnings and cash flow. In some cases, we have chosen to delay or defer the collection of our management fees until the performance of that investment has recovered. Although the industry has seen some measurable improvement in 2021, the recovery of the sector may prove to be slow or could reverse. Should this occur, we may continue to delay collecting our asset management fees timely which, over time, would have a negative impact on our liquidity.<br>

**Performance Allocations.** Our ability to realize value from our investments was adversely impacted, and could continue to be adversely impacted, by decreased portfolio company revenues and earnings, lack of potential buyers with financial resources to pursue an acquisition, and limited access to the equity capital markets. During parts of 2020, limited opportunities for realizing gains delayed or eliminated receipt of performance revenues as preferred return thresholds became harder to achieve. Although the continuing market recovery has contributed to capital deployment and realizations, a potential market downturn, or a slower economic recovery, and associated declines in the value of investments as well as limited capital deployment and realization opportunities could reduce our performance revenues.

**Advisory and Transaction Fees**. As noted elsewhere, the pandemic slowed both our anticipated investment funds fundraising pace and our ability to complete both buy and sell transactions in 2020 and much of 2021, which resulted in the elimination of the ancillary activities we provide to our funds and the revenues derived from such activity. We also saw certain asset-level activities, such as construction, slow, causing a negative impact on our fees. While we have begun to experience a return to pre-pandemic transactional behaviors, a market recession caused by a resurgence in COVID infection rates could continue to put downward pressure on our ability to generate and collect advisory and transaction related fees.

**Investment Performance**. Many of our investments are in industries that have been materially impacted by COVID-19 and related public health restrictions and recommendations, including shutdowns or limitations in operations. For example, certain investments in our real estate portfolio, such as those in the hospitality sector have experienced material reductions in value and continue to be adversely impacted. We have also seen an increasing focus toward rent regulation as a means to address residential affordability caused by undersupply of housing in the United States. Such conditions may contribute to adverse operating performance, including by moderating rent growth in our residential portfolio. During the year ended December 31, 2020, the valuation of certain sectors of our portfolio, particularly in the sectors most directly impacted by the COVID-19 pandemic, declined significantly from their valuations on December 31, 2019. Furthermore, such negative market conditions could potentially result in a portfolio company entering bankruptcy proceedings, thereby potentially resulting in a complete loss of the fund's investment in such portfolio company and a significant negative impact to the investment fund's performance and consequently to our operating results and cash flow, as well as to our reputation.<br>

**-** **Liquidity**. Our portfolio companies faced, and may face in the future, increased credit and liquidity risk due to volatility in financial markets, reduced revenue streams, and limited access or higher cost of financing, which may result in potential impairment of our or our funds' investments. Changes in the debt financing markets impacted, and may in the future impact, the ability of our portfolio companies to meet their respective financial obligations. For example, the initial outbreak of the pandemic created additional pressure for certain of our portfolio companies' and investments' liquidity needs, by adversely impacting rent collection and operational performance in the hospitality sector. Although we have multiple sources of liquidity to meet our capital needs, changes in the debt financing markets may also impact our ability to refinance our debt obligations. In addition, tenants leasing real estate properties owned by our funds may not be able to pay rents in a timely manner or at all, resulting in a decrease in value of our funds' credit and real estate investments and lower than expected return.

**Employee-Related Risks**. COVID-19 continues to present a threat to our employees' and their families' well-being. Our employees or executive officers may become sick or otherwise unable to perform their duties for an extended period of time. Further, extended public health restrictions and remote working arrangements may impact employee morale. In addition to any potential impact of such extended illness on our operations, we may be exposed to the risk of litigation by our employees against us for, among other things, failure to take adequate steps to protect their well-being, particularly in the event they become sick after a return to the office. A prolonged period of remote work may also make it more difficult to integrate new employees and maintain our culture.<br>

**Operational Risks**. In accordance with local government guidance and social distancing recommendations, the majority of our employees have been working remotely during the COVID-19 pandemic. While our technology infrastructure has supported remote work, such working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts. In addition, third- party service providers on whom we have become increasingly reliant for certain aspects of our business could be impacted by an inability to perform due to COVID-19 restrictions or by failures of, or attacks on, their information systems and technology.<br>

The extent to which the COVID-19 pandemic will affect our business, financial condition, results of operations, liquidity and prospects materially will depend on future developments, including the duration, spread and intensity of the pandemic, the duration of government measures to mitigate the pandemic and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and difficult to predict.

***We could lose part or all of our investments, which could have a material adverse effect on our financial condition and results of*** ***operations.***

There is an inherent risk that we could lose all or part of our investment in certain assets. Our investments are generally illiquid, which may affect our ability to change our asset mix in response to changes in economic and other conditions. The value of our investments can also be diminished by:

&nbsp;&nbsp;&nbsp;&nbsp;· civil
 unrest, acts of war and terrorism and acts of God, including earthquakes, hurricanes, and
 other natural disasters (which may result in uninsured or underinsured losses);

&nbsp;&nbsp;&nbsp;&nbsp;· the
 impact of present or future legislation (including environmental regulation, changes in laws
 concerning foreign ownership of property, changes in tax rates, changes in zoning laws and
 laws requiring upgrades to accommodate disabled persons) and the cost of compliance with
 these types of legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;· liabilities
 relating to claims, to the extent insurance is not available or is inadequate.

***The historical*** ***returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our Class A common stock.***

An investment in our Class A common stock is not an investment in any of our funds. You should not conclude that positive performance of our funds will necessarily result in positive returns on an investment in our Class A common stock. The historical performance of our funds is relevant to us primarily insofar as it is indicative of asset management fees, performance allocations, and advisory and transaction fees we have earned in the past and may earn in the future and our reputation and ability to raise new funds.

In addition, the historical returns of our funds may not be indicative of any future returns of these or from any future funds we may raise due to several factors including:

&nbsp;&nbsp;&nbsp;&nbsp;· market
 conditions during previous periods may have been more favorable for generating positive performance
 than the market conditions we may experience in the future; and

· our
 funds' returns may have previously benefited from investment opportunities and general
 market conditions that may not recur, and we may not be able to achieve the same returns
 or profitable investment opportunities or deploy capital as quickly.

***We may be subject to litigation risks and may face liabilities and damage to our professional reputation as a result of*** ***investment decisions on behalf of investors in our funds.***

We make investment decisions on behalf of investors in our funds that could result in substantial losses. This may subject us to the risk of legal liabilities or actions alleging negligent misconduct, breach of fiduciary duty, or breach of contract. Further, we may be subject to third-party litigation arising from allegations that we improperly exercised control or influence over portfolio investments.

These and other legal liabilities could have a material adverse effect on our businesses, financial condition, our results of operations, or cause reputational harm to us, which could harm our businesses. We depend, to a large extent, on our business relationships and our reputation for integrity and professional services to attract and retain investors and to pursue investment opportunities for our funds. As a result, allegations of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities, or the investment industry in general, whether or not valid, may harm our reputation, which may be damaging to our businesses.

***Actions of any joint venture partners that we may have could reduce the returns on joint venture investments.***

At times we enter joint ventures or partnerships to acquire and develop properties. Such investments may involve risks not otherwise present with other methods of investment, including:

&nbsp;&nbsp;&nbsp;&nbsp;· that
 our co-venturer, or partner in an investment could become insolvent or bankrupt;

&nbsp;&nbsp;&nbsp;&nbsp;· that
 such co-venturer, or partner may at any time have economic or business interests or goals
 that are or that become inconsistent with our business interests or goals;

&nbsp;&nbsp;&nbsp;&nbsp;· that
 such co-venturer, or partner may be in a position to take action contrary to our instructions,
 requests or our policies or objectives; or

&nbsp;&nbsp;&nbsp;&nbsp;· that
 disputes between us and our co-venturer, or partner, may result in litigation or arbitration
 that would increase expenses.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment.

***Our reliance on third parties to operate and to develop certain of our properties may harm our business.***

In some instances, we rely on third-party property managers and hotel operators to manage our properties. These third parties are directly responsible for the day-to-day operation of our properties with limited supervision by us, and they often have potentially significant decision-making authority with respect to those properties. These third parties may fail to manage our properties effectively or in accordance with their agreements with us, may be negligent in their performance and may engage in criminal or fraudulent activity. If any of these events occur, we could incur losses or face liabilities from the loss or injury to our property or to persons at our properties. In addition, disputes may arise between us and these third-party managers and operators, and we may incur significant expenses to resolve those disputes or terminate the relevant agreement with these third parties and locate and engage competent and cost-effective service providers to operate and manage the relevant properties.

In addition, we are also parties to hotel management agreements. If any of these events occur, our relationships with any franchisors may be damaged, we may be in breach of our franchise agreement, and we could incur liabilities resulting from loss or injury to our property or to persons at our properties. From time to time, disputes may arise between us and our third-party managers regarding their performance or compliance with the terms of the hotel management agreements, which in turn could adversely affect us. If we are unable to resolve such disputes through discussions and negotiations, we may choose to terminate our management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the expense of which may be material and the outcome of which may harm our business, operating results or prospects.

***Changes in relevant tax laws, regulations, treaties, or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rate and tax liability.***

Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties. These laws, regulations and treaties are complex, and the manner which they apply to us and our funds is sometimes open to interpretation. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Although management believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities, the tax authorities could challenge our interpretation resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate. In particular, changes in legislation or regulation relating to Opportunity Zones could adversely affect our ability to form new Opportunity Zone Funds or to acquire assets for our existing Opportunity Zone Funds, thereby diminishing our ability to generate revenue from those activities.

***Conflicts of interest exist between our Company and related parties.***

Conflicts of interest exist and may arise in the future as a result of the relationships between our Company and its affiliates and divisions and our officers, directors and owners, on the one hand, and our funds and its investors, on the other hand. We earn fees from our funds, including our carried interest which value is a direct result from the performance of our funds. There may be instances where the interests of our funds and the investors in such funds diverge from those of our Company which could result in conflicts of interest. In resolving these conflicts, our board of directors and executive officers have a fiduciary duty to our stockholders. In addition, as we operate as a Fund Manager through a wholly owned subsidiary, our Company has a fiduciary duty to investors in the funds we manage. Unless the resolution of a conflict is specifically provided for in the operating agreements of such funds, our board of directors may consider a wide range of factors they determine to be in good faith when resolving a conflict. An independent third party is not required to evaluate the resolution. As a result of the foregoing, there may be instances where any such conflicts are resolved in a manner which favors the interests of our funds and their investors over our stockholders. See Certain Relationships and Related Party Transactions.

***Risk management activities may adversely affect the return on our funds' investments.***

When managing our exposure to market risks, we may (on our own behalf or on behalf of our funds) from time to time use forward contracts, options, swaps, caps, collars and floors, or pursue other strategies or use other forms of derivative instruments to limit our exposure to changes in the relative values of investments that may result from market developments, including changes in prevailing interest rates, currency exchange rates and commodity prices. The success of any hedging or other derivative transactions generally will depend on our ability to correctly predict market changes, the degree of correlation between price movements of a derivative instrument, the position being hedged, the creditworthiness of the counterparty and other factors. As a result, while we may enter into a transaction in order to reduce our exposure to market risks, the transaction may result in poorer overall investment performance than if it had not been executed. Such transactions may also limit the opportunity for gain if the value of a hedged position increases.

While such hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other risks. These arrangements may require the posting of cash collateral at a time when a fund has insufficient cash or illiquid assets such that the posting of the cash is either impossible or requires the sale of assets at prices that do not reflect their underlying value. Moreover, these hedging arrangements may generate significant transaction costs, including potential tax costs, that reduce the returns generated by a fund. Finally, the Commodity Futures Trading Commission (the "CFTC") may in the future require certain foreign exchange products to be subject to mandatory clearing, which could increase the cost of entering into currency hedges.

***Our real estate funds are subject to the risks inherent in the ownership, development, and operation of real estate.***

Investments in our real estate funds will be subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets, including the deterioration of real estate fundamentals. These risks include, but are not limited to, those associated with the burdens of ownership of real property, general and local economic conditions, changes in supply of and demand for competing properties in an area (as a result, for instance, of overbuilding), fluctuations in the average occupancy and room rates for hotel properties, operating income, the financial resources of tenants, changes in building, environmental, zoning and other laws, casualty or condemnation losses, energy and supply shortages, various uninsured or uninsurable risks, natural disasters, climate change related risks (including climate-related transition risks and acute and chronic physical risks), changes in government regulations (such as rent control), changes in real property tax rates, changes in income tax rates, changes in interest rates, the reduced availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, changes to the taxation of business entities and the deductibility of corporate interest expense, negative developments in the economy that depress travel activity, environmental liabilities, contingent liabilities on disposition of assets, acts of god, terrorist attacks, war and other factors that are beyond our control. In addition, if our real estate funds acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, they will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of our fund, such as weather, labor conditions, or material shortages), and the availability of both construction and permanent financing with favorable terms. In addition, our real estate funds may also make investments in residential real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets.

***Investments by our investment funds may rank junior to investments made by others.***

In most cases, the companies in which our investment funds invest will have indebtedness or equity securities or may be permitted to incur indebtedness or to issue equity securities that rank senior to our investment. By their terms, such instruments may provide that their holders are entitled to receive payments of dividends, interest or principal on or before the dates on which payments are to be made in respect of our investment. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a company in which an investment is made, holders of securities ranking senior to our investment would typically be entitled to receive payment in full before distributions could be made in respect of our investment. After repaying senior security holders, the company may not have any remaining assets to use for repaying amounts owed in respect of our investment. To the extent that any assets remain, holders of claims that rank equally with our investment would be entitled to share on an equal and ratable basis in distributions that are made out of those assets. Also, during periods of financial distress or following an insolvency, the ability of our investment funds to influence a company's affairs and to take actions to protect their investments may be substantially less than that of the senior creditors.

***Rapid growth of our businesses may be difficult to sustain and may place significant demands on our administrative, operational, and financial resources.***

Our assets under management have grown significantly in the past, and we are pursuing further growth in the near future, both organically and through acquisitions. Our rapid growth has placed, and planned growth, if successful, will continue to place, significant demands on our legal, accounting and operational infrastructure, and has increased expenses. The complexity of these demands, and the expense required to address them, is a function not simply of the amount by which our assets under management has grown, but of the growth in the variety and complexity of, as well as the differences in strategy between, our different funds. In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the investment management market and legal, accounting, regulatory, and tax developments.

Our future growth will depend in part on our ability to maintain an operating platform and management system sufficient to address our growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources.

***We depend on our founders, senior professionals, and other key personnel, and our ability to retain them and attract additional qualified personnel is critical to our success and our growth prospects.***

We depend on the diligence, skill, judgment, business contacts and personal reputations of our founders, senior professionals and other key personnel. Our future success will depend upon our ability to attract and retain senior professionals and other personnel. Our executives have built highly regarded reputations in the alternative investment industry. Our executives attract business opportunities and assist both in negotiations with lenders and potential joint venture partners and in the representation of large and institutional clients. If we lost their services, our relationships with lenders, joint ventures, and clients would diminish significantly.

In addition, some of our officers have strong regional reputations, and they aid in attracting business, identifying opportunities, and negotiating for us and on behalf of our clients. As we continue to grow, our success will largely depend on our ability to attract and retain qualified personnel in all areas of business. We may be unable to continue to hire and retain a sufficient number of qualified personnel to support or keep pace with our planned growth.

***Our management team has limited public company experience.***

Our management team has limited public company experience. Our entire management team, as well as other Company personnel, will need to devote substantial time to compliance, and may not effectively or efficiently manage our transition into a public company. If we are unable to effectively comply with the regulations applicable to public companies or if we are unable to produce accurate and timely financial statements, which may result in misstatements that may be material in our financial statements or possible restatement of financial results, our stock price may be materially adversely affected. Any such failures could also result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our securities, harm to our reputation and diversion of financial and management resources from the operation of our business, any of which could materially adversely affect our business, financial condition, results of operations, and growth prospects. Additionally, the failure of a key employee to perform in his or her current position could result in our inability to continue to grow our business or to implement our business strategy.

***We may expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.***

We intend, if market conditions warrant, to grow our businesses by increasing assets under management in existing businesses and expanding into new investment strategies, geographic markets and businesses. We may pursue growth through acquisitions of critical business partners or other strategic initiatives, which may include entering into new lines of business.

Attempts to expand our businesses involve a number of special risks, including some or all of the following:

&nbsp;&nbsp;&nbsp;&nbsp;· the
 required investment of capital and other resources;

· the
 diversion of management's attention from our core businesses;

· the
 assumption of liabilities in any acquired business;

· the
 disruption of our ongoing businesses;

· entry
 into markets or lines of business in which we may have limited or no experience;

· increasing
 demands on our operational and management systems and controls;

· compliance
 with additional regulatory requirements;

· potential
 increase in investor concentration; and

· the
 broadening of our geographic footprint, increasing the risks associated with conducting operations
 in certain jurisdictions where we currently have no experience.

Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business does not generate sufficient revenues or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures, in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control. Because we have not yet identified these potential new investment strategies, geographic markets or lines of business, we cannot identify all of the specific risks we may face and the potential adverse consequences on us and their investment that may result from any attempted expansion.

***We may not be successful in competing with companies in the asset management industry and alternative investment industries, some of which may have substantially greater resources than we do.***

The asset management industry and alternative investment industries are intensely competitive. We compete primarily on a regional, industry, and asset basis.

We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies, and financial markets. We compete for outside investors based on a variety of factors, including investment performance, investor perception of investment managers' drive, focus and alignment of interest, quality of service provided to and duration of relationship with investors, business reputation, and the level of fees and expenses charged for services.

We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price.

We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers, and other parties. Many of these competitors are substantially larger and have considerably greater financial, technical, and marketing resources than are available to us. Many of these competitors have similar investment objectives to ours, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment.

***If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe their intellectual property rights, our business could suffer.***

Our business depends, in part, on our ability to identify and protect proprietary information and other intellectual property such as our client lists and information and business methods. We rely on a combination of trade secrets, confidentiality policies, non-disclosure and other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. However, we may not adequately protect these rights, and their disclosure to, or use by, third parties may harm our competitive position. Our inability to detect unauthorized use of, or to take appropriate or timely steps to enforce, our intellectual property rights may harm our business.

Also, third parties may claim that our business operations infringe on their intellectual property rights. These claims may harm our reputation, cost us money to defend, distract the attention of our management and prevent us from offering some services.

Confidential intellectual property is increasingly stored or carried on mobile devices, such as laptop computers, which increases the risk of inadvertent disclosure where the mobile devices are lost or stolen and the information has not been adequately safeguarded or encrypted. This also makes it easier for someone with access to our systems, or someone who gains unauthorized access, to steal information and use it to our disadvantage. Advances in technology, which permit increasingly large amounts of information to be stored on mobile devices or on third-party "cloud" servers, may exacerbate these risks.

***Our business could be adversely affected by security breaches through cyber-attacks, cyber intrusions, or otherwise.***

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our information technology networks and related systems. These risks include operational interruption, private data exposure, and damage to our relationship with our customers, among others. A security breach involving our networks and related systems could disrupt our operations in numerous ways that could ultimately have an adverse effect on our financial condition and results of operations.

***If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock may decline.***

As a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, in the future, we will be required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act beginning with our annual report on Form 10-K for the fiscal year ending December 31, 2023. We are in the process of designing, implementing, and testing our internal control over financial reporting required to comply with this obligation, which process is time consuming, costly, and complicated. In addition, our independent registered public accounting firm may be required to attest to the effectiveness of our internal control over financial reporting beginning with our annual report on Form 10-K following the date on which we are no longer an "emerging growth company," which may be up to five full years following the date of this offering. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is not effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission, or other regulatory authorities, which could require additional financial and management resources.

**Risks Related to Our Organizational Structure**

***The consolidation of*** ***investment funds or operating businesses of our portfolio companies could make it more difficult to understand the operating performance of the Company and could create operational risks for the Company.***

Under applicable generally accepted accounting principles in the United States of America ("U.S. GAAP"), we may be required to consolidate certain of our funds, limited liability companies, partnerships or operating businesses if we determine that these entities are variable interest entities ("VIEs") and where we determine that the Company is the primary beneficiary of the VIE. The consolidation of such entities could make it difficult for an investor to differentiate the assets, liabilities, and results of operations of the Company apart from the assets, liabilities, and results of operations of the consolidated VIEs. The assets of the consolidated VIEs are not available to meet our liquidity requirements. As of September 30, 2022, December 31, 2021 and 2020, total assets of our consolidated VIEs reflected in our consolidated balance sheets were $238 million, $232 million and $219 million, respectively, and as of September 30, 2022, December 31, 2021 and 2020, total liabilities of our consolidated VIEs reflected in our consolidated balance sheets were $153 million, $167 million and $155 million, respectively.

***Our Bylaws have an exclusive forum for adjudication of disputes provision which limits the forum to the Delaware Court of Chancery for certain stockholder litigation matters actions against the Company, which may limit an investor's ability to seek what they regard as a favorable judicial forum for disputes with the Company or its directors, officers, employees, or stockholders.***

Section 7.06(a) of Article VII of our Bylaws dictates that, unless we consent in writing to the selection of an alternative forum, the Delaware Court of Chancery (or, if the Delaware Court of Chancery does not have jurisdiction, the federal district court for the State of Delaware) is, to the fullest extent permitted by law, the sole and exclusive forum for certain actions including derivative action or proceeding brought on behalf of the Company; an action asserting a breach of fiduciary duty owed by an officer, director, employee or to the stockholders of the Company; any claim arising under Delaware corporate law, our amended and restated certificate of incorporation or our amended and restated bylaws; and any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions of Section 7.06 of Article VII of our Bylaws.

A Delaware corporation is allowed to mandate in its corporate governance documents a chosen forum for the resolution of state law-based stockholder class actions, derivative suits and other intra-corporate disputes. With respect to such state law claims, the Company's management believes limiting state law-based claims to Delaware will provide the most appropriate outcomes as the risk of another forum misapplying Delaware law is avoided, Delaware courts have a well-developed body of case law and limiting the forum will preclude costly and duplicative litigation and avoids the risk of inconsistent outcomes. Additionally, Delaware Chancery Courts can typically resolve disputes on an accelerated schedule when compared to other forums.

The choice of forum provisions contained in the Company's Bylaws may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, the enforceability of similar choice of forum provisions in other issuers' bylaws and certificates of incorporation has been challenged in legal proceedings, and it is possible that in connection with any applicable action brought against the Company, a court could find the choice of forum provisions contained in the Company's Bylaws to be inapplicable or unenforceable in such action. As a result, the Company could incur additional costs associated with resolving such actions in other jurisdictions, which could harm the Company's business, operating results and financial condition.

***If we were deemed to be an "investment company" under the Investment Company Act, applicable restrictions could make it impractical for us to continue our businesses as conducted and could have a material adverse effect on our businesses.***

An entity will generally be deemed to be an "investment company" for purposes of the Investment Company Act if:

&nbsp;&nbsp;&nbsp;&nbsp;· it
 is or holds itself out as being engaged primarily, or proposes to engage primarily, in the
 business of investing, reinvesting or trading in securities; or

· absent
 an applicable exemption, it owns or proposes to acquire investment securities having a value
 exceeding 40% of the value of its total assets (exclusive of U.S. government securities and
 cash items) on an unconsolidated basis.

Our exemptions from the registration requirements of an investment company under the Investment Company Act are threefold:

&nbsp;&nbsp;&nbsp;&nbsp;· Our
 parent company does not meet the asset test component of the definition of "investment
 company" under the Investment Company Act as summarized above;

· Our
 investment subsidiaries qualify under the exemption afforded by Section 3(c)(5)(C) of
 the Investment Company Act; and

· Our
 intermediate subsidiaries qualify under the exemption afforded by Section 3(c)(6) of
 the Investment Company Act. See "Investment Company Considerations".

We are engaged primarily in the business of investing services for real estate and real estate-related assets and not primarily in the business of investing, reinvesting, or trading in securities. We hold ourselves out as a vertically integrated alternative asset management firm and do not propose to engage primarily in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that we are, or following this offering will be, required to register as an investment company for purposes of the Investment Company Act. Furthermore, following this offering, we will have no material assets other than interests in certain wholly owned subsidiaries (within the meaning of the Investment Company Act), which in turn will have either direct interests in real estate assets or LLC member/LP partnership interests in affiliated funds. We do not believe that, based on current rules and interpretations, the equity interests in our wholly owned subsidiaries or the LLC member interests consolidated, or unconsolidated affiliated funds qualify as investment securities under the Investment Company Act.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. If anything were to happen that would cause us to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on capital structure, the ability to transact business with affiliates and the ability to compensate senior employees, could make it impractical for us to continue our businesses as currently conducted, impair the agreements and arrangements between and among us, our funds and our senior management, or any combination thereof, and have a material adverse effect on our businesses, financial condition and results of operations. In addition, we may be required to limit the amount of investments that we make as a principal or otherwise conduct our businesses in a manner that does not subject us to the registration and other requirements of the Investment Company Act.

***Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. The possibility of increased regulatory focus could result in additional burdens on our business. Changes in tax law and other legislative or regulatory changes could adversely affect us.***

Our fund management and ancillary businesses are subject to extensive regulation. We are subject to regulation, including periodic examinations, by governmental and self-regulatory organizations in the jurisdictions in which we operate. Many of these regulators are empowered to conduct investigations and administrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or investment adviser from registration or membership. Even if an investigation or proceeding did not result in a sanction or the sanction imposed against us or our personnel by a regulator were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing clients or fail to gain new fund management or financial advisory clients.

In addition, we regularly rely on exemptions from various requirements of the Securities Act, the Exchange Act, the U.S. Investment Company Act of 1940, as amended, or the Investment Company Act, and the U.S. Employee Retirement Income Security Act of 1974, as amended, in conducting our fund management activities. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to become unavailable to us, we could become subject to regulatory action or third-party claims and our business could be materially and adversely affected. If we were deemed an "investment company" under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as conducted and could have a material adverse effect on our business.

In addition, we may be adversely affected by new or revised legislation or regulations imposed by governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.

**Risks Related to this Offering and Ownership of Our Class A Common Stock**

***The dual class structure of our common stock has the effect of concentrating voting control with our executive officers, which will limit your ability to influence the outcome of important transactions.***

Our Class B common stock has 10 votes per share and our Class A common stock, which is the stock we are offering in this offering, has one vote per share. John C. Loeffler, II, our Chief Executive Officer, and Jennifer Schrader, our President and Chief Operating Officer, own all of our outstanding shares of Class B common stock. Together Mr. Loeffler and Ms. Schrader exercise 86% voting control over the Company prior to this offering. As a result, if they act together, these stockholders will be able to exercise significant influence over all matters submitted to our stockholders for approval, including the election of directors and approval of significant corporate transactions, such as (i) making changes to our articles of incorporation whether to issue additional common stock and preferred stock, (ii) employment decisions, including compensation arrangements; and (iii) whether to enter into material transactions with related parties. This control may adversely affect the market price of our Class A common stock.

***We may not be able to satisfy listing requirements of Nasdaq or obtain or maintain a listing of our Class A common stock on Nasdaq.***

If our Class A common stock is listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq's listing requirements, or if we fail to meet any of Nasdaq's listing standards, our Class A common stock may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our Class A common stock from Nasdaq may materially impair our stockholders' ability to buy and sell our Class A common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Class A common stock. The delisting of our Class A common stock could significantly impair our ability to raise capital and the value of your investment.

***No public market for our Class A common stock currently exists, and an active trading market may not develop or be sustained following this offering.***

Prior to this offering, there has been no public market for our Class A common stock. Although we intend to apply to list our Class A common stock on the Nasdaq Capital Market, there is no guarantee that Nasdaq, or any other exchange or quotation system, will permit our Class A common stock to be listed and traded, and the closing of this offering is contingent upon the successful listing of our Class A common stock on the Nasdaq Capital Market. Furthermore, even if our Class A common stock is approved for listing on Nasdaq, an active trading market may not develop following the closing of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital necessary to continue to fund operations and may impair our ability to acquire other companies or technologies by using our shares as consideration. The initial public offering price was determined by negotiations between us and the underwriters and may not be indicative of the future prices of our Class A common stock.

***Our share price may be volatile, and you may be unable to sell your shares at or above the offering price.***

The market price of our Class A common stock is likely to be volatile and could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;· actual
 or anticipated fluctuations in our financial condition and operating results, including fluctuations
 in our quarterly and annual results;

· overall
 conditions in our industry and the markets in which we operate or in the economy as a whole;

· changes
 in laws or regulations applicable to our operations;

· actual
 or anticipated changes in our growth rate relative to our competitors;

· announcements
 by us or our competitors of significant acquisitions, strategic partnerships, joint ventures
 or capital commitments;

· additions
 or departures of key personnel;

· issuance
 of new or updated research or reports by securities analysts;

· fluctuations
 in the valuation of companies perceived by investors to be comparable to us;

· litigation
 matters;

· announcement
 or expectation of additional financing efforts;

· sales
 of our Class A common stock by us or our stockholders;

· share
 price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

· the
 expiration of contractual lock-up agreements with our executive officers, directors and stockholders;
 and

· general
 economic and market conditions.

Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our Class A common stock. If the market price of our Class A common stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.

***The initial public offering price of common stock sold in certain recent small-cap and micro-cap initial public offerings have experienced substantially higher volatility in a very short period of time following the effective date of such offerings. The market price of our Class A common stock could be subject to similar volatility and wide fluctuations***.

We note recent instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated to company performance following a number of recent initial public offerings, particularly small-cap and micro-cap initial public offerings of companies with relatively smaller public floats. There is the potential for rapid and substantial price volatility risks to investors when investing in stock where the price is changing rapidly. Higher volatility may also mean higher risk to investors. For example, such volatility may be problematic for investors who need to sell their shares at short notice as a reversal from an extreme stock price run-up can come very quickly and the subsequent price decline may be more severe than in a quieter market. In addition, such volatility, including any stock price run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our stock. There can be no assurance that the market price of our Class A common stock will not be subject to similar volatility and wide fluctuations.

***Future sales and issuances of our*** ***Class A common stock or rights to purchase Class A common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our Class A common stock to decline.***

We may issue additional securities following the closing of this offering. In the future, we may sell Class A common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner that we determine. We also expect to issue Class A common stock to employees, consultants, and directors pursuant to our equity incentive plans. If we sell common stock, convertible securities or other equity securities in subsequent transactions, or Class A common stock is issued pursuant to equity incentive plans, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our Class A common stock.

***Future sales of our Class A common stock in the public market could cause our share price to fall.***

Sales of a substantial number of shares of our Class A common stock in the public market after this offering, or the perception that these sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. Based on 12,583,587 shares of Class A common stock outstanding as of September 30, 2022, giving effect to the automatic conversion of all shares of Series B Preferred Stock into Class A common stock on the effective date of this offering, we will have 14,183,587 shares of Class A common stock outstanding (or 14,423,587 shares if the option to purchase additional shares is exercised in full). Based on the conversion of all shares of Class B common stock outstanding as of September 30, 2022 into 7,416,413 shares of Class A common stock, we will have 21,600,000 shares of Class A common stock outstanding (or 21,840,000 shares if the option to purchase additional shares is exercised in full), which would decrease the adjusted net tangible book value per share after this offering, as presented in the table in the section title "Dilution", by 34.3% (or 34.0% if the option to purchase additional shares is exercised in full). As a result, holders of the Company's Class A common stock, including purchasers in this offering, will experience substantial dilution upon the conversion of such shares of Class B common stock into the Company's Class A common stock.

All of the Class A common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933. All 1,650,215 outstanding shares of Series B Preferred Stock, which automatically convert into an equal number of shares of Class A common stock on the effective date of this offering, were sold under Regulation A+ and the underlying shares of Class A common stock will also be freely tradable without restrictions or further registration under the Securities Act of 1933. We, and all of our directors and officers, have agreed, or will agree, with the underwriters that, until 180 days after the date of this prospectus, subject to certain exceptions, we and they will not, without the prior written consent of the Representatives, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any of our shares of common stock, any options or warrants to purchase any of our shares of common stock or any securities convertible into or exchangeable for or that represent the right to receive shares of our common stock. See also the section of this prospectus captioned "Shares Eligible for Future Sale."

The underwriters may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements with the underwriters prior to expiration of the lock-up period. For more information regarding the lock-up agreements with the underwriters see the section of this prospectus captioned "Underwriting."

We intend to file a registration statement on Form S-8 under the Securities Act to register the shares subject to outstanding stock options and unvested restricted stock under the 2017 Plan and shares of Class A common stock reserved for issuance under our 2017 Plan, which as of September 30, 2022, totaled 10,000,000 shares. Once we register the shares under these plans, they can be freely sold in the public market upon issuance and vesting, subject to a 180-day lock-up period and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants.

***We expect to incur significant additional costs as a result of being a public company, which may adversely affect our business, financial condition and results of operations.***

Upon completion of this offering, we expect to incur costs associated with becoming and remaining a public company and the corporate governance requirements that will become applicable to us as a public company, including rules and regulations of the SEC and Nasdaq, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010. These rules and regulations are expected to significantly increase our accounting, legal, and financial compliance costs and make some activities more time-consuming. We also expect these rules and regulations to make it more expensive for us to obtain and maintain directors' and officers' liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers and are likely to increase our costs for doing so. Accordingly, increases in costs incurred as a result of becoming a publicly traded company may adversely affect our business, financial condition, and results of operations.

***Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.***

Upon the closing of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

***If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations, or prevent fraud.***

Our management has not completed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 10-K, beginning with our annual report for the fiscal year ending December 31, 2023. In addition, once we cease to be an "emerging growth company" as such term is defined under the JOBS Act, our independent registered public accounting firm may be required to attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Generally, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations, and civil or criminal sanctions.

***We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.***

We are an emerging growth company, as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the year in which we complete this offering, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption and, therefore, we are not subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, changes in rules of U.S. generally accepted accounting principles or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could significantly affect our financial position and results of operations.

***We will be a "controlled company" within the meaning of the listing rules of Nasdaq and, as a result, can rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.***

After completion of this offering, John C. Loeffler, II, our Chief Executive Officer, and Jennifer Schrader, our President and Chief Operating Officer, through ownership of all our outstanding shares of Class B common stock, will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" but may elect not to comply with certain corporate governance requirements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the requirement that a majority of our Board of Directors
 consist of "independent directors";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 requirement that we have a compensation committee that is composed entirely of independent
 directors with a written charter addressing the committee's purpose and responsibilities;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 requirement that we have a nominating and corporate governance committee that is composed
 entirely of independent directors with a written charter addressing the committee's
 purpose and responsibilities.

Although we do not intend to rely on the "controlled company" exemptions to Nasdaq's corporate governance rules, we could elect to rely on these exemptions in the future. If we elected to rely on the "controlled company" exemptions, a majority of the members of our board of directors might not be independent directors, our nominating and corporate governance and compensation committees might not consist entirely of independent directors upon closing of the offering, and you would not have the same protection afforded to shareholders of companies that are subject to Nasdaq's corporate governance rules.

***Our management has broad discretion in the use of the net proceeds from this offering and may not use the net proceeds effectively.***

Our management will have broad discretion in the application of the net proceeds of this offering. We cannot specify with certainty the uses to which we will apply these net proceeds. The failure by our management to apply these funds effectively could adversely affect our ability to continue maintaining and expanding our business.

***If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.***

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover our Company may change their recommendations regarding our Company, and our stock price could decline.

***If you purchase shares of our*** ***Class A common stock in this offering, you will incur immediate and substantial dilution.***

The offering price of our Class A common stock is substantially higher than the pro forma net tangible book value per share of our Class A common stock, which was $0.44 per share of our Class A common stock as of September 30, 2022. As a result, you will incur immediate and substantial dilution in net tangible book value when you buy our Class A common stock in this offering. This means that you will pay a higher price per share than the amount of our total tangible assets, less our total liabilities, divided by the number of shares of Class A common stock outstanding. In addition, you may also experience additional dilution if options or other rights to purchase our Class A common stock that are outstanding or that we may issue in the future are exercised or converted or we issue additional shares of our Class A common stock at prices lower than our net tangible book value at such time. See "Dilution."

***We have never paid dividends on our capital stock, and we do not intend to pay dividends for the foreseeable future. Consequently, any gains from an investment in our Class A common stock will likely depend on whether the price of our Class A common stock increases.***

We have never declared or paid any dividends on our capital stock and do not intend to pay any dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the operation of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

***Our charter documents and Delaware law and the voting control exercised by our founders could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.***

Our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could delay or prevent a change in control of our Company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:

&nbsp;&nbsp;&nbsp;&nbsp;· authorizing
 our board of directors to issue preferred stock with voting or other rights or preferences
 that could discourage a takeover attempt or delay changes in control;

· prohibiting
 stockholder action by written consent;

· limiting
 the persons who may call special meetings of stockholders; and

· requiring
 advance notification of stockholder nominations and proposals.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, the provisions of Section 203 of the Delaware General Corporate Law ("DGCL") govern us. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of our board of directors.

These and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law, together with the voting control possessed by our founders, could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions. For more information, see the section of this prospectus captioned "Description of Capital Stock—Anti-Takeover Effects."

***Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.***

Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the Delaware General Corporation Law ("DGCL"), our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that:

&nbsp;&nbsp;&nbsp;&nbsp;· we will
 indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request,
 to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person
 acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant
 and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful;

&nbsp;&nbsp;&nbsp;&nbsp;· we may,
 in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

· we are
 required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such
 directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;

· we will
 not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that
 person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to
 enforce a right to indemnification;

· the rights
 conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with
 our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and

· we may
 not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers,
 employees and agents.

**CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS**

This prospectus includes forward-looking statements within the meaning of the federal securities laws. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the operating results and financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, statements about:

· estimates
 of our expenses, future revenues, capital requirements and our needs for additional financing;

· our estimates
 of the size of our market opportunities;

· our ability
 to effectively manage our growth;

· our ability
 to successfully enter new markets, manage our growth expansion and comply with any applicable laws and regulations;

· the effects
 of increased competition from our market competitors;

· significant
 disruption in, or breach in security of, our information technology systems and resultant interruptions in service and any related
 impact on our reputation;

· the attraction
 and retention of qualified employees and key personnel;

· the effectiveness
 of our internal controls;

· changes
 in laws and government regulation affecting our business;

&nbsp;&nbsp;&nbsp;&nbsp;· the impact
 of adverse economic conditions;

· the sufficiency
 of our cash and cash equivalents to meet our liquidity needs and service our indebtedness; and

· outcomes
 of legal or administrative proceedings.

In addition, in this prospectus, the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "predict," "potential" and similar expressions, as they relate to our Company, our business and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Forward-looking statements speak only as of the date of this prospectus. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the Securities and Exchange Commission as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Please note that the safe harbor provisions of Securities Act Section 27A and Exchange Act Section 21E do not apply to forward-looking statements made in this offering.

**INDUSTRY AND MARKET DATA**

We have obtained the industry, market and similar data set forth in this prospectus from our own internal estimates and research, industry publications and surveys and studies conducted by third parties. These data sources involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information and estimates.

Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events, or circumstances may differ materially from events and circumstances that are assumed in this information. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

**USE OF PROCEEDS**

We estimate that the net proceeds from our issuance and sale of shares of our Class A common stock in this offering will be approximately $6.1 million, assuming an initial public offering price of $5.00 per share after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $5.00 per share, would increase or decrease our net proceeds from this offering by approximately $1.5 million, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase or decrease our net proceeds from this offering by approximately $4.6 million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions payable by us. We do not expect that a change in the offering price or the number of shares by these amounts would have a material effect on our intended uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.

The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our Class A common stock and facilitate our future access to the capital markets. As of the date of this prospectus, we currently intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures. We may also use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. However, we do not have agreements or commitments to enter into any acquisitions at this time.

The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. We will have broad discretion over how to use the net proceeds to us from this offering. We intend to invest the net proceeds to us from the offering that are not used as described above in investment-grade, interest-bearing instruments. See "*Risk Factors—Risks Related to this Offering and Our Class A Common Stock — Our management has broad discretion in the use of the net proceeds from this offering and may not use the net proceeds effectively."*

**DIVIDEND POLICY**

We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors or any authorized committee thereof after considering our financial condition, results of operations, capital requirements, business prospects and other factors our board of directors or such committee deems relevant, and subject to the restrictions contained in our current or future financing instruments. See also "*Risk Factors— Risks Related to this Offering and Our Class A Common Stock — We have never paid dividends on our capital stock and we do not intend to pay dividends for the foreseeable future. Consequently, any gains from an investment in our Class A common stock will likely depend on whether the price of our common stock increases."*

**CAPITALIZATION**

The following table sets forth our cash and capitalization as of September 30, 2022 (i) on an actual basis, ii) on a pro forma basis after giving effect to (A) the automatic conversion of all outstanding shares of Series B Preferred Stock into Class A common stock on the effective date of this offering and (B) the termination of the Company's obligation to repurchase shares of a non-participating founder's shares of common stock, which obligation terminates on the effective date of this offering, resulting in the elimination of a previously booked contingent liability from such obligation and a corresponding addition to stockholders' equity, and (iii) on a pro forma as adjusted basis, giving effect to our receipt of estimated net proceeds from the sale of shares of Class A common stock that we are offering at an assumed initial public offering price of $5.00 per share after deducting the estimated underwriting discounts and commissions and estimated offering expenses. The table gives effect to the 1-for-1.6820384 reverse stock split effected in January 2023. You should read this table together with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

---

| | | | |
|:---|:---|:---|:---|
| | **At September 30, 2022** | **At September 30, 2022** | **At September 30, 2022** |
| <br>(in thousands, except share data) | **Actual** | **Pro <br> Forma** | **Pro Forma<br> As Adjusted** |
| Cash and restricted cash | $4754 | $4754 | $10899 |
| Stockholders' (deficit) equity: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock Series B, $0.001 par value, 12,500,000 shares authorized, 1,650,215 shares issued and outstanding, actual, no shares issued and outstanding, pro forma and pro forma as adjusted |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Class A common stock, $0.001 par value, 100,000,000 shares authorized, 10,933,372 shares issued and outstanding, actual, 12,583,587 shares issued and outstanding, pro forma, and 14,183,587 shares issued and outstanding, as adjusted | 11 | 13 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp; Class B common stock, $0.001 par value, 15,000,000 shares authorized, 7,416,413 shares issued and outstanding actual, pro forma and pro forma as adjusted | 7 | 7 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp; Paid-in capital | 33019 | 33017 | 39161 |
| &nbsp;&nbsp;&nbsp;&nbsp; Treasury stock | (13626) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | (20240) | (21397) | (21397) |
| Total stockholders' (deficit) equity attributable to CaliberCos Inc. | (829) | 11640 | 17785 |
| Total capitalization | (829) | 11640 | 17785 |

---

Each $1.00 increase or decrease in the assumed initial public offering price of $5.00 per share would increase or decrease, as applicable, our cash, and total stockholders' equity and total capitalization by approximately $1.5 million, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. Each increase or decrease of 1,000,000 million shares in the number of shares offered by us would increase or decrease the amount of our cash, total stockholders' equity and total capitalization by approximately $4.6 million, assuming an initial public offering price of $5.00 per share after deducting estimated underwriting discounts and commissions payable by us

The total number of shares of our common stock reflected in the discussion and table above (i) does not give effect to (x) the conversion of Class B common stock to Class A common stock, (y) the conversion of convertible debt securities into Class A common stock and (z) the exercise of any warrants or stock options or vesting of restricted stock units outstanding as of the date hereof, and (ii) excludes shares of Class A common stock reserved for future grant or issuance under our 2017 Plan.

**DILUTION**

If you invest in our Class A common stock, your interest will be diluted to the extent of the difference between the public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A common stock after this offering. Dilution in net tangible book value per share to new investors is the amount by which the offering price paid by the purchasers of the shares sold in this offering exceeds the pro forma as adjusted net tangible book value per share of Class A common stock after this offering. Net tangible book value per share is determined at any date by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of our Class A common stock deemed to be outstanding at that date.

Our historical net tangible book value (deficit) as of September 30, 2022 was ($7.0) million, or ($0.64) per share of Class A common stock. After giving effect to (i) the automatic conversion of all Series B Preferred Stock into Class A common stock on the effective date of this offering and (ii) the termination of the Company's obligation to repurchase shares of a non-participating founder's shares of common stock, which obligation terminates on the effective date of this offering, resulting in the elimination of a previously booked contingent liability from such obligation and a corresponding addition to stockholders' equity, our pro forma historical net tangible book value as of September 30, 2022 was $5.5 million, or $0.44 per share of Class A common stock.

After giving effect to our sale of 1,600,000 shares of our Class A common stock in this offering at an assumed initial public offering price of $5.00 per share,after deducting estimated underwriting discounts and commissions payable by us, our pro forma as adjusted net tangible book value as of September 30, 2022, would have been $11.6 million, or $0.82 per share. This represents an immediate increase in pro forma net tangible book value of $1.46 per share to our existing stockholders and an immediate dilution of $4.18 per share to new investors purchasing shares of Class A common stock in this offering. The following table illustrates this dilution on a per share basis:

---

| | | |
|:---|:---|:---|
|  Assumed initial public offering price per share |  | $5 |
|  Historical net tangible book value (deficit) per share as of September 30, 2022 | $(0.64) |  |
|  Increase per share attributable to the pro forma adjustments described above | 1.08 |  |
|  Pro forma net tangible book value (deficit) per share as of September 30, 2022 | 0.44 |  |
|  Increase in pro forma net tangible book value per share attributable to new investors purchasing shares in this offering | 0.38 |  |
|  Pro forma as adjusted net tangible book value (deficit) per share after this offering |  | 0.82 |
|  Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering |  | $4.18 |

---

Each $1.00 increase or decrease in the assumed initial public offering price of $5.00 per share would increase or decrease, as applicable, our pro forma as adjusted net tangible book value by approximately $1.5 million, or approximately $0.10 per share, and would increase or decrease, as applicable, dilution per share to new investors in this offering by $0.90, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease, as applicable, our pro forma as adjusted net tangible book value by approximately $4.6 million, or approximately $0.25 per share. An increase of 1,000,000 shares in the number of shares offered by us would decrease dilution per share to new investors in this offering by approximately $0.25 and a decrease of 1,000,000 shares in the number of shares offered by us would increase dilution per share to new investors in this offering by approximately $0.29 per share, assuming an initial public offering price of $5.00 per share and after deducting estimated underwriting discounts and commissions payable by us. The pro forma as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. If the underwriters exercise their option to purchase additional shares in full, the pro forma as adjusted net tangible book value per share would be $0.88 per share, and the dilution per share to new investors in this offering would be $4.12 per share.

The following table summarizes on an as adjusted basis as described above, as of September 30, 2022, the differences between the existing Class A stockholders and new investors with respect to the number of shares of Class A common stock purchased from us, the total consideration paid to us and the average price per share paid or to be paid to us at an assumed initial public offering price of $5.00 per share, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | **Total Consideration** | **Total Consideration** | |
| **Shares Purchased** | **Number** | **Percent** | **Amount** | **Percent** | **Average Price**<br>**Per Share** |
| Existing Class A stockholders <sup>(1)</sup> | 12583587 | 88.7% | $31029740 | 79.5% | $2.47 |
| New investors | 1600000 | 11.3% | 8000000 | 20.5% | 5.00 |
| Totals <sup>(1)</sup> | 14183587 | 100.0% | $39029740 | 100.0% | $2.75 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Gives effect to the automatic conversion of all Series B Preferred Stock into Class A common stock on the effective date of this offering.

If the underwriters exercise their option to purchase additional shares in full, the percentage of shares of our Class A common stock held by existing Class A stockholders would be 77.1% and the percentage of shares of our Class A common stock held by new investors would be 22.9%.

To the extent that any outstanding options are exercised, or new options are issued under our stock-based compensation plans, or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. If all outstanding options and vested restricted stock units under our 2017 Plan as of September 30, 2022 were exercised or settled, then our existing Class A stockholders, including the holders of these options, would own 91.0% and our new investors would own 9.0% of the total number of shares of our Class A common stock and Class B common stock outstanding on the completion of this offering.

The total number of shares of our common stock reflected in the discussion and table above (i) does not give effect to (x) the conversion of Class B common stock to Class A common stock, (y) the conversion of convertible debt securities into Class A common stock and (z) the exercise of any warrants or stock options or vesting of restricted stock units outstanding as of the date hereof, and (ii) excludes shares of Class A common stock reserved for future grant or issuance under our 2017 Plan.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this prospectus, including those set forth in the sections of this prospectus entitled "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements".*

**Overview**

Caliber was originally founded as Caliber Companies, LLC, an Arizona limited liability company, organized under the laws of Arizona, and commenced operations in January 2009. In 2014, the Company was reorganized as a Nevada corporation and in June 2018, we reincorporated in the state of Delaware.

Caliber is a leading vertically integrated asset management firm whose primary goal is to enhance the wealth of investors seeking to make investments in middle-market assets. We strive to build wealth for our investor clients by creating, managing, and servicing proprietary products including middle-market investment funds, private syndications, and direct investments. Our funds include investment vehicles focused primarily on real estate, private equity, and debt facilities. We earn asset management fees calculated as a percentage of managed capital in our Funds and Offerings. We market our services through direct sales to private investors, wholesaling to investment advisers, direct sales to family offices and institutions, and through in-house client services.

We believe that we provide investors attractive risk-adjusted returns by offering a balance of (i) structured offerings and ease of ownership, (ii) a pipeline of investment opportunities, primarily projects that range in value between $5 million and $50 million, and (iii) an integrated execution and processing platform. Our investment strategy leverages the local market intelligence and real-time data we gain from our operations to evaluate current investments, generate proprietary transaction flow, and implement various asset management strategies.

While we primarily act as an alternative asset manager, we also offer a full suite of support services and employ a vertically integrated approach to investment management. Our asset management activities are complemented with transaction and advisory services including development and construction management, acquisition and disposition expertise, and fund formation, which we believe differentiate us from other asset management firms. We believe our model allows us to acquire attractive projects, reduce operating costs, and deliver services to our funds that bolster net returns to investors.

Our operations are organized into three reportable segments for management and financial reporting purposes: Fund Management, Development, and Brokerage.

Fund Management — This segment represents our fund management activities along with back office and corporate support functions including accounting and human resources. It includes the activities of Caliber Services, which acts as an external manager of our funds, which have diversified investment objectives. It also includes the activities associated with Caliber Securities, a wholly-owned Arizona registered issuer-dealer, which generates fees from set up services and fund formation. We earn fund management fees for services rendered to each of the funds by Caliber Services as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Asset Management Fee*. We receive an annual
 asset management fee typically equal to 1.0% - 1.5% of the non-affiliated capital contributions related to the assets owned by the
 particular fund to compensate us for the overall administration of that fund. These management fees are payable regularly, generally
 on a monthly basis, pursuant to our management agreement with each fund.

&nbsp;&nbsp;&nbsp;&nbsp;· *Carried Interest.* We are entitled to an allocation of the income
 allocable to the limited partners or members of each fund for returns above accumulated and unpaid priority preferred returns and
 repayment of preferred capital contributions (the "Hurdle Rate"). Income earned with respect to our carried interest
 is recorded as Performance Allocations. Performance Allocations are an important element of our business and have historically accounted
 for a material portion of our revenues.

Depending on the fund, we typically receive a carried interest of 20% - 35%, depending on the fund, of all cash distributions from (i) the operating cash flow of each fund above the Hurdle Rate and (ii) the cash flow resulting from the sale or refinancing of any investments held by our funds after payment of the related fund's investors unpaid priority preferred returns and Hurdle Rate. Our funds' preferred returns range from 6% - 12%.

&nbsp;&nbsp;&nbsp;&nbsp;· *Financing Fee*. We earn a fee upon the closing of a loan by our investment funds with a third-party
 lender to compensate us for the services performed and costs incurred in securing the financing. This is typically a fixed fee arrangement
 which approximates no more than 1% of the total loan and will not exceed 3% of the total loan after considering all other origination
 fees charged by lenders and brokers involved in the transaction. Financing fees are recorded under Transaction and Advisory Fees.

&nbsp;&nbsp;&nbsp;&nbsp;· *Set-Up Fee.* We charge an initial one-time fee related to the initial formation, administration and
 set-up of the applicable fund. Set-up fees can be flat fees or a percentage of capital raised, typically 1.5% of capital raised or
 less. These fees are recorded under Transaction and Advisory Fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Fund Formation Fee.* Through Caliber
 Securities, we earn non-affiliated fees from raising capital for our funds. Our contracts with our funds are typically fixed
 fee arrangements which approximate no more than 3.5% on capital raised. These fees are recorded under Transaction and Advisory
 Fees. Based on the contractual terms of the relevant
 funds we manage, in addition to the fees noted above, Caliber is entitled to be reimbursed for its expenses, which are not to exceed
 non-affiliated third-party costs, related to services provided to the funds.

Development — This segment represents our activities associated with providing real estate development services as their principal developer. These services include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by our funds. Revenues generated by this segment are generally based on 4% of the total expected costs of the development or 4% of the total expected costs of the construction project. Caliber Development, a wholly-owned subsidiary of Caliber Services and an Arizona licensed general contractor, acts as either the developer, development manager, and/or construction manager on our funds' projects.

We have a number of development, redevelopment, construction, and entitlement projects that are underway or are in the planning stages, which we define as AUD. This category includes projects we are planning to build on undeveloped land and projects to be built and constructed on undeveloped lands which are not yet owned by our funds but are under contract to purchase. Completing these development activities may ultimately result in income-producing assets, assets we can sell to third parties, or both. As of September 30, 2022, we are actively developing 2,460 multifamily units, 2,300 single family units, 2.5 million square feet of commercial and industrial, and 1.3 million of office and retail. If all of these projects are brought to completion, the total cost capitalized to these projects, which represents total current estimated costs to complete the development and construction of such projects, is $2.2 billion, which we expect would be funded through a combination of undeployed fund cash, third-party equity, project sales, tax credit financing and similar incentives, and secured debt financing. We are under no obligation to complete these projects and may dispose of any such assets at any time. There can be no assurance that assets under development will ultimately be developed or constructed because of the nature of the cost of the approval and development process and market demand for a particular use. In addition, the mix of residential and commercial assets under development may change prior to final development. The development of these assets will require significant additional financing or other sources of funding, which may not be available.

Brokerage — This segment is involved in the buying, selling and leasing of all our funds' assets. For the nine months ended September 30, 2022 and 2021, our brokerage segment completed approximately $63.1 million and $46.8 million in transactions generating approximately $0.9 million and $0.6 million of brokerage fees, respectively.

**Trends Affecting Our Business**

Our business is driven by trends which affect the following:

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| | |
|:---|:---|
| 1.) | **Capital formation:** any trend which increases or decreases investors' knowledge of alternative investments, desire to acquire them, access to acquire them, and knowledge and appreciation of Caliber as a potential provider, will affect our ability to attract and raise new capital. Capital formation also drives investment acquisitions, which contribute to Caliber's revenues. |

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| | |
|:---|:---|
| 2.) | **Investment acquisition:** any trend which increases or decreases the supply of middle-market real estate projects or loans, the accessibility of developments or development incentives, or enhances or detracts from Caliber's ability to access those projects will affect our ability to generate revenue. Coincidentally, investment acquisitions, or the rights to acquire an investment, drive capital formation – creating a flywheel effect for Caliber. |

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| | |
|:---|:---|
| 3.) | **Project execution:** any trend which increases or decreases the costs of execution on a real estate project, including materials pricing, labor pricing, access to materials, delays due to governmental action, and the general labor market, will affect Caliber's ability to generate revenues.  |

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Our business depends in large part on our ability to raise capital for our funds from investors. Since our inception, we have continued to successfully raise capital into our funds with our total capital raised through September 30, 2022 exceeding $582 million. Our success at raising new capital into our funds is impacted by the extent to which new investors see alternative assets as a viable option for capital appreciation and/or income generation. Since our ability to raise new capital into our funds is dependent upon the availability and willingness of investors to direct their investment dollars into our products, our financial performance is sensitive in part to changes in overall economic conditions that affect investment behaviors. The demand from investors is dependent upon the type of asset, the type of return it will generate (current cash flow, long-term capital gains, or both) and the actual return earned by our fund investors relative to other comparable or substitute products. General economic factors and conditions, including the general interest rate environment and unemployment rates, may affect an investor's ability and desire to invest in real estate. For example, a significant interest rate increase could cause a projected rate of return to be insufficient after considering other risk exposures. Additionally, if weakness in the economy emerges and actual or expected default rates increase, investors in our funds may delay or reduce their investments; however, we believe our approach to investing and the capabilities that Caliber manages throughout the deal cycle will continue to offer an attractive value proposition to investors.

While we have had historical successes, there can be no assurance that fundraising for our new and existing funds will experience similar success. If we were unable to raise such capital, we would be unable to collect capital raise fees or deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition.

We remain confident about our ability to find, identify, and source new investment opportunities that meet the requirements and return profile of our investment funds despite headwinds associated with increased asset valuations, competition and increased overall cost of credit. We continue to identify strategic acquisitions on off-market terms and anticipate that this trend will continue. We are at a point in our investment cycle where some of our funds have begun to exit significant parts of their portfolios while other are approaching a potential harvesting phase. We have complemented these cycles with other newer funds that will maintain management fees while providing continued sources of activity for our Development segment.

Acquiring new assets includes being able to negotiate favorable loans on both a short and long-term basis. We strive to forecast and project our returns using assumptions about, among other things, the types of loans that we might expect the market to extend for a particular type of asset. This becomes more complex when the asset also requires construction financing. We may also need to refinance existing loans that are due to mature. Factors that affect these arrangements include the interest rate and economic environment, the estimated fair value of real property, and the profitability of the asset's historical operations. These capital market conditions may affect the renewal or replacement of our credit agreements, some of which have maturity dates occurring within the next 12 months. Obtaining such financing is not guaranteed and is largely dependent on market conditions and other factors.

**Trends:**

***COVID-19***

The prevailing trend in 2021 that affected our business was the impact of the COVID-19 pandemic, which began having an effect in the first quarter of 2020, and which subsequently affected all three trends described above. COVID-19 continues to pose a threat to the health and economic wellbeing of the worldwide population and the overall economy in light of variants that seem to spread more easily than the original virus. While the equity markets have rebounded from their steep declines in March 2020 after the World Health Organization announced that infections of COVID-19 had become a pandemic, there is continued uncertainty as to the duration of the global health and economic impact caused by COVID-19 even with vaccines now available.

For the year ended December 31, 2020, the potential adverse effects of COVID-19 resulted in an immediate and sharp slowdown in the U.S. economy which created uncertainty in the global economic outlook. This adversely affected our ability to raise money into our funds for that fiscal period. However, the global economy improved and as a result capital raised into our funds rose to $114.0 million from $39.2 million for the years ended December 31, 2021 and 2020, respectively. We are continuing to monitor the recovery in velocity of new investment capital into our funds and anticipate continuing to see the same trend for the foreseeable future.

The extent to which the pandemic will affect our business, financial condition, results of operations, liquidity and prospects materially in the future will depend on future developments, including the duration, spread and intensity of the pandemic, the duration of government measures to mitigate the pandemic and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and difficult to predict.

***Interest rates***

A prevailing trend in 2022 which affects our business is the rising interest rate environment. The majority of our funds' assets are monetary in nature and subject to risk from changes in interest rates. Our earnings and cash flows depend to a great extent upon the difference between the interest our funds pay on loans and borrowings and the value of fixed-rate debt investments made by our funds. Depending on the terms and maturities of our assets and liabilities, a significant change in interest rates could have a material adverse effect on our profitability. In addition, rising interest rates, coupled with periods of significant equity and credit market volatility may potentially make it more difficult for us to find attractive opportunities for our funds to exit and realize value from their existing investments.

Interest rates remained at relatively low levels on a historical basis and the U.S. Federal Reserve maintained the federal funds target range at 0.0% to 0.25% for much of 2020 and 2021. During approximately the first ten months of 2022, the Federal Reserve raised interest rates by an aggregate of 375 basis points. The consensus is that rates will be increased additional times during 2022. Additionally, the current geopolitical environment in Europe provides yet another layer of uncertainty around the actions that the Federal Reserve might take. Market interest rates are affected by many factors outside of our control, including governmental monetary policies, domestic and international economic conditions, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. Rising interest rates create downward pressure on the price of real estate, increase the cost and reduce the availability of debt financing for the transactions our funds pursue and decrease the value of fixed-rate debt investments made by our funds, each of which may have an adverse impact on our business.

Increased costs of borrowing could also cause us to reconsider the purchase of certain real estate assets, the terms of any such purchase or the mix of debt and equity we employ in connection with such purchase. Such issues are expected to be more prevalent in a continued rising interest rate environment. A higher interest rate environment may lead to a significant contraction or weakening in the market for debt financing or have other adverse change relating to the terms of debt financing (such as, for example, higher equity requirements and/or more restrictive covenants), particularly in the area of acquisition financings for private equity and real estate transactions, could have a material adverse impact on our business. In a rising interest rate environment, the financing of acquisitions or the operations of our funds' portfolio companies with debt may also become less attractive due to the cost of capital or limitations on the deductibility of corporate interest expense. If our funds are unable to obtain committed debt financing for potential acquisitions, can only obtain debt financing at an increased interest rate or on unfavorable terms or the ability to deduct corporate interest expense is substantially limited, our funds may face increased competition from strategic buyers of assets who may have an overall lower cost of capital or the ability to benefit from a higher amount of cost savings following an acquisition, or may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than would otherwise be the case, each of which could lead to a decrease in our revenues.

In addition, if our funds are unable to obtain committed debt financing for potential acquisitions, can only obtain debt financing at an increased interest rate or on unfavorable terms, this would require us to employ a higher mix of equity to acquire real estate assets. The cost of equity in a rising interest rate environment may also become more expensive; we may be required to offer a higher rate of return on equity in order to finance such assets. This in turn would adversely affect our profitability from such assets. While to date our funds' borrowing costs have not substantially increased, as rates continue to increase, our ability to use leverage as a financing tool or to pass along any increased costs of borrowing or financing will become more difficult, all of which could have an adverse effect on our profitability.

Increased interest rates may impact our results of operations with the following challenges and opportunities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Challenges

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 in asset management, set-up, and fund formation fees due to possible decrease in capital
 raised,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 in performance allocation revenue due to funds' possible decrease in operating cash
 flow and real estate sale proceeds,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 in financing fees if a fund is unable to refinance any maturing debt, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 in brokerage revenue due to limited acquisition activity by our funds and possible decrease
 in fair value of funds' real estate assets and sale price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Opportunities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 in asset management, set-up, and fund formation fees due to possible increase in capital
 raise and acquisition of distressed multi-family real estate,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 in performance allocation revenue due to funds' increase in operating cash flow related
 to possible increase in rental revenue,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 in development revenue as construction costs increase, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 in brokerage revenue related to acquisition of distressed multi-family real estate.

Increased interest rates may impact our funds' results of operations with the following challenges and opportunities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Challenges:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o limit
 acquisitions,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o reduce
 profitability of acquisitions,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 cash flow and working capital due to increased interest expense and construction costs,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o decrease
 the fair value of the funds' real estate assets,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o reduce
 capital raise due an increase in investor expectations of return on their debt and equity
 investments, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o difficulty
 in refinancing existing debt, which may cause the fund to extend more expensive bridge debt
 for longer periods of time or sell an asset prior to optimizing cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Opportunities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 rental rates, resulting in increased revenues, operating cash flow and working capital,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 sales of distressed multi-family real estate, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o increase
 capital raise as investors are seeking enhanced transparency and investment opportunities
 focused on strategies to produce growth, yield and inflation protection, which is in line
 with our alternative investment strategy.

Currently, we do not expect any changes to our product and services mix due to a rising interest rate environment. We will continue to create, manage, and service middle-market investment funds, private syndications, and direct investments and our funds will continue to include investment vehicles focused primarily on real estate, private equity, and debt facilities. Project sales are driven by adherence to a long-term business plan for each asset and we do not plan to make any changes to the expected timelines in our business plan due to the increased cost of financing. If financing costs continue to increase or stay persistently high for an extended period, it may affect our decision to sell assets in the future, irrespective of our current plans, as continuing to hold those assets for rental income may offer a more attractive alternative. This would have the effect of maintaining and potentially increasing asset management fee revenues while decreasing the potential for performance allocations and transaction and advisory fee revenues over the same period of time. We also do not expect any decreases in project sales as our product sales are driven by adherence to a long-term business plan for each asset and we do not plan to make any changes due to the increased cost of financing.

***Inflation***

Another prevailing trend in 2022 which affects our business, and which corresponds with a rising interest rate environment, is the increase in inflation nationwide. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 7.7% in October 2022. As a result, during approximately the first ten months in 2022, the Federal Reserve has increased the federal funds rate by 375 basis points to date in 2022 and has indicated its intention to continue to increase interest rates in an effort to combat inflation.

Historically, inflation has tended to favor new capital formation for Caliber's funds, as investors seek opportunities that can hedge against rising costs, such as real estate investments. For project execution, inflation has increased the cost of nearly all building materials and labor types, increasing the cost of construction and renovation of our funds' assets. Furthermore, third parties we do business with, such as developers and contractors, are also affected by inflation and the rising costs of goods and services used in their businesses. A significant and continued increase in interest rates and inflation could have a negative impact on their ability to do business with us, which could affect our profitability.

**Key Financial Measures and Indicators**

Our key financial measures are discussed in the following pages. Additional information regarding these key financial measures and our other significant accounting policies can be found in Note 2 – Summary of Significant Accounting Policies in the notes to our accompanying consolidated financial statements included herein.

***Total Revenue***

We generate the majority of our revenue from (i) asset management fees, (ii) performance allocations and (iii) advisory and transaction services. Included within our consolidated results, are the related revenues of certain consolidated VIEs. During 2021, we realigned our operating segments to better reflect the internal management of our business based on a change to the way our chief operating decision maker monitors performance, aligns strategies, and allocates resources. Refer to Note 2 – Summary of Significant Accounting Policies – *Segment Information* in the notes to our accompanying consolidated financial statements for additional disclosures.

***Total Expenses***

Total expenses include operating costs, general and administrative, marketing and advertising and depreciation and amortization. Included within our consolidated results, are the related expenses of certain consolidated VIEs.

***Other (Income) Expenses***

Other (income) expenses include gain on extinguishment of debt, interest expense and interest income.

**Results of Operations**

***Comparison of the Nine Months Ended September 30, 2022 and 2021***

The following table and discussion provide insight into our condensed consolidated results of operations for the nine months ended September 30, 2022 and 2021 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
|  | **2022** | **2021** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $3048 | $1706 | $1342 | 78.7% |
| &nbsp;&nbsp;&nbsp;Performance allocations | 2508 | 396 | 2112 | 533.3% |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 8261 | 3116 | 5145 | 165.1% |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality revenue | 43801 | 27021 | 16780 | 62.1% |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Other revenue | 4871 | 3833 | 1038 | 27.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 62489 | 36072 | 26417 | 73.2% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating Costs | 8421 | 6045 | 2376 | 39.3% |
| &nbsp;&nbsp;&nbsp;General and administrative | 5389 | 2075 | 3314 | 159.7% |
| &nbsp;&nbsp;&nbsp;Marketing and Advertising | 1293 | 1329 | (36) | (2.7)% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 23 | 74 | (51) | (68.9)% |
| &nbsp;&nbsp;&nbsp;Consolidated fund expenses - Hospitality expenses | 44786 | 39312 | 5474 | 13.9% |
| &nbsp;&nbsp;&nbsp;Consolidated fund expenses - Other expenses | 6146 | 4406 | 1740 | 39.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 66058 | 53241 | 12817 | 24.1% |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Gain on sale of real estate investment | 21530 |  | 21530 | 100.0% |
| &nbsp;&nbsp;&nbsp;Other income, net | (241) | (856) | 615 | 71.8% |
| &nbsp;&nbsp;&nbsp;Gain on extinguishment of debt | (1421) |  | (1421) | 100.0% |
| &nbsp;&nbsp;&nbsp;Interest income | (112) |  | (112) | 100.0% |
| &nbsp;&nbsp;&nbsp;Interest expense | 685 | 546 | 139 | 25.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Income (Loss) Before Income Taxes** | 19050 | (16859) | 35909 | (213.0)% |
| &nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | - | - | - | 0.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Income (Loss)** | 19050 | (16859) | 35909 | (213.0)% |
| &nbsp;&nbsp;&nbsp;Net income (loss) attributable to noncontrolling interests | 14561 | (16603) | 31164 | 187.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Income (Loss) Attributable to CaliberCos Inc.** | 4489 | (256) | $4745 | (1853.5)% |

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For the nine months ended September 30, 2022 and 2021, total revenues were $62.5 million and $36.1 million, respectively, representing a period-over-period increase of 73.2%. This increase was primarily due to an increase in revenues in our consolidated fund assets whose operations are recovering from the impact of the COVID-19 pandemic. Additionally, the increase in revenue was driven by a significant increase in transaction and advisory fees, related to fund set-up fees and performance allocations, captured from the sale of investments.

For the nine months ended September 30, 2022 and 2021, total expenses were $66.1 million and $53.2 million, respectively, representing a period-over-period increase of 24.1%. The increase was primarily due to an increase in consolidated fund related expenses as operations responded to the measured recovery that started to appear in late 2021. The properties began hiring in more employees to cater to the increasing occupancies. In addition, there was an increase in general and administrative expenses of $3.3 million, which was primarily due to an increase in professional fees and an increase in the legal accrual related to the Company's settlement agreement with 6831614 Manitoba Ltd.

For the nine months ended September 30, 2022, Consolidated funds – Gain on sale of real estate investment represents the gain recognized in 2022 on the sale of GC Square Apartments for $21.5 million, a multi-family property with a cost basis of $9.1 million. This sale drove the majority of our performance allocations for the period. As of December 31, 2021, this real estate investment was included in Real estate assets held for sale on the consolidated balance sheets.

For the nine months ended September 30, 2022, Gain on extinguishment of debt represents the gain recognized in 2022 on the forgiveness of a PPP loan of $1.4 million principal, plus accrued interest.

***Segment Analysis***

The following discussion is specific to our various segments for the nine months ended September 30, 2022 and 2021. Our segment information is presented in a format consistent with the information senior management uses to make operating decisions, assess performance and allocate resources.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP because these fees are eliminated in consolidation when they are derived from a consolidated fund. Furthermore, segment expenses are also different than those presented on a consolidated U.S. GAAP basis due to the exclusion of fund expenses that are paid by the consolidated funds.

<u>Fund Management</u>

The following table presents our results of operations for our Fund Management segment (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
|  | **2022** | **2021** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $6095 | $4824 | $1271 | 26.3% |
| &nbsp;&nbsp;&nbsp;Performance allocations | 2508 | 396 | 2112 | 533.3% |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 6276 | 1768 | 4508 | 255.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 14879 | 6988 | 7891 | 112.9% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 7045 | 4621 | 2424 | 52.5% |
| &nbsp;&nbsp;&nbsp;General and administrative | 5166 | 1916 | 3250 | 169.6% |
| &nbsp;&nbsp;&nbsp;Marketing and advertising | 1292 | 1329 | (37) | (2.8)% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 23 | 29 | (6) | (20.7)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 13526 | 7895 | 5631 | 71.3% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | 3 | (299) | 302 | (101.0)% |
| &nbsp;&nbsp;&nbsp;Interest income | (111) | (91) | (20) | 22.0% |
| &nbsp;&nbsp;&nbsp;Gain on extinguishment of debt, net of interest expense | (781) | 479 | (1260) | (263.0)% |
| **Net Loss** | $2242 | $(996) | $3238 | (325.1)% |

---

For the nine months ended September 30, 2022 and 2021, asset management fees were $6.1 million and $4.8 million, respectively, representing a period-over-period increase of 26.3%. The increase in our fees corresponds to the increase in total managed capital. Total managed capital at September 30, 2022 was approximately $348.9 million compared to $274.9 million at September 30, 2021.

For the nine months ended September 30, 2022 and 2021, performance allocations were $2.5 million and $0.4 million, respectively. The increase is due to a $2.3 million increase in our carried interest earned by the Company related to the sale of the GC Square Apartments multi-family property in March 2022.

For the nine months ended September 30, 2022 and 2021, transaction and advisory fees were $6.3 million and $1.8 million, respectively. The increase is primarily related to the fund set-up fees for Caliber Tax Advantaged Opportunity Zone Fund II, LLC.

For the nine months ended September 30, 2022 and 2021, operating costs were $7.0 million and $4.6 million, respectively, representing a period-over-period increase of 52.5%. This increase was primarily due to an increase in payroll costs, as the Company's employees increased from 58 at September 30, 2021 to 71 at September 30, 2022.

For the nine months ended September 30, 2022 and 2021, general and administrative costs were $5.2 million and $1.9 million, respectively, representing a period-over-period increase of 169.6%. This increase was primarily due to an increase in professional fees and an increase in the legal accrual related to the Company's settlement agreement with 6831614 Manitoba Ltd.

For the nine months ended September 30, 2022 and 2021, gain on extinguishment of debt, net of interest expense was $0.8 million and ($0.5) million, respectively, representing a period-over-period increase of 263.0%. The increase was primarily due to the gain on extinguishment of debt recognized in 2022 on the forgiveness of a PPP loan of $1.4 million principal, plus accrued interest.

<u>Development</u>

The following table presents our results of operations for our Development segment (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
|  | **2022** | **2021** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | $2596 | $1615 | $981 | 60.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 2596 | 1615 | 981 | 60.7% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 1071 | 1840 | (769) | (41.8)% |
| &nbsp;&nbsp;&nbsp;General and administrative | 157 | 113 | 44 | 38.9% |
| &nbsp;&nbsp;&nbsp;Marketing and advertising |  | 1 | (1) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Depreciation | 8 |  | 8 | 100.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 1236 | 1954 | (718) | (36.7)% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | (216) | (48) | (168) | 350.0% |
| **Net Income** | $1576 | $(291) | $1867 | (641.6)% |

---

For the nine months ended September 30, 2022 and 2021, transaction and advisory fees were $2.6 million and $1.6 million, respectively. The increase is primarily due to an increase in construction management fees related to new construction projects and increased construction activity in the nine months ended September 30, 2022, as compared to the same period in 2021.

For the nine months ended September 30, 2022 and 2021, operating costs were $1.1 million and $1.8 million, respectively, representing a period-over-period decrease of 41.8%. This decrease was due to lower headcount as the Company no longer acts as general contractor on development projects.

<u>Brokerage</u>

The following table presents our results of operations for our Brokerage segment (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
|  | **2022** | **2021** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | $1221 | $940 | $281 | 29.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 1221 | 940 | 281 | 29.9% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 305 | 191 | 114 | 59.7% |
| &nbsp;&nbsp;&nbsp;General and administrative | 58 | 47 | 11 | 23.4% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | - | 45 | (45) | (100.0)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 363 | 283 | 80 | 28.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expenses (income), net | (28) | (510) | 482 | (94.5)% |
| &nbsp;&nbsp;&nbsp;Interest expense | 46 | 106 | (60) | (56.6)% |
| **Net Income** | $840 | $1061 | $(221) | (20.8)% |

---

***Comparison of Years Ended December 31, 2021 and 2020***

The following table and discussion provide insight into our consolidated results of operations for the years ended December 31, 2021 and 2020 (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | | |
|  | **2021** | **2020** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $3476 | $2754 | $722 | 26.2% |
| &nbsp;&nbsp;&nbsp;Performance allocations | 733 | 299 | 434 | 145.2% |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 5666 | 3415 | 2251 | 65.9% |
| &nbsp;&nbsp;&nbsp;Consolidated funds – Hospitality revenue | 40837 | 27676 | 13161 | 47.6% |
| &nbsp;&nbsp;&nbsp;Consolidated funds – Other revenue | 5321 | 3733 | 1588 | 42.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 56033 | 37877 | 18156 | 47.9% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating Costs | 9685 | 10972 | (1287) | (11.7)% |
| &nbsp;&nbsp;&nbsp;General and administrative | 5307 | 2751 | 2556 | 92.9% |
| &nbsp;&nbsp;&nbsp;Marketing and Advertising | 1536 | 1086 | 450 | 41.4% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 83 | 151 | (68) | (45.0)% |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality expenses | 55999 | 44718 | 11281 | 25.2% |
| &nbsp;&nbsp;&nbsp;Consolidated funds – Other expenses | 5532 | 4509 | 1023 | 22.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 78142 | 64187 | 13955 | 21.7% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | (1653) | (86) | (1567) | 1822.1% |
| &nbsp;&nbsp;&nbsp;Interest income | (1) | (7) | 6 | (85.7)% |
| &nbsp;&nbsp;&nbsp;Interest expense | 712 | (672) | 1384 | (206.0)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Loss Before Income Taxes** | (21167) | (25545) | 4378 | (17.1)% |
| &nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | - | - | - | 0.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Loss** | (21167) | (25545) | 4378 | (17.1)% |
| &nbsp;&nbsp;&nbsp;Net loss attributable to noncontrolling interests | (20469) | (20099) | (370) | 1.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Loss Attributable to CaliberCos Inc.** | $(698) | $(5446) | $4748 | (87.2)% |

---

For the years ended December 31, 2021 and 2020, total revenues were $56.0 million and $37.9 million, respectively, representing a period-over-period increase of approximately 47.9%. This increase was primarily due to (i) an increase in revenues in our hospitality portfolio whose operations began to recover from the impact of the COVID-19 pandemic (while lockdowns associated with virus containment continued to affect revenues in 2021, our properties are located in states that had re-opened quickly in late 2020); (ii) increased revenues in our single-family and multi-family real estate portfolios; and (iii) increased interest revenue in our lending fund compared to the prior comparative period.

For the years ended December 31, 2021 and 2020, total expenses were $78.1 million and $64.2 million, respectively, representing a period-over-period increase of 21.7%. The increase was primarily due to an increase in hospitality related expenses as operations responded to the measured recovery that started to appear in late 2020. The properties began expanded staffing levels and service offerings as occupancy and demand began to recover. In addition, the increase in total expenses is attributable to increased operating costs of our single-family and multi-family real estate portfolios as well as an increased interest expense related to our single-family and multi-family real estate portfolios. For the year ended December 31, 2021, notes payable related to these portfolios increased by approximately $15.7 million, primarily related to the consolidation of our Ironwood Fundco, LLC fund.

***Segment Analysis***

The following discussion is specific to our various segments for the years ended December 31, 2021 and 2020. Our segment information is presented in a format consistent with the information senior management uses to make operating decisions, assess performance and allocate resources.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP because these fees are eliminated in consolidation when they are derived from a consolidated fund. Furthermore, segment expenses are also different than those presented on a consolidated U.S. GAAP basis due to the exclusion of fund expenses that are paid by the consolidated funds.

<u>Fund Management</u>

The following table presents our results of operations for our Fund Management segment (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | | |
|  | **2021** | **2020** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $7610 | $5316 | $2294 | 43.2% |
| &nbsp;&nbsp;&nbsp;Performance allocations | 733 | 422 | 311 | 73.7% |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 3240 | 1278 | 1962 | 153.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 11583 | 7016 | 4567 | 65.1% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 7725 | 7105 | 620 | 8.7% |
| &nbsp;&nbsp;&nbsp;General and administrative | 5084 | 2796 | 2288 | 81.8% |
| &nbsp;&nbsp;&nbsp;Marketing and advertising | 1533 | 1012 | 521 | 51.5% |
| &nbsp;&nbsp;&nbsp;Depreciation | 38 | 39 | (1) | (2.6)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 14380 | 10952 | 3428 | 31.3% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | (1090) | (24) | (1066) | 4441.7% |
| &nbsp;&nbsp;&nbsp;Interest income | (104) | (7) | (97) | 1385.7% |
| &nbsp;&nbsp;&nbsp;Interest expense | 641 | (639) | 1280 | (200.3)% |
| **Net loss** | $(2244) | $(3266) | $1022 | (31.3)% |

---

For the years ended December 31, 2021 and 2020, asset management fees were $7.6 million and $5.3 million, respectively, representing a period-over-period increase of 43.2%. The increase in our fees corresponds to the increase in total managed capital. Total managed capital at December 31, 2021 was approximately $307.0 million compared to $224.2 million at December 31, 2020.

For the years ended December 31, 2021 and 2020, performance allocations were $0.7 million and $0.4 million, respectively, representing a period-over-period increase of 73.7%. This increase was primarily due to an increase in our carried interest income. In 2021, profit share was generated by the sale by our investment funds of an office/flex building investment and a separate sale of a land investment. In 2020, performance allocations were primarily related to the final distribution of our profit share related to the completion of a 2019 sale by one of our investment funds of an investment in three apartment buildings.

For the years ended December 31, 2021 and 2020, transaction and advisory fees were $3.2 million and $1.3 million, respectively, representing a period over period increase of 153.5%. For the year ended December 31, 2021, we raised approximately $114.0 million compared to approximately $39.2 million for the year ended December 31, 2020.

For the years ended December 31, 2021 and 2020, operating costs were $7.7 million and $7.1 million, respectively, representing a period-over-period increase of 8.7%. This increase was primarily due to an increase in corporate payroll costs resulting from increased headcount.

For the years ended December 31, 2021 and 2020, general and administrative costs were $5.1 million and $2.8 million, respectively, representing a period-over-period increase of 81.8%. This increase was primarily due to an increase in legal reserves in 2021 based on continued development of current litigation matters of the Company.

For the years ended December 31, 2021 and 2020, marketing and advertising was $1.5 million and $1.0 million, respectively, representing a period-over-period increase of approximately 51.5%. During the year ended December 31, 2021, we incurred higher costs associated with marketing the closing of the Company's Reg A+ capital raise which closed at the end of February 2021.

For the years ended December 31, 2021 and 2020, other expenses (income), net was $1.1 million and $0.02 million, respectively. This increase is primarily due to employee retention credits received in 2021 under the CARES Act for which the Company did not qualify in 2020.

For the years ended December 31, 2021 and 2020, interest expense was $0.6 million and $(0.6) million, respectively, representing a period-over-period increase of 200.3%. In 2020, we received approval from the Small Business Administration for full forgiveness of our Payroll Protection Program loan totaling $1.4 million.

<u>Development</u>

The following table presents our results of operations for our Development segment (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | | |
|  | **2021** | **2020** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | $3211 | $4434 | $(1223) | (27.6)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 3211 | 4434 | (1223) | (27.6)% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 2659 | 4541 | (1882) | (41.4)% |
| &nbsp;&nbsp;&nbsp;General and administrative | 162 | 65 | 97 | 149.2% |
| &nbsp;&nbsp;&nbsp;Marketing and advertising | 3 | 55 | (52) | (94.5)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 2824 | 4661 | (1837) | (39.4)% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | (53) | 1 | (54) | (5400.0)% |
| **Net Income (loss)** | $440 | $(228) | $668 | (293.0)% |

---

For the years ended December 31, 2021 and 2020, segment revenues were $3.2 million and $4.4 million, respectively, representing a period-over-period decrease of 27.6%. This was due to the completion of our Tucson Convention Center hotel the Doubletree by Hilton in March 2021.

For the years ended December 31, 2021 and 2020, operating costs were $2.7 million and $4.5 million, respectively, representing a period-over-period decrease of 41.4%. This decrease was due to the decrease in revenues over the same period and recovery in 2021 from the increased operating costs experienced in 2020 due to the effects of the pandemic where supply and labor shortages caused inefficiencies in our job execution and increased labor costs, respectively.

<u>Brokerage</u>

The following table presents our results of operations for our Brokerage segment (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | | |
|  | **2021** | **2020** |<br>**$ Change** |<br>**% Change** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | $1198 | $747 | $451 | 60.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 1198 | 747 | 451 | 60.4% |
| **Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating costs | 259 | 636 | (377) | (59.3)% |
| &nbsp;&nbsp;&nbsp;General and administrative | 61 | 3 | 58 | 1933.3% |
| &nbsp;&nbsp;&nbsp;Marketing and advertising |  | 18 | (18) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 45 | 110 | (65) | (59.1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 365 | 767 | (402) | (52.4)% |
| &nbsp;&nbsp;&nbsp;Other expenses (income), net | (510) |  | (510) | 100.0% |
| &nbsp;&nbsp;&nbsp;Interest expense | 115 | 202 | (87) | (43.1)% |
| **Net Income (loss)** | $1228 | $(222) | $1450 | (653.2)% |

---

For the years ended December 31, 2021 and 2020, segment revenues were $1.2 million and $0.7 million, respectively, representing an increase of 60.4%. In 2021, we completed the sale of our Treehouse apartment complex in Tucson, Arizona which sold for $23.0 million and our Fiesta Tech office/flex building in Gilbert, Arizona for $8.3 million.

For the years ended December 31, 2021 and 2020, other expenses (income) were $0.5 million and $0, respectively. In 2021 we sold the remaining four single-family homes owned by Caliber Auction Homes, which included two single family homes which were sold to related parties, previously held as investments in real estate for $1.9 million, resulting in a gain on the dispositions of $0.5 million.

**Investment Valuations**

The investments that are held by our funds are generally considered to be illiquid and have no readily ascertainable market value. We value these investments based on our estimate of their fair value as of the date of determination. We estimate the fair value of our fund's investments based on a number of inputs built within forecasting models which are either developed by a third party or by our internal finance team. The models generally rely on discounted cash flow analysis and other techniques and may include independently sourced market parameters. The material estimates and assumptions used in these models include the timing and expected amounts of cash flows, income and expenses for the property, the appropriateness of discount rates used, overall capitalization rate, and, in some cases, the ability to execute, estimated proceeds and timing of expected sales and financings. The majority of our assets utilize the income approach to value the property. Where appropriate, management may obtain additional supporting evidence of values from methods generally utilized in the real estate investment industry, such as appraisal reports and broker price opinion ("BPO") reports.

As discussed elsewhere in this document, we have experienced adverse effects related to COVID-19 on our assets. It is unclear whether the effects of COVID-19 will have a lasting and prolonged effect on asset values over the long term.

With respect to the underlying factors that led to the change in fair value in the current year, we identify assets that are undervalued and/or underperforming at the time of acquisition. Such assets generally undergo some form of repositioning soon after our acquisition in order to help drive increased appreciation and operating performance. Once the repositioning is complete, we focus on increasing the asset's net operating income, thereby further increasing the value of the asset. Making below-market acquisitions, adding value through development activities, and increasing free cash flow with proper management all represent a material component to our core business model. Despite those efforts, the impacts of COVID-19 have appeared in the values of our assets. While we believe that COVID-19 will not have a permanent effect on the long-term value of our assets, there can be no assurance that such outcome will occur.

A unique feature of Caliber's funds is the discretion given to Caliber's management team to decide when to sell assets and when to hold them. We believe this discretion allows Caliber to avoid selling properties that, while their business plan may have matured, the market will not pay an attractive price in the current environment. Avoiding selling at a time of disruption, such as all of 2020, is critical to preserving the value of our assets, our carried interest, our ongoing revenues, and our clients' capital. We believe the disruption caused by COVID-19 may negatively affect our competitors, who may have a more traditional model with fixed, required, liquidation dates, which in turn may offer Caliber attractive investment opportunities. While this is management's expectation, there can be no assurance these outcomes will occur.

**Assets Under Management**

AUM refers to the assets we manage or sponsor. We monitor two types of information with regard to our AUM:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Managed
 Capital – we define this as the total equity capital raised from investors in our funds at any point in time. We use this information
 to monitor, among other things, the amount of 'preferred return' that would be paid at the time of a distribution and
 the potential to earn a performance fee over and above the preferred return at the time of the distribution. Our asset management
 fees are based on a percentage of Managed Capital and monitoring the change and composition of Managed Capital provides relevant
 data points for Caliber management to further calculate and predict future earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Fair Value ("FV") AUM – we define
this is as the aggregate fair value of the real estate assets we manage and from which we derive management fees, performance revenues
and other fees and expense reimbursements. We estimate the value of these assets quarterly to help make sale and hold decisions and to
evaluate whether an existing asset would benefit from refinancing or recapitalization. This also gives us insight into the value of our
carried interest at any point in time. We also utilize FV AUM to predict the percentage of our portfolio which may need development services
in a given year, fund management services (such as refinance), and brokerage services. As we control the decision to hire for these services,
our service income is generally predictable based upon our current portfolio AUM and our expectations for AUM growth in the year forecasted.
As of September 30, 2022, we had total FV AUM of approximately $686 million.

Although we believe we are utilizing generally accepted methodologies for our calculation of Managed Capital and FV AUM, it may differ from our competitors, thereby making these metrics non-comparable to our competitors.

***Managed Capital***

The table below summarizes the activity of the Managed Capital for the nine months ended September 30, 2022:

---

| | |
|:---|:---|
|  | **September 30,<br> 2022** |
| Beginning of year | $306899 |
| &nbsp;&nbsp;&nbsp;Originations | 49980 |
| &nbsp;&nbsp;&nbsp;Redemptions | (7941) |
| End of period | $348938 |

---

The following table summarizes Managed Capital of our investment fund portfolios as of September 30, 2022 and December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2022** | **December 31,<br> 2021** |
| &nbsp;&nbsp;&nbsp;Real Estate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hospitality | $102077 | $100887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential | 58674 | 45643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 94357 | 65176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate | 255108 | 211706 |
| &nbsp;&nbsp;&nbsp;Credit<sup>(1)</sup> | 70777 | 49729 |
| &nbsp;&nbsp;&nbsp;Other<sup>(2)</sup> | 23053 | 45464 |
| Total | $348938 | $306899 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Credit Managed Capital represents loans made to Caliber's
 investment funds by our Diversified credit fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other Managed Capital represents undeployed capital
 held in our Diversified funds.

Managed capital for our hospitality investment funds increased $1.2 million during the nine months ended September 30, 2022, representing capital raised into our hospitality assets for capital improvements and operating costs related to three hotels.

Managed capital for our residential investment funds increased $13.0 million during the nine months ended September 30, 2022, representing: (i) $13.2 million in capital raised into our residential assets, and (ii) $6.1 million contributed by our Diversified funds, primarily to support four new multi-family ground-up builds in Arizona and one in Texas, which was offset by $6.3 million of redemptions related to the sale of GC Square in the first quarter of 2022.

Managed capital for our commercial investment funds increased $29.2 million during the nine months ended September 30, 2022, representing: (i) $10.4 million in capital raised into our commercial assets, and (ii) $18.8 million contributed by our Diversified funds, to support five commercial ground-up builds, acquisitions and tenant improvements.

During the nine months ended September 30, 2022, we raised $7.0 million of new capital into Caliber Fixed Income Fund III, LP ("CFIF III") and deployed it into our various real estate investments. We also deployed $14.0 million directly into new investments in the form of notes receivable.

As of September 30, 2022, we held $23.1 million of other managed capital, which included a $3.0 million private equity investment in a local start-up business and $20.1 million of undeployed cash and pursuit costs, compared to $45.5 million of undeployed cash and pursuit costs held as of December 31, 2021.

***FV AUM***

As the economy continued to recover, our FV AUM increased. The table below details the activities that had an impact on our FV AUM, for the nine months ended September 30, 2022.

---

| | |
|:---|:---|
|  | **September 30, <br> 2022** |
| Beginning of year | $601168 |
| &nbsp;&nbsp;&nbsp;Assets acquired | 30734 |
| &nbsp;&nbsp;&nbsp;Construction and net market appreciation | 87591 |
| &nbsp;&nbsp;&nbsp;Assets sold<sup>(1)</sup> | (32000) |
| &nbsp;&nbsp;&nbsp;Credit<sup>(2)</sup> | 21048 |
| &nbsp;&nbsp;&nbsp;Other<sup>(3)</sup> | (22411) |
| End of period | $686130 |

---

The following table summarizes FV AUM of our investment fund portfolios as of September 30, 2022 and December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2022** | **December 31,<br> 2021** |
| &nbsp;&nbsp;&nbsp;Real Estate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hospitality | $312900 | $264800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential<sup>(1)</sup> | 79500 | 90763 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 199900 | 150412 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate | 592300 | 505975 |
| &nbsp;&nbsp;&nbsp;Credit<sup>(2)</sup> | 70777 | 49729 |
| &nbsp;&nbsp;&nbsp;Other<sup>(3)</sup> | 23053 | 45464 |
| Total | $686130 | $601168 |

---

(1) Includes the sale of the GC Square
 Apartments multi-family property in March 2022.

(2) Credit FV AUM represents loans made to Caliber's
 investment funds by our Diversified credit fund.

(3) Other FV AUM represents undeployed capital held in
 our Diversified funds.

**Managed Capital**

The table below summarizes the activity of the Managed Capital for the years ended December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Beginning of year | $224213 | $188243 |
| &nbsp;&nbsp;&nbsp;Originations | 99132 | 38611 |
| &nbsp;&nbsp;&nbsp;Redemptions | (16446) | (2641) |
| End of Year | $306899 | $224213 |

---

The following table summarizes Managed Capital for our investment fund portfolios as of December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| &nbsp;&nbsp;&nbsp;Real Estate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hospitality | $100887 | $89730 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential | 45643 | 46297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 65176 | 35500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate | 211706 | 171527 |
| &nbsp;&nbsp;&nbsp;Credit<sup>(1)</sup> | 49729 | 48173 |
| &nbsp;&nbsp;&nbsp;Other<sup>(2)</sup> | 45464 | 4513 |
| Total | $306899 | $224213 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Credit Managed Capital represents loans made to Caliber's investment
 funds by our Diversified credit fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other Managed Capital represents undeployed capital held in our Diversified funds.

Managed capital for our hospitality investment funds increased $11.2 million during the year ended December 31, 2021, representing capital raised into our hospitality assets for capital improvements and operating costs related to three hotels.

Managed capital for our commercial investment funds increased $29.7 million during the year ended December 31, 2021, representing capital raised into our commercial assets to support one commercial ground-up build in Arizona and three commercial ground-up builds in Colorado. The scope of investments included tenant improvements and land development.

As of December 31, 2021, we held $45.5 million of undeployed cash and pursuit costs, compared to $4.5 million of undeployed cash and pursuit costs held as of December 31, 2020. For the year ended December 31, 2020, the potential adverse effects of COVID-19 resulted in an immediate and sharp slowdown in the U.S. economy which created uncertainty in the global economic outlook. This adversely affected our ability to raise money into our funds for that fiscal period. However, the global economy improved and as a result capital raised into our funds rose to $114.0 million from $39.2 million for the years ended December 31, 2021 and 2020, respectively, increasing our undeployed capital balance during the year ended December 31, 2021.

Residential and credit managed capital remained relatively constant from December 31, 2020 to December 31, 2021.

**FV AUM**

As the economy continued to recover, our FV AUM increased. The table below details the activities that had an impact on our FV AUM, during the year ended December 31, 2021.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Beginning of year | $465553 | $395816 |
| &nbsp;&nbsp;&nbsp;Assets acquired | 37008 | 4300 |
| &nbsp;&nbsp;&nbsp;Construction and net market appreciation | 95902 | 61995 |
| &nbsp;&nbsp;&nbsp;Assets sold | (39802) | (1258) |
| &nbsp;&nbsp;&nbsp;Credit<sup>(1)</sup> | 1556 | 15921 |
| &nbsp;&nbsp;&nbsp;Other<sup>(2)</sup> | 40951 | (11221) |
| End of Year | $601168 | $465553 |

---

The following table summarizes FV AUM of our investment fund portfolios as of December 31, 2021 and December 31, 2020:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| &nbsp;&nbsp;&nbsp;Real Estate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hospitality | $264800 | $223800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential | 90763 | 83635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 150412 | 105432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate | 505975 | 412867 |
| &nbsp;&nbsp;&nbsp;Credit<sup>(1)</sup> | 49729 | 48173 |
| &nbsp;&nbsp;&nbsp;Other<sup>(2)</sup> | 45464 | 4513 |
| Total | $601168 | $465553 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Credit FV AUM represents loans made to Caliber's investment funds by our Diversified credit
 fund.

(2) Other FV AUM represents undeployed capital held in our Diversified funds.

**Non-GAAP Measures**

We present EBITDA and Adjusted EBITDA, which are not recognized financial measures under U.S. GAAP, as supplemental disclosures because we regularly review these measures to evaluate our funds, measure our performance, identify trends, formulate financial projections and make strategic decisions.

EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization on a basis that deconsolidates our consolidated funds (intercompany eliminations) and eliminates noncontrolling interest. Eliminating the impact of consolidated funds and noncontrolling interest provides investors a view of the performance attributable to CaliberCos Inc. and is consistent with performance models and analysis used by management. Adjusted EBITDA represents EBITDA as further adjusted to exclude stock-based compensation, transaction fees, expenses and other amounts related to the registration statement of which this prospectus forms a part, the share repurchase costs related to the Company's Buyback Program, litigation settlements, expenses recorded to earnings relating to investment deals which were abandoned or closed, any other non-cash expenses or losses, as further adjusted for extraordinary or non-recurring items.

When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. We generally use these non-U.S. GAAP financial measures to evaluate operating performance and for other discretionary purposes. We believe that these measures enhance the understanding of ongoing operations and comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly identified measures of other companies.

EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments. These measures may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for periods presented (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** <br> **September 30,** | **Nine Months Ended** <br> **September 30,** |
|  | **2022** | **2021** |
| **Net Income (Loss) Before Income Taxes** | $19050 | $(16859) |
| Add: |  |  |
| &nbsp;&nbsp;Intercompany eliminations | 4878 | 3769 |
| &nbsp;&nbsp;Non-controlling interest eliminations | (19270) | 12864 |
| **CaliberCos Net Loss<sup>(1)</sup>** | 4658 | (226) |
| Add: |  |  |
| &nbsp;&nbsp;Interest expense | 686 | 585 |
| &nbsp;&nbsp;Depreciation expense | 31 | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**EBITDA** | 5375 | 433 |
| Add: |  |  |
| &nbsp;&nbsp;Share buy back | 235 | 238 |
| &nbsp;&nbsp;Stock-based compensation | 371 |  |
| &nbsp;&nbsp;Legal costs<sup>(2)</sup> | 525 | 13 |
| &nbsp;&nbsp;Public registration costs<sup>(3)</sup> | 779 | 1010 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Adjusted EBITDA** | $7285 | $1694 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) CaliberCos Net Loss is presented on a basis that deconsolidates our consolidated
 funds and eliminates noncontrolling interest and includes only those amounts attributable to CaliberCos Inc. and its wholly-owned
 subsidiaries. See Note 10 – Segment Reporting for additional disclosures on our segment accounting policies and the required
 U.S. GAAP reconciliation to the condensed consolidated statements of operations.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Legal costs represent an increase in the accrual related
 to the Company's settlement agreement with 6831614 Manitoba Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Public registration
 costs include direct costs related to our Reg A+ and S-1 offerings such as legal and
 accounting advisor fees, printing costs, and advertising costs.

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods presented (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years Ended<br> December 31,** | **Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| **Net Loss Before Income Taxes** | $(21167) | $(25545) |
| Add: |  |  |
| &nbsp;&nbsp;Intercompany eliminations | 5218 | 4011 |
| &nbsp;&nbsp;Non-controlling interest eliminations | 15373 | 17818 |
| **CaliberCos Net Loss<sup>(1)</sup>** | (576) | (3716) |
| Add: |  |  |
| &nbsp;&nbsp;Interest expense | 756 | 970 |
| &nbsp;&nbsp;Depreciation expense | 83 | 149 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**EBITDA** | 263 | (2597) |
| Add: |  |  |
| &nbsp;&nbsp;Share buy back | 317 | 291 |
| &nbsp;&nbsp;Stock-based compensation | 24 |  |
| &nbsp;&nbsp;Severance payments |  | 138 |
| &nbsp;&nbsp;Legal costs<sup>(2)</sup> | 1818 |  |
| &nbsp;&nbsp;Public registration costs<sup>(3)</sup> | 1040 | 878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Adjusted EBITDA** | $3462 | $(1290) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) CaliberCos Net Loss is presented on a basis that deconsolidates
 our consolidated funds and eliminates noncontrolling interest and includes only those amounts attributable to CaliberCos Inc. and
 its wholly-owned subsidiaries. See Note 16 – Segment Reporting for additional disclosures on our segment accounting policies
 and the required U.S. GAAP reconciliation to the consolidated statements of operations.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Legal costs represent an increase in the accrual related
 to the 6831614 Manitoba Ltd. complaint.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Public registration
 costs include direct costs related to our Reg A+ offering such as legal and accounting
 advisor fees, printing costs, and advertising costs.

**Liquidity and Capital Resources**

As described elsewhere in this prospectus, COVID-19 has had far-reaching adverse impacts on the near-term availability of access to capital markets and debt. Due to COVID-19, we continue to take a measured approach to our operations and cash flows. Through the year ended December 31, 2021, we obtained PPP Round 2 loans totaling $5.9 million under the CARES Act. For a discussion of remedial measures and other key trends and uncertainties that have affected our business see "Trends Affecting Our Business".

The Company, through guarantees of loans held by its consolidated funds, has five separate loans outstanding with maturity dates within the 12-month period subsequent to when these financial statements were issued with outside lenders totaling $82.8 million at September 30, 2022. Management is actively managing the potential amendments to the applicable loan agreements to include additional extension options, pay off or refinancing of these facilities. Management believes that we will be able to come to an agreement with the respective lenders in order to mitigate any defaults or enter into new financing arrangements with third-party lenders. Compliance with all other covenants were met.

Each of our funds and the related assets that are acquired or own equity interest in those funds are established as separate legal entities with limited liability. Therefore, the cash flows generated by these entities, whether through operations or financing, are unavailable for general corporate purposes.

We have historically financed our operations primarily through a combination of operating cash flows, private offerings of our equity securities, and secured and unsecured debt. In addition, due to the consolidation of CFIF III, we now recognize a revolving line of credit with a maximum borrowing amount of $4.5 million.

We hold our excess unrestricted cash in bank accounts with several high-quality financial institutions. We believe that our current capital position is sufficient to meet our current liquidity needs for at least the next 12 months.

***Equity Financings***

Since inception through September 30, 2022, we have raised approximately $33.7 million from the sale of common and convertible preferred stock to third parties and management. The funds received from the issuance of our stock sales have been used for operating expenditures and refinancing our higher interest debt.

***Unsecured Corporate Debt***

As of September 30, 2022, we have issued and outstanding unsecured promissory notes of $13.4 million with an average outstanding principal balance of $0.1 million, a weighted average interest rate of 10.23%, and maturity dates ranging from April 2023 to June 2024. Management believes it can come to a mutual agreement with each lender to extend the maturities of the notes for an additional 12-month term. This outstanding debt resulted in $0.6 million of interest expense for the nine month period ended September 30, 2022.

***Cash Flows Analysis***

The section below discusses in more detail the Company's primary sources and uses of cash and primary drivers of cash flows within the Company's consolidated statements of cash flows.

---

| | | | |
|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | |
| <br>*(dollars in thousands)* | **2022** | **2021** |<br>**$ Change** |
| Net cash provided by (used in): |  |  |  |
| Operating activities | $(3816) | $(12568) | $8752 |
| Investing activities | (23877) | (14600) | (9277) |
| Financing activities | 29570 | 33312 | (3742) |
| **Net Change in Cash and Cash Equivalents** | $**1877** | $**6144** | $**(4267)** |

---

The assets of our consolidated funds, on a gross basis, can be substantially larger than the assets of our core business and, accordingly could have a substantial effect on the accompanying statements of cash flows. The table below summarizes our consolidated statements of cash flow by activity attributable to the Company and to our consolidated funds.

---

| | | | |
|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | |
| <br>*(dollars in thousands)* | **2022** | **2021** |<br>**$ Change** |
| Net cash used in the Company's operating activities | $(3508) | $(4219) | $711 |
| Net cash used in the Consolidated Funds' operating activities | (308) | (8349) | 8041 |
| Net cash used in operating activities | **(3816)** | **(12568)** | **8752** |
| Net cash (used in) provided by the Company's investing activities | (961) | 1413 | (2374) |
| Net cash used in the Consolidated Funds' investing activities | (22916) | (16013) | (6903) |
| Net cash used in investing activities | **(23877)** | **(14600)** | **(9277)** |
| Net cash provided by the Company's financing activities | 7320 | 5921 | 1399 |
| Net cash provided by the Consolidated Funds' financing activities | 22250 | 27391 | (5141) |
| Net cash provided by financing activities | **29570** | **33312** | **(3742)** |
| **Net Change in Cash and Cash Equivalents** | $**1877** | $**6144** | $**(4267)** |

---

*Operating Activities*

Our net cash flows from operating activities are generally comprised of asset management fees, performance allocations, and transaction and advisory fees, less cash used for operating expenses, including interest paid on our debt obligations. Net cash flows used in operating activities of the Company decreased from the nine months ended September 30, 2022 to 2021, primarily due to increased capital assets under management resulting in increased asset management fees received and an increase in performance allocations over the same period recognized from the sale of a multi-family property held as a fund investment in March 2022, offset by increased operating expenses, including increases in payroll due to increased headcount and bonuses paid and increased general and administrative expenses incurred in the current year. The decrease in net cash used in operating activities of the Consolidated Funds is related to an increase in net income, excluding the effect of the non-cash items, which was primarily related to an increase in hospitality revenues offset by an increase in hospitality expenses.

*Investing Activities*

The increase in net cash flows used in investing activities of the Company for the nine months ended September 30, 2022 to 2021, primarily relates to increased contributions to our investment funds in 2022 as compared to the same period in 2021. The increase in net cash flows used in investing activities of the Consolidated Funds is primarily due to the increase in investments in real estate assets, including the consolidation of the Northsight Crossings AZ, LLC and Southpointe Fundco, LLC investment funds, offset by the net impact of the deconsolidation and net proceeds from the sale of the GC Square Apartments held by the GC Square, LLC investment fund and the deconsolidation of Ironwood Fundco, LLC.

*Financing Activities*

The decrease in net cash flows provided by financing activities for the nine months ended September 30, 2022 to 2021 were primarily driven by $7.2 million in proceeds raised pursuant to our Series B preferred stock Reg A+ offering in in 2021, as compared to no proceeds raised during the respective 2022 period, offset by an increase of $7.6 million of net proceeds on notes payable in 2022 from 2021. In addition, the net proceeds from notes payable and notes payable – related parties of our consolidated funds decreased $7.4 million in 2022 as compared to the same prior period in 2021.

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | |
| <br>*(dollars in thousands)* | **2021** | **2020** |<br>**$ Change** |
| Net cash provided by (used in): |  |  |  |
| Operating activities | $(15015) | $(15769) | $754 |
| Investing activities | (14314) | (9668) | (4646) |
| Financing activities | 35046 | 19561 | 15485 |
| **Net Change in Cash and Cash Equivalents** | $**5717** | $**(5876)** | $**11593** |

---

The table below summarizes our consolidated statements of cash flow by activity attributable to the Company and to our consolidated funds.

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | |
| <br>*(dollars in thousands)* | **2021** | **2020** |<br>**$ Change** |
| Net cash used in the Company's operating activities | $(5857) | $(3203) | $(2654) |
| Net cash used in the Consolidated Funds' operating activities | (9158) | (12566) | 3408 |
| Net cash used in operating activities | **(15015)** | **(15769)** | **754** |
| Net cash provided by (used in) the Company's investing activities | 928 | (380) | 1308 |
| Net cash used in the Consolidated Funds' investing activities | (15242) | (9288) | (5954) |
| Net cash used in investing activities | **(14314)** | **(9668)** | **(4646)** |
| Net cash provided by the Company's financing activities | 5567 | 3015 | 2552 |
| Net cash provided by the Consolidated Funds' financing activities | 29479 | 16546 | 12933 |
| Net cash provided by financing activities | **35046** | **19561** | **15485** |
| **Net Change in Cash and Cash Equivalents** | $**5717** | $**(5876)** | $**11593** |

---

*Operating Activities*

Our net cash flows from operating activities are generally comprised of asset management fees, performance allocations, and transaction and advisory fees, less cash used for operating expenses, including interest paid on our debt obligations. Net cash flows used in operating activities increased from 2020 to 2021 primarily due to an increase in amounts due from related parties, increased operating expenses, including increases in payroll due to increased headcount and bonuses paid, additional amounts lent to related parties, and increased pursuit costs incurred in the current year. The decrease in net used in operating activities of the Consolidated Funds is primarily due to increases in net loss, excluding the effect of the non-cash items, primarily the gain on extinguishment of debt and in accounts receivable, partially offset by increases in accounts payable and accrued expenses and amounts due to related parties.

 

*Investing Activities*

Net cash flows provided by investing activities for 2021 primarily relate to $1.9 million in proceeds from the sale of four single-family homes, previously held as investments in real estate, offset by an additional investment in our real estate assets and additional contributions to our investment funds. Net cash flows used in investing activities for 2020 primarily relates to additional investment in our real estate assets and additional contributions to our investment funds. The increase in net cash flows used in investing activities of the Consolidated Funds is primarily due to the increase in investments in and acquisition of real estate assets and net fundings on notes receivables - related parties.

 

*Financing Activities*

Net cash flows provided by financing activities for 2021 were primarily driven by $7.2 million in proceeds raised pursuant to our Series B preferred stock Reg A+ offering, offset by net repayments on notes payable and notes payable – related parties and payments related to our buyback obligation to one of our non-participating founders (see Note 11 to our consolidated financial statements included herein). Net cash flows provided by financing activities for 2020 were primarily driven by $3.4 million in proceeds raised pursuant to our Series B preferred stock Reg A+ offering and net proceeds from notes payable and notes payable – related parties, offset payments related to our buyback obligation to one of our non-participating founders. The net proceeds from notes payable and notes payable related parties of our consolidated funds increased $7.0 million in 2021 compared to 2020. In addition, net contributions from noncontrolling interest holders increased $6.0 million in 2021 compared to 2020.

**Critical Accounting Estimates**

We believe the following critical accounting policies affect our more significant estimates and judgements used in the preparation of our consolidated financial statements.

***Revenue Recognition***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, management applies the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company's revenues primarily consist of fund management and transaction and advisory fees.

*Fund Management*

Asset Management Fees are generally based on 1.0% - 1.5% of the unreturned capital contributions in a particular fund and include reimbursement for costs incurred on behalf of the fund, including an allocation of certain overhead costs. Asset management fees are recalculated for each fund on an annual basis. These customer contracts require the partnership to provide management services, representing a performance obligation that the partnership satisfies over time.

Performance allocations ("carried interest") are an arrangement in which we are entitled to an allocation of investment returns, generated within the investment funds which we manage, based on a contractual formula. We typically receive 20% – 35% of all cash distributions from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns range from 6% to 12%, typically 6% for common equity or 10-12% for preferred equity, which does not participate in profits. Performance allocations are related to services which have been provided and are recognized when it is determined that they are no longer probable of significant reversal, which is generally satisfied when an underlying fund investment is realized or sold.

*Transaction and Advisory Fees*

Revenues from contracts with customers includes fixed fee arrangements with its related party affiliates to provide certain associated activities which are ancillary to and generally add value to the assets we manage, such as set up and fund formation services associated with marketing, soliciting, and selling member interests in the affiliated limited partnerships, brokerage services, construction and development management services, loan placement and guarantees. The recognition and measurement of revenue is based on the assessment of individual contract terms. For performance obligations satisfied at a point in time, there are no significant judgments made in evaluating when the customer obtains control of the promised service.

For performance obligations satisfied over time, significant judgment is required to determine how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on appropriate measurement of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company's estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company. Revenues are recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

***Income Taxes***

The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, *Accounting for Income Taxes*. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance is required to reduce the balance of a deferred tax asset if it is determined that it is more-likely-than-not that all or some portion of the deferred tax asset will not be realized due to the lack of sufficient taxable income or other limitation on the Company's ability to utilize the loss carryforward.

We recognize the impact of an income tax position, if that position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 9 – Income Taxes in the notes to our accompanying consolidated financial statements included herein for more detail.

***Segment Information***

During 2021, we realigned our operating segments to represent the internal management of our business. This realignment demonstrates a strategic shift in the growth and maturation of the Caliber model into an alternative asset manager generating fees from managed capital and growing a portfolio of high value diversified assets. The Company's activities are organized into three operating segments which constitute three reportable segments based on similarities with both their qualitative and economic characteristics. These segments distinguish all of the primary revenue generating activities of the business but group them together by their nature. The Company's chief operating decision maker uses total revenue, operating income and key operating statistics to evaluate performance and allocate resources to the Company's operations. Under this revised structure, the Company's operations are now organized into three reportable segments for management and financial reporting purposes, Fund Management, Development and Brokerage.

Management has concluded that based on the strategic shift in our operating strategies the consolidated investment funds which previously comprised the Hospitality, Residential, Commercial and Diversified segments, no longer meet the requirements in ASC 280, *Segment Reporting*, as operating segments. The consolidated investment funds are consolidated based on the requirement in ASC 810, *Consolidation*, as the Company was determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. The Company's chief operating decision maker no longer regularly reviews the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds.

The non-reportable segments include certain business activities which do not meet the requirement to be a reportable segment because they are immaterial. These activities represent the operating activity of our single-family assets which involve both the sale and rental of real estate assets. In addition, the Company has not and does not allocate its assets or liabilities specifically to the operating segments and the Company's chief operating decision maker does not review assets or liabilities by segment to make operating decisions. Assets, liabilities and corporate expenses are recorded at the legal entity level, which is not consistent to the operating segment and is therefore not reported by segment.

**Accounting Estimates of Consolidated Funds**

***Consolidated Fund Revenues***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, our consolidated funds apply the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Our consolidated funds' revenues primarily consist of hospitality revenues and rental income.

<u>Consolidated funds – Hospitality revenue</u>

Hospitality revenues are comprised of charges for room rentals, food and beverage sales, and other hotel operating activities. Revenues are recognized as earned, which is defined as the date upon which a guest occupies a room or utilizes the hotel's services. Revenues are recorded net of sales tax.

Our consolidated funds have performance obligations to provide accommodations and other ancillary services to hotel guests. As compensation for such goods and services, the consolidated funds are typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased. These fees are generally payable at the time the hotel guest checks out of the hotel. The consolidated funds generally satisfy the performance obligations over time and recognize the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied, and the services have been rendered.

For food and beverage, revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the consolidated funds received in exchange for those services, which is generally when payment is tendered at the time of sale.

The consolidated funds receive deposits for events and rooms. Such deposits are deferred and included in other liabilities on the accompanying consolidated balance sheets. The deposits are credited to income when the specific event takes place.

<u>Consolidated funds – Other revenue</u>

Included in Consolidated funds – Other revenue is rental income which includes the revenues generated primarily by the rental operations of the residential (multi-family and single-family) properties of our consolidated funds. The consolidated funds' revenues generated by residential properties, consists of rental income that each tenant pays in accordance with the terms of each lease and are reported on a straight-line basis over the initial noncancelable term of the lease, net of any concessions, and recognized when earned and collectability is reasonably assured. These revenues are recorded net of any sales and occupancy taxes collected from tenants. Rental income is not within the scope of ASC 606 and would fall under ASC 840 – Leases (or ASC 842 – Leases, when effective).

***Consolidated Fund Expenses***

Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise related to, our consolidated funds, including, without limitation, operating costs, depreciation and amortization, interest expense on debt held by our consolidated funds, gain on extinguishment of debt, insurance expenses, professional fees and other costs associated with administering and supporting those funds.

***Fair Value of Financial Instruments***

The fair value of financial instruments is disclosed in accordance with ASC 825, *Financial Instruments*. The fair value of our financial instruments is estimated using available market information and established valuation methodologies. The estimates of fair value are not necessarily indicative of the amounts the consolidated funds could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

**BUSINESS**

**General**

Caliber is a leading vertically integrated asset management firm, whose primary goal is to enhance the wealth of investors seeking to make investments in middle-market assets. We strive to build wealth for our investor clients by creating, managing, and servicing proprietary products including middle-market investment funds, private syndications, and direct investments. Our funds include investment vehicles focused primarily on real estate, private equity, and debt facilities. We earn asset management fees calculated as a percentage of managed capital in our Funds and Offerings. We market our services through direct sales to private investors, wholesaling to investment advisers, direct sales to family offices and institutions and through in-house client services.

We believe that we provide investors attractive risk-adjusted returns by offering a balance of (i) structured offerings and ease of ownership, (ii) a pipeline of investment opportunities, primarily projects that range in value between $5 million and $50 million, and (iii) an integrated execution and processing platform. Our investment strategy leverages the local market intelligence and real-time data we gain from our operations to evaluate current investments, generate proprietary transaction flow, and implement various asset management strategies.

**Market Opportunity**

Our focus is on offering investors access to investments in alternative asset classes. According to Preqin, an investment data company that provides financial data and information on the alternative assets market, total alternative global assets under management ("AUM") is expected to reach $17.2 trillion by 2025. Preqin's 2020 investor survey indicated that 81% of investors surveyed intended to either increase or significantly increase their investments into alternative assets. Caliber's current product offerings offer a broad range of alternative real estate investments and its established business model is designed for growth into multiple alternative asset classes. Caliber's roadmap includes expanding into a full suite of credit products and adding business equity products such as private equity and venture capital. We believe that Caliber's ability to move with the market and cater to investor interests, supported with our innovative product team, drives growth in our AUM.

**Caliber's Integrated Model**

While we primarily act as an alternative asset manager, we also offer a full suite of support services and employ a vertically integrated approach to investment management. Our asset management activities are complemented with transaction and advisory services, including development and construction management, acquisition and disposition expertise, and fund formation, which we believe differentiate us from other asset management firms. We believe our model allows us to acquire attractive projects, reduce operating costs and deliver services to our funds that enhance net returns to investors. We integrate our expertise and knowledge across these verticals to successfully manage our investment platform.

The following table summarizes the fees we are scheduled to earn by investment phase and distinguishes between fees that are incurred one time and fees that are earned throughout the investment life cycle.

![](tm2230806d1_s1aimg005.jpg)

We follow a rigorous diligence process to identify and qualify each of our investments. We source and analyze our investment opportunities through the strong relationships and networks we have developed in our target markets. We utilize and consider both qualitative and quantitative data in the identification and selection of our investment opportunities. We consider data from varying sources including proprietary market analytics, cost of capital, and internal financial modeling projections. We also consider portfolio exposure or concentrations in any one asset class and other laws and requirements that are either outlined in our fund operating agreements or other limitations required by law.

Real Estate – Our real estate expertise was formed in the wake of the 2008 financial crisis and encompasses hospitality, residential, and commercial asset types and vertical and horizontal projects. Our asset management team specializes by asset type, allowing for collaboration of different real estate verticals to gain pricing and capital deployment efficiencies as well purchasing power over materials and supplies to increase cash flows and returns. Our real estate products include core plus, value add, distressed and opportunistic investing. Our opportunity zone fund also provides access to tax efficient deployment of capital.

Credit – Our credit products are designed to meet our investors' needs for stable, cash flowing, real estate agnostic investments. We deploy and enhance investing in both mezzanine and preferred equity strategies based on the capital requirements of the underlying investment. Each investment decision involves a number of factors and criteria that are focused on the subject asset's ability to perform in the near term, its plans and projected capabilities, and its long-term return profile, among others.

*Assets Under Management*. AUM refers to the assets we manage or sponsor. We monitor two types of information with regard to our AUM:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Managed Capital – we define this as the total
 equity capital raised from investors in our funds at any point in time. We use this information to monitor, among other things, the
 amount of 'preferred return' that would be paid at the time of a distribution and the potential to earn a performance
 fee over and above the preferred return at the time of the distribution. Our asset management fees are based on a percentage of Managed
 Capital and monitoring the change and composition of Managed Capital provides relevant data points for Caliber management to further
 calculate and predict future earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Fair Value ("FV") AUM – we define
this is as the aggregate fair value of the real estate assets we manage and from which we derive management fees, performance revenues
and other fees and expense reimbursements. We estimate the value of these assets quarterly to help make sale and hold decisions and to
evaluate whether an existing asset would benefit from refinancing or recapitalization. This also gives us insight into the value of our
carried interest at any point in time. We also utilize FV AUM to predict the percentage of our portfolio which may need development services
in a given year, fund management services (such as refinance), and brokerage services. As we control the decision to hire for these services,
our service income is generally predictable based upon our current portfolio AUM and our expectations for AUM growth in the year forecasted.
As of September 30, 2022, we had total FV AUM of approximately $686 million.

The following example is included for illustrative purposes only to describe how the Company seeks to earn fees based on the life cycle of an investment. Assume in year one, Caliber raises debt and equity totaling $1.0 million (60/40, debt/equity) to acquire land for $0.3 million. In years two and three Caliber completes development and construction activities totaling $0.7 million. In year four, Caliber sells the asset for $3.0 million.

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| | | | |
|:---|:---|:---|:---|
| **Fees** | **Reoccurring** | **One-time** | **Description** |
| Brokerage Fee | $- | $6000 | Caliber earns a real estate brokerage fee of 2% of the purchase price the property of $300,000 in the beginning of Year 1. |
| Capital Formation Fee |  | 8000 | Caliber earns a fee approximating 2% of the total equity raised of $400,000 for this project in Year 1. |
| Loan Placement Fee |  | 6000 | Caliber earns a fee of up to 1% upon closing a loan used to acquire and/or improve the property in Year 1. |
| Asset Management Fee | 24000 |  | Caliber earns an annual fee equal to 1.5% of the total equity raised for managing the asset from Year 1 to Year 4. |
| Accounting Fee | 16000 |  | Caliber earns an annual fee of approximately 1% of total equity capital raised for accounting and back office costs from Year 1 to Year 4. |
| Loan Guarantee Fee | 6000 |  | Caliber earns an annual fee equal to 0.25% of the total loan amount charged annually if guaranteeing the debt from Year 1 to Year 4. |
| Development Fees | 40000 |  | Caliber earns a fee of 4% of the acquisition, development, and construction costs of the project for managing development. Earned while the development activities are being completed |
| Construction Management Fees | 28000 |  | Caliber earns a fee of 4% of the construction costs of the project for managing and overseeing construction of the asset. Earned while the construction activities are being completed |
| Performance Fee |  | 700000 | Caliber earns a fee equal to 35% of any profit that is generated from successfully improving, optimizing, and selling the property in Year 4. For simplicity this example does not contemplate preferred return hurdles owed to investors. |
| Brokerage Fee | - | 60000 | Caliber earns a real estate brokerage fee of 2% of the disposition of the property for $3,000,000 at the end of Year 4. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Fees Earned Over Investment Period** | $**114000** | $**780000** |  |
| **Total Caliber Fees Earned** | $**894000** |  |  |

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Our vertically integrated model means Caliber earns fees from multiple revenue channels throughout the investment life cycle and accreting value into the asset along the way through increased control and decision making.

**Business Segments**

Our operations are organized into three reportable segments for management and financial reporting purposes: Fund Management, Development, and Brokerage.

Fund Management — This segment represents our fund management activities along with back office and corporate support functions including accounting and human resources. It includes the activities of Caliber Services, LLC and its subsidiaries, ("Caliber Services"), which acts as an external manager of our funds, which have diversified investment objectives. It also includes the activities associated with Caliber Securities, LLC ("Caliber Securities"), a wholly-owned Arizona registered issuer-dealer, which generates fees from fund formation. We earn fund management fees for services rendered to each of the funds by Caliber Services as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Asset Management Fee*. We receive an annual asset management fee typically equal to 1.0% - 1.5%
 of the non-affiliated capital contributions related to the assets owned by the particular fund to compensate us for the overall administration
 of that fund. These management fees are payable regularly, generally on a monthly basis, pursuant to our management agreement with
 each fund.

&nbsp;&nbsp;&nbsp;&nbsp;· *Carried Interest.* We are entitled to an allocation of the income allocable to the limited partners or members of each fund
 for returns above accumulated and unpaid priority preferred returns and repayment of preferred capital contributions (the "Hurdle
 Rate"). Income earned with respect to our carried interest is recorded as Performance Allocations. Performance Allocations
 are an important element of our business and have historically accounted for a material portion of our revenues. Depending on the fund, we typically receive
 a carried interest of 20% - 35%, depending on the fund, of all cash distributions from (i) the operating cash flow of each fund
 above the Hurdle Rate and (ii) the cash flow resulting from the sale or refinancing of any investments held by our funds after
 payment of the related fund's investors unpaid priority preferred returns and Hurdle Rate. Our funds' preferred returns
 range from 6% - 12%.

&nbsp;&nbsp;&nbsp;&nbsp;· *Financing Fee*. We earn a fee upon the closing of a loan by our investment funds with a third-party
 lender to compensate us for the services performed and costs incurred in securing the financing. This is typically a fixed fee arrangement
 which approximates no more than 1% of the total loan and will not exceed 3% of the total loan after considering all other origination
 fees charged by lenders and brokers involved in the transaction. Financing fees are recorded under Transaction and Advisory Fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· *Set-Up Fee.* We charge an initial one-time fee related to the initial formation, administration and set-up of the
 applicable fund. Set-up fees can be flat fees or a percentage of capital raised, typically 1.5% of capital raised or less. These
 fees are recorded under Transaction and Advisory Fees.

· *Fund Formation Fee.* Through Caliber Securities, we earn non-affiliated fees from raising capital for our funds. Our contracts
 with our funds are typically fixed fee arrangements which approximate no more than 3.5% on capital raised. These fees are recorded
 under Transaction and Advisory Fees. Based on the contractual terms of the relevant
 funds we manage, in addition to the fees noted above, Caliber is entitled to be reimbursed for its expenses, which shall not exceed
 non-affiliated third-party costs, related to services provided to the funds.

Development — This segment represents our activities associated with providing real estate development services as their principal developer. These services include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by our funds. Revenues generated by this segment are generally based on 4% of the total expected costs of the development or 4% of the total expected costs of the construction project. Caliber Development, LLC ("Caliber Development"), a wholly-owned subsidiary of Caliber Services and an Arizona licensed general contractor, acts as either the developer, development manager, and/or construction manager on our funds' projects.

We have a number of development, redevelopment, construction, and entitlement projects that are underway or are in the planning stages, which we define as Assets Under Development ("AUD"). This category includes projects we are planning to build on undeveloped land and projects to be built and constructed on undeveloped lands which are not yet owned by our funds but are under contract to purchase. Completing these development activities may ultimately result in income-producing assets, assets we can sell to third parties, or both. As of September 30, 2022, we are actively developing 2,460 multifamily units, 2,300 single family units, 2.5 million square feet of commercial and industrial, and 1.3 million of office and retail. If all of these projects are brought to completion, the total cost capitalized to these projects, which represents total current estimated costs to complete the development and construction of such projects, is $2.2 billion, which we expect would be funded through a combination of undeployed fund cash, third-party equity, project sales, tax credit financing and similar incentives, and secured debt financing. We are under no obligation to complete these projects and may dispose of any such assets at any time. There can be no assurance that assets under development will ultimately be developed or constructed because of the nature of the cost of the approval and development process and market demand for a particular use. In addition, the mix of residential and commercial assets under development may change prior to final development. The development of these assets will require significant additional financing or other sources of funding, which may not be available.

Brokerage — This segment is involved in the buying, selling and leasing of all our funds' assets. For the nine months ended September 30, 2022 and 2021, our brokerage segment completed approximately $63.1 million and $46.8 million in transactions generating approximately $0.9 million and $0.6 million of brokerage fees, respectively

The table below summarizes the types of fees earned during the nine months ended September 30, 2022, from each of our funds, organized by asset class. Caliber has a partnership interest in each of the funds listed below. Any additional interests are described in footnote 2 to the table below.

---

| |
|:---|
| **Fund Name** |
| **Hospitality:** |
| CHPH, LLC <sup>(1)</sup> \* |
| Indian Bend Hotel Group, LLC <sup>(1)</sup> \* |
| 44th & McDowell Hotel Group, LLC <sup>(1)</sup> \* |
| Tucson East, LLC \* |
| 47th Street Phoenix Fund, LLC <sup>(1)</sup> \* |
| CH Ocotillo Inv Fund LLC <sup>(1)</sup> \* |
| Elliot 10 Fund, LLC <sup>(1)</sup> \* |
| SF Alaska, LP \* |
| The Ketch, LLC \* |
| TCC Hotel I, LLC <sup>(1)</sup> \* |
| **Residential:** |
| GC Square, LLC \* |
| Circle Lofts, LLC <sup>(1)</sup> \* |
| Caliber Residential Advantage Fund, LP <sup>(2)</sup> \* |
| Roosevelt III Holdco, LLC \* |
| Boardwalk Fundco, LLC \* |
| Ironwood Fundco, LLC \* |
| Jordan Lofts, LLC \* |
| Southpointe Fundco, LLC <sup>(1)</sup> \* |
| Commons Fundco, LLC \* |
| Flagstaff at 4th, LLC <sup>(3)</sup> \* |
| **Commercial:** |
| DFW Behavioral Health Fundco, LLC \* |
| Encore Fundco, LLC \* |
| DT Mesa Holdco, LLC <sup>(1)</sup> \* |
| J-25 Johnstown Holdings, LLC \* |
| Ridge II Holdco, LLC \* |
| Northsight Crossing AZ, LLC <sup>(1)</sup> \* |
| Pima Center Fundco, LLC \* |
| Riverwalk Developments Fundco 1-5 <sup>(4)</sup> \* |
| Riverwalk Land Fundco, LLC \* |
| Southridge Fundco, LLC \* |
| CBH 1 Phoenix Holdco LLC \* |
| **Diversified:** |
| Caliber Diversified Opportunity Fund II, LP <sup>(5)</sup> \* |
| Caliber Tax Advantaged Opportunity Zone Fund, LP <sup>(5)</sup> \* |
| Caliber Fixed Income Fund III, LP <sup>(1)(5)</sup> \* |
| CDIF, LLC <sup>(2)(5)</sup> \* |
| Caliber Tax Advantaged Opportunity Zone Fund II, LLC <sup>(5)</sup> \* |

---

(1) Consolidated at September 30, 2022.

(2) Caliber owned membership interests in these funds at September 30,
 2022 and received immaterial distributions during the nine months ended September 30, 2022, which are included in performance allocation
 revenue.

(3) Property held by this fund was sold in 2021, with final distributions made in 2022, generating performance allocation revenue.

(4) Represents five individual funds.

(5) The diversified funds only hold investments in the hospitality, residential and commercial asset classes above. Fees earned from the diversified funds contemplate fees earned on the corresponding investments to avoid charging fees on the same capital.

**Structure of Funds**

We are focused on enhancing wealth for our clients by providing access to high quality alternative investments. We believe that capital organized privately into structured funds offers investors an attractive balance of risk-adjusted return and investment performance. By allowing minimum investments as low as $50,000, we provide investors, who may not otherwise have been able to purchase a large asset, a variety of alternative investment strategies, including typical real estate investment solutions.

Our funds are typically structured as limited partnerships or limited liability companies which have a specified period during which clients can subscribe for limited partnership units or membership interests in the funds. Once the client is admitted as a limited partner or member, that client generally cannot withdraw its investment and may be required to contribute additional capital if called by the general partner or managing member. These funds can have a single investment purpose or the ability to invest in a broad range of asset types. As funds liquidate their investments, they typically distribute the proceeds to the funds' investors, however, and in particular with our multi-asset funds, the funds have the ability to retain the proceeds to make additional investments.

We act as an external manager of our funds, which have diversified investment objectives and include investment vehicles focused on real estate, private equity and debt facilities. The consolidated investment funds are variable interest entities in which Caliber has been determined to be the primary beneficiary for accounting purposes since we have the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. Our chief operating decision maker does not regularly review the operating results of these investment funds for the purpose of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds. Outside of our interests as the manager or general partner of these funds, our benefits in these entities are limited to Caliber's direct membership or partnership interests, if any. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates" for discussion of our consolidation and segment accounting policies.

The following tables present the revenues of our consolidated and unconsolidated investment funds, by fund type, which are comprised of (i) hospitality revenues that include charges from room rentals, food and beverage sales, and other hotel operating activities, (ii) rental revenues generated primarily by the residential properties, and (iii) gains on real estate sales and revenues for Caliber, which are comprised of asset management fees, performance allocations, and transaction and advisory fees, for the periods presented (dollar amounts in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** |
| <br>**Fund Type** | **Number of<br> Funds** | **Fund<br> Revenue** | **Caliber<br> Revenue** | **Number of<br> Consolidated<br> Funds** |
| **Real Estate** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Single Asset | 26 | $65424 | $10339 | 11<sup>(1)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-Asset | 5 | 3740 | 5955 |  |
| **Credit** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Single Asset | 7 | 74 | 1590 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-Asset | 1 | 3909 | 812 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 39 | 73147 | 18696 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-consolidated funds revenue |  | (22671) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intercompany eliminations |  | (1804) <sup>(2)</sup> | (4879) |  |
| &nbsp;&nbsp;&nbsp;Total consolidated revenues |  | $48672 | $13817 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes GC Square, LLC, which was consolidated
 until the sale of the GC Square Apartments in March 2022 and Ironwood, LLC which was consolidated until the debt refinance in September
 2022.

(2) Represents interest income earned by a consolidated
 lending fund from other consolidated funds.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** |
| <br>**Fund Type** | **Number of<br> Funds** | **Fund<br> Revenue** | **Caliber<br> Revenue** | **Number of<br> Consolidated<br> Funds** |
| **Real Estate** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Single Asset | 21 | $37057 | $6377 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-Asset | 4 | 4247 | 1700 |  |
| **Credit** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Single Asset | 2 | 173 | 633 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Multi-Asset | 1 | 3578 | 833 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 28 | 45055 | 9543 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-consolidated funds revenue |  | (12089) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intercompany eliminations |  | (2112)<sup>(1)</sup> | (4325) |  |
| &nbsp;&nbsp;&nbsp;Total consolidated revenues |  | $30854 | $5218 |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Represents
 interest income earned by a consolidated lending fund from other consolidated funds.

**Investment Process and Risk Management**

We maintain a rigorous investment process across all our funds. Each fund has investment policies and procedures that generally contain investment parameters and requirements, such as limitations relating to the types of assets, industries or geographic regions in which the fund will invest. An investment committee reviews and evaluates investment opportunities in a framework that includes a qualitative and quantitative assessment of the key opportunities and risks of investments.

Our investment professionals are responsible for the full life cycle of an investment, from evaluation, through execution, to exit. Investment professionals generally submit investment opportunities for review and approval by our investment committee. The investment committee is comprised of executives and senior leaders of the Company. When evaluating investment opportunities, the investment committee may consider, without limitation and depending on the nature of the investment and its strategy, the quality of the asset in which the fund proposes to invest, likely exit strategies, factors that could reduce the value of the asset at exit, and a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the asset's business operations. Our investment committee also incorporates, to the extent appropriate, environmental, social and governance ("ESG") factors into the investment decision-making process.

Existing investments are reviewed and monitored on a regular basis by investment and asset management professionals. In addition, our investment professionals and asset managers work directly with our portfolio companies' directors, executives and managers to drive operational efficiencies and growth.

**Capital Invested In and Alongside Our Investment Funds**

To further align our interests with those of investors in our investment funds, we have invested our own capital and that of certain of our personnel in the investment funds that we sponsor and manage. Minimum general partner capital commitments to our investment funds are determined separately with respect to each of our investment funds and, generally, are less than 5% of the limited partner commitments of any particular fund. We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs.

Investors in many of our funds also receive the opportunity to make additional "co-investments" with the investment funds. Our employees, as well as Caliber itself, also have the opportunity to make investments, in or alongside our funds and other vehicles we manage, in some instances without being subject to management fees, carried interest or incentive fees. In certain cases, limited partner investors may pay additional management fees or carried interest in connection with such co-investments.

**Competition**

The asset management industry is intensely competitive. We compete primarily on a regional, industry and asset basis.

We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies, and financial markets. We compete for outside investors based on a variety of factors, including investment performance, investor perception of investment managers' drive, focus and alignment of interest, quality of service provided to and duration of relationship with investors, business reputation, and the level of fees and expenses charged for services.

We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price.

We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers, and other parties. Many of these competitors are substantially larger and have considerably greater financial, technical, and marketing resources than are available to us. Many of these competitors have similar investment objectives to ours, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment.

The alternative investment industry is highly competitive. Many of our competitors have greater financial resources and a broader market presence than we do. We compete with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;· Competitive fee structures
 on our asset management services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Diversification
 of our revenue stream across the deal continuum, including advisory and transaction fees which include brokerage fees on buying and
 selling assets, construction management fees on repositioning assets, set up and fund formation fees on capital contributed into
 our funds from third-party clients.

**Strategy and Competitive Strengths**

We manage and administer investment vehicles that allow investors to diversify their holdings into asset classes that would not be readily accessible to them otherwise. We typically distribute cash to fund investors where there is either: (i) sufficient distributable cash derived from the income of our investments (rents, etc.) or (ii) a capital event, such as a sale of an asset or a cash-out refinance. Caliber's approach is to offer investors, and their wealth managers, products managed by a team aligned with their success. We believe our competitive strengths include:

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Extensive relationship and sourcing network.*** We leverage our relationships in order to source deals for our
 funds. In addition, our management has extensive relationships with major industry participants in each of the markets in which we
 currently operate. Their local presence and reputation in these markets enables them to cultivate key relationships with major holders
 of property inventory, in particular, financial institutions, throughout the real estate community.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Targeted market opportunities.*** We primarily focus on business and investment-friendly markets
 that have a long-term trend of population growth and income improvement, in particular focus on Arizona, Colorado, Nevada, Texas
 and Utah. We generally avoid engaging in direct competition in over-regulated and saturated markets.

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Structuring expertise and speed of execution.*** We believe we have developed a reputation of being able to quickly
 execute, as well as originate and creatively structure acquisitions, dispositions and financing transactions. We have experience
 in a variety of investment strategies, including direct property investments, joint ventures, participating loans and investments
 in performing and non-performing mortgages with the objective of long-term ownership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Vertically integrated platform for operational enhancement.*** We believe in a hands-on approach to
 real estate investing and possess local expertise in brokerage, development management, and investment sales, which we believe enable
 us to invest successfully in select submarkets. Our goal is to optimize the use of in-house services for high margin, low volume
 tasks while using third-party services for high volume, low margin tasks.

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Focus on the middle market.*** We believe our focus on middle market opportunities offers our investors significant
 alternatives to active, equity investing. This focus has allowed us to offer a diversified range of alternative investment opportunities,
 particularly for accredited investors.

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Risk protection and investment discipline.*** We underwrite our investments based upon an examination of investment
 economics and an understanding of market dynamics and risk management strategies. We conduct an in-depth sensitivity analysis on
 each of our fund investments. This analysis applies various economic scenarios that include, where appropriate, changes to rental
 rates, absorption periods, operating expenses, interest rates, exit values and holding periods.

**Our Growth Strategy**

We aim to continue building wealth for our investors by expanding our business with the following strategies:

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Organic growth with our existing high net worth investor base.*** We estimate that we currently service less
 than 1% of the current high net worth investor base in the United States. Using our established direct sales method, we intend to
 attract additional high net worth individuals to expand our number of customers and our assets under management.

&nbsp;&nbsp;&nbsp;&nbsp;·  ***Expansion into additional distribution channels*** . We intend to expand Caliber's recent, early success in accessing institutional channels by further
 expanding our fundraising activities directed to registered investment advisers (RIA), broker-dealers, family offices, and boutique
 institutions.

&nbsp;&nbsp;&nbsp;&nbsp;·  ***New funds and platforms*** .
 We intend to grow our AUM by expanding the number of available funds and platforms. We will look for complementary products and vehicles
 that utilize our existing vertically integrated infrastructure to allow us to continue to capture attractive risk-adjusted returns.
 These areas of investment could include private debt, venture capital and private equity. We expect these new funds and platforms
 will attract new investors, in addition to leveraging our existing investor base.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;·  ***Accretive acquisitions*** . We plan to evaluate potential accretive acquisition opportunities to further
 grow our business. These acquisitions could include opportunities to expand our distribution capabilities, product offerings or geographic
 reach.

**Human Capital Management**

Caliber's core principles of accountability, respect, and transparency are at the heart of who we are and how we operate. Our employees are integral to Caliber's culture of transparency, integrity, professionalism, and excellence. Our employees adhere to these core principles leading to our continued success as an organization. Our professionals have decades of institutional experience in commercial, real estate, capital markets, alternative investments, and mergers and acquisitions. We give our employees the opportunities to develop their skills and encourage them to collaborate to achieve success.

As of September 30, 2022, we had 71 employees. None of our employees are currently covered by a collective bargaining agreement.

*Talent Acquisition, Development and Retention*

We face intense competition for qualified personnel. We believe the talent of our employees, in association with our rigorous investment process, has supported our growth and investment performance over the past decade. We are focused on hiring, training, and developing the skills and careers of our people. We provide opportunities for growth and development for our employees and support their personal and professional goals in an effort to retain the most talented individuals.

We value diversity and inclusion on our team. The opportunities we provide in conjunction with our reputation is what we believe makes us an attractive employer. We seek to retain and incentivize the performance of our employees through our compensation structure. We enter into non-competition and non-solicitation agreements with certain employees.

*Compensation and Benefits*

Our compensation strategy is designed to attract qualified talent, retain team members, and stay competitive within the talent market. Caliber continually evaluates our compensation structure to ensure it aligns with the market and continues to be an attractive component of joining our team. Compensation includes incentives for individual performance as well as overall Company success in meeting goals. We believe these additional incentives encourage team members to perform at a high level.

We provide our team members with competitive health and retirement offerings, as well as a variety of quality-of-life benefits, including flexible time-off, an employee assistance program at no cost to the employee, a Company match for retirement plan contribution, tuition reimbursement, and overall support for well-being and family planning resources.

**Regulatory and Compliance Matters**

Our businesses, as well as the financial services industry generally, are subject to extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations or exchanges in the jurisdictions in which we operate relating to, among other things, anti-money laundering laws, and privacy laws with respect to client information, and some of our funds invest in businesses that operate in highly regulated industries. Each of the regulatory bodies with jurisdiction over us oversee many aspects of financial services, including the authority to grant, and in specific circumstances to revoke, permissions to engage in particular activities. Any failure to comply with these rules and regulations could expose us to liability and/or reputational damage. The SEC and various self-regulatory organizations, state securities regulators, and international securities regulators have in recent years increased their regulatory activities, including regulation, examination, and enforcement in respect of asset management firms. Additional legislation, increasing regulatory oversight of fundraising activities, changes in rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.

We intend to continue to conduct our operations so that neither we nor any subsidiaries we own nor ones we may establish will be required to register as an investment company under the Investment Company Act of 1940, as amended ("Investment Company Act"). The loss of our exclusion from regulation pursuant to the Investment Company Act could require us to restructure our operations, sell certain of our assets, or abstain from the purchase of certain assets, which could have an adverse effect on our financial condition and results of operations. If we were deemed an "investment company" under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as conducted and could have a material adverse effect on our business.

Beginning in the second quarter of 2020 and continuing through December 31, 2020, Caliber partnered with Patrick Capital Markets, LLC, a FINRA licensed entity, to provide managing broker-dealer services for the private fund offerings the Company was actively marketing. This additional layer of capital infrastructure was designed to support Caliber's plan to grow an internal licensed sales team distributing our funds directly to both high-net-worth private clients and to institutions, such as registered investment advisers, who service those clients. The fees and costs associated with this arrangement included a managing broker-dealer fee ranging from 0.50% to 0.65% and a sales commission of 1.0%. These corresponding costs are partially offset by a reduction to the fee earned in our Caliber Securities contracts.

Beginning in January 2021, we formally engaged and transitioned our managing broker-dealer relationship to Tobin & Company Securities, LLC, a FINRA licensed entity. Our contract with Tobin provides for a managing broker-dealer fee ranging from 0.70% - 1.00% and a sales commission of 1.00%. These corresponding costs are partially offset by a reduction to the fee earned in our Caliber Securities contracts. Caliber believes its internal licensed sales and support team will enable the Company to bring its securities to market for an all-in cost of 4% - 5% of capital formed as compared to as much as 15% charged by some of our competitors.

**MANAGEMENT**

**Directors, Executive Officers, Key Employees and Director Nominees**

The Company's directors, executive officers, key employees and director nominees are listed below as of the date of this prospectus. The executive officers are full-time employees.

---

| | | |
|:---|:---|:---|
| **Name** | **Position** | **Age** |
| **Directors and Executive Officers:** |  |  |
| John C. "Chris" Loeffler, II | Chief Executive Officer and Chairman of the Board | 38 |
| Jennifer Schrader | President & Chief Operating Officer and Vice-Chairperson | 41 |
| Jade Leung | Chief Financial Officer | 48 |
| Roy Bade | Chief Development Officer | 60 |
| **Key Employees:** |  |  |
| John Hartman | Chief Investment Officer | 57 |
| **Director Nominees:** |  |  |
| William J. Gerber | Director Nominee | 64 |
| Michael Trzupek | Director Nominee | 53 |
| Daniel P. Hansen | Director Nominee | 53 |

---

Each of our directors holds office until the next annual meeting of our stockholders or until his/her successor has been elected and qualified, or until his/her death, resignation, or removal. Our executive officers are appointed by our board of directors and hold office until their death, resignation, or removal from office.

***Business Experience***

The following is a brief overview of the education and business experience of each of our directors, executive officers and director nominees during at least the past five years, including their principal occupations or employment during the period, the name and principal business of the organization by which they were employed:

**Directors and Executive Officers:**

***John C. "Chris" Loeffler, II.*** Mr. Loeffler has served as the Chief Executive Officer and Chairman of Caliber's Board of Directors since its inception. As Chief Executive Officer, Mr. Loeffler directs and executes the global strategy, oversees investments and fund management, and contributes to private and public capital formation. As a co-founder Mr. Loeffler took an early role in forming the Company's financial and operational infrastructure and navigating the vertical integration of all real estate and investment services. Prior to forming Caliber, Mr. Loeffler served as a Senior Associate in the audit and assurance practice for PwC in Phoenix, Arizona, completing public company audits, developing control systems, and completing several acquisition or sale transactions. Some of Mr. Loeffler's clients included Honeywell International, Inc., CSK Auto Inc., Verizon Communications, Inc., Republic Services, Inc., Car Wash Partners, Inc., and the Arizona Diamondbacks. Mr. Loeffler earned a Bachelor of Science degree in Business Administration with a concentration in Accounting from California Polytechnic State University, San Luis Obispo. Mr. Loeffler also attended Universidad Complutense de Madrid (University of Madrid) in Madrid, Spain. In addition, Mr. Loeffler is a Board Director for Qwick, Inc., a venture-funded hospitality staffing marketplace, and a Board Director for Zennihome Holdings, Inc., a technology-forward manufacturer of stackable housing units. We believe that Mr. Loeffler's extensive knowledge of Caliber's business and his extensive corporate and leadership experience as a co- founder of Caliber and its Chief Executive Officer qualifies him to serve on our Board of Directors.

***Jennifer Schrader.*** Ms. Schrader has served as the President and Chief Operating Officer and as Vice-Chairperson and director of Caliber since its inception. Since co-founding Caliber in 2009, Ms. Schrader has overseen the acquisition, design, repositioning, and disposition of over $600 million in assets to date. In addition, she leads the Company's daily operations, inclusive of Caliber's asset management activities, focusing on the execution of each investment's business plan over the asset's full lifecycle. Prior to forming Caliber, Ms. Schrader was the Managing Partner of First United Equites, LLC, a Michigan business focused on acquiring, renovating and selling homes for profit. Ms. Schrader serves as Chair of the Caliber Foundation, which was launched in 2021, and on the Colangelo College of Business Advisory Board for Grand Canyon University in Phoenix, Arizona. Ms. Schrader attended Lawrence Technological University in Michigan where she studied architecture and interior architecture. She holds a Real Estate Broker's license from the Arizona School of Real Estate and Business. We believe that Ms. Schrader's extensive knowledge of Caliber's business and her extensive corporate and leadership experience as a co-founder of Caliber and its President qualifies her to serve on our Board of Directors.

***Jade Leung.*** Mr. Leung has served as Caliber's Chief Financial Officer and corporate secretary since April 2017. As Chief Financial Officer, Mr. Leung oversees all aspects of accounting and controllership, financial planning and analysis, tax, financial reporting, and treasury functions at Caliber. Mr. Leung is also responsible for the strategic direction of Caliber's information technology and data security initiatives. Before being named Chief Financial Officer, Mr. Leung served as Caliber's Vice President of Finance and was responsible for managing and streamlining the Company's accounting and compliance functions across all divisions and functions. In August 2016, he was also named the Chief Compliance Officer for the Company's Arizona issuer-dealer, Caliber Securities, LLC, which established a new revenue stream for the Caliber group of companies. Prior to joining Caliber, Mr. Leung spent 12 years with PwC, most recently as Senior Manager in audit and assurance services in Los Angeles, CA where he managed audit and accounting advisory services for some of PwC's largest Fortune 500 companies in the United States, Canada, and Japan. Notably, Mr. Leung participated in over $1 billion of public market transactions and financing arrangements for companies including First Solar, Inc., American Express Company, Mitsubishi UFJ Financial Group, and Rural/Metro Corporation. Mr. Leung earned an accounting degree from Ryerson University and a Bachelor of Arts degree in Psychology from the University of British Columbia. Jade holds an active CPA license in the states of Arizona and Maine.

***Roy Bade.*** Mr. Bade has served as the Chief Development Officer of Caliber since November 2019. Roy is responsible for managing real estate service lines provided by Caliber's vertically integrated group of operating businesses. His four areas of responsibility include vertical and horizontal real estate development, construction, acquisitions, and project financing. Mr. Bade joined Caliber in 2014 as Fund Manager and was quickly promoted to Executive Vice President and Fund Manager. He was responsible for maximizing returns on existing properties and managing Caliber's development and construction activity. For nearly 30 years prior to joining Caliber, Mr. Bade acted as the principal and managing partner of two businesses, Bade Commercial Services Inc and BCS Development Group, LLC, which included the development, construction, and property management of commercial, retail and industrial properties throughout Phoenix, Arizona. During this time, Mr. Bade developed, constructed and owned over 750,000 square feet of property. Mr. Bade graduated from Washington State University with a Bachelor of Science in Business Information Systems, and holds a Commercial General Contractor's license, and holds an Arizona Real Estate Broker's license.

**Key Employees:**

***John Hartman.*** Mr. Hartman has served as Caliber's Chief Investment Officer since September 2021. As Chief Investment Officer, Mr. Hartman is responsible for all of Caliber's private funds, private syndications, and public products such as REIT's and DST's. Mr. Hartman joined Caliber in December of 2020 as a consultant and was then hired to fill the role of Executive Vice President and Chief Investment Officer. From January 2020 until joining Caliber he was a Managing Director and equity partner of Republic Capital Partners, a commercial real estate merchant bank, where he oversaw the investor marketing and capital formation activities, including deal sourcing and negotiation. Prior to that, he was Chief Executive Officer and a member of the Board of Directors of Gadsden Properties, a publicly traded real estate company from June 2016 to January 2020. Prior to joining Gadsden, Mr. Hartman was CEO of Landwin Realty Trust, a REIT created out of the merger of several private equity real estate funds from February 2014 to June 2016. Mr. Hartman also served as a Managing Director of Astrum Investment Management; a $50 million private equity real estate fund focused on C-credit middle-market industrial sale/leasebacks from August 2011 to February 2014. Earlier in his career, Mr. Hartman held the position of Chief Financial Officer for Global Facilities Development, a national commercial real estate development and site selection company, focused on historical rehabilitations for high-tech reuse, primarily data centers, between 2009 and 2011. He has also served as President and CEO of Silverado Financial (SLVO), a publicly traded real estate finance company. Mr. Hartman has held leadership roles at private and public real estate firms including institutionally backed private equity real estate funds, where he managed capital formation, due diligence, underwriting, and acquisitions. Mr. Hartman has acquired/developed over $2B in commercial real estate. Mr. Hartman holds a bachelor's degree from San Jose State University and an MBA from California Coast University. Mr. Hartman is a licensed real estate broker in Arizona.

**Director Nominees:**

***William J. Gerber***. Mr. Gerber will become a member of the Board of Directors of the Company on the effective date of this offering. Mr. Gerber has been a member of our Advisory Board since April 2019. Mr. Gerber has acted as a consultant since October 2015. From October 2006 to October 2015 Mr. Gerber served as Chief Financial Officer of TD Ameritrade Holding Corporation (Nasdaq: AMTD) ("TD Ameritrade"), a provider of securities brokerage services and related technology-based financial services to retail investors, traders and independent registered investment advisors, and has extensive financial experience. In May 2007, he was named Executive Vice President of TD Ameritrade. In his role as Chief Financial Officer, he oversaw investor relations, business development, certain treasury functions and finance operations, including accounting, business planning and forecasting, external and internal reporting, tax and competitive intelligence. From May 1999 until October 2006, he served as the Managing Director of Finance at TD Ameritrade, during which time he played a significant role in evaluating merger and acquisition opportunities. Prior to joining TD Ameritrade, he served as Vice President of Acceptance Insurance Companies, Inc., where he was responsible for all aspects of mergers and acquisitions, investment banking activity, banking relationships, investor communications and portfolio management. Prior to joining Acceptance, Mr. Gerber spent eight years with Coopers & Lybrand, now known as PwC, serving as an audit manager primarily focusing on public company clients. Mr. Gerber was named to Institutional Investor Magazine's All-America Executive Team as one of the top three CFOs in the Brokerage, Asset Managers and Exchanges category (2012 and 2013). He was also named a member of the CNBC CFO Council (2013 and 2014). Since January 2017, he has served on the Board of Directors of Northwestern Mutual Series Fund, a mutual fund company. He has also served on the Board of Directors of the U.S. holding company for the Royal Bank of Canada since July 2016 and Streck, Inc., a privately held company, since March 2015. In addition, he serves on the Boys Town National Board of Trustees. Mr. Gerber holds a B.B.A. in Accounting from the University of Michigan. Mr. Gerber holds a CPA license in the state of Michigan. We believe that Mr. Gerber's extensive knowledge of Caliber's business as a member of the Advisory Board of Caliber and his extensive corporate and leadership experience qualify him to serve on our Board of Directors.

***Michael Trzupek.*** Mr. Trzupek will become a member of the Board of Directors of the Company on the effective date of this offering. Mr. Trzupek has been a member of our Advisory Board since May 2019. From September 2020 to April 2022, Mr. Trzupek served as the Chief Financial Officer of Core Scientific, one of the largest digital asset mining infrastructure providers in North America. From February 2019 to June 2020, Mr. Trzupek served as the Chief Financial Officer of Premera Blue Cross, Washington's leading health plan. Mr. Trzupek oversees accounting, financial planning and analysis, investment and treasury. Prior to joining Premera Blue Cross, Mr. Trzupek served as Group Vice President for Providence St. Joseph Health System, executing finance functions, strategic planning and budgeting, as well as the evaluation of affiliations, acquisitions and strategic investments. Prior to Providence St. Joseph Health System, he was a Corporate Finance General Manager at Microsoft, focused on business planning for the Company's hardware products, including Xbox and Surface. Mr. Trzupek began his financial career at Intel. Mr. Trzupek received his Master of Business Administration from the University of Chicago. He is a member of the Board of Directors at the Seattle Aquarium, as well as a former Advisory Board member for eCapital Advisors. We believe that Mr. Trzupek's extensive knowledge of Caliber's business as a member of the Advisory Board of Caliber and his extensive corporate and leadership experience qualify him to serve on our Board of Directors.

***Daniel P. Hansen.*** Mr. Hansen will become a member of the Board of Directors of the Company on the effective date of this offering. Mr. Hansen has been a member of our Advisory Board since May 2022. Mr. Hansen previously served as the Chairman, President and Chief Executive Officer of Summit Hotel Properties, Inc. (NYSE:INN) from that company's initial public offering until his retirement in 2021. He served on the Board of the American Hotel & Lodging Association (AHLA) and as a trustee of the AHLA Foundation and on advisory councils of multiple hotel brands. Mr. Hansen was recognized by Institutional Investor Magazine as a top small-cap executive in 2017, and in 2018, received the EY Entrepreneur of The Year Award in the Texas region. Prior to joining The Summit Group, Mr. Hansen spent 11 years with Merrill Lynch in various leadership positions culminating as a Vice President and Regional Sales Manager in the Texas Mid-South Region. Mr. Hansen graduated from South Dakota State University with a B.A. in Economics. We believe that Mr. Hansen's extensive corporate and leadership experience qualify him to serve on our Board of Directors.

**Family Relationships**

There are no family relationships among any of our executive officers or directors.

**Involvement in Certain Legal Proceedings**

To the best of our knowledge, except as described above, none of our directors or executive officers has, during the past ten years:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· been
 convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding
 traffic violations and other minor offences);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· had
 any bankruptcy petition filed by or against the business or property of the person, or of
 any partnership, corporation or business association of which he was a general partner or
 executive officer, either at the time of the bankruptcy filing or within two years prior
 to that time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· been
 subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated,
 of any court of competent jurisdiction or federal or state authority, permanently or temporarily
 enjoining, barring, suspending or otherwise limiting, his involvement in any type of business,
 securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
 or to be associated with persons engaged in any such activity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· been
 found by a court of competent jurisdiction in a civil action or by the Securities and Exchange
 Commission or the Commodity Futures Trading Commission to have violated a federal or state
 securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· been
 the subject of, or a party to, any federal or state judicial or administrative order, judgment,
 decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement
 of a civil proceeding among private litigants), relating to an alleged violation of any federal
 or state securities or commodities law or regulation, any law or regulation respecting financial
 institutions or insurance companies including, but not limited to, a temporary or permanent
 injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
 cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting
 mail or wire fraud or fraud in connection with any business entity; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· been
 the subject of, or a party to, any sanction or order, not subsequently reversed, suspended
 or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange
 Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the
 Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity
 or organization that has disciplinary authority over its members or persons associated with
 a member.

**Committees of our Board of Directors**

Our Board of Directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will operate pursuant to a charter to be adopted by our Board of Directors and will be effective upon the effectiveness of the registration statement of which this prospectus is a part. The Board of Directors may also establish other committees from time to time to assist our Company and the board of directors. Upon the effectiveness of the registration statement of which this prospectus is a part, the composition and functioning of all of our committees will comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, the Nasdaq Capital Market and SEC rules and regulations, if applicable. Upon our listing on the Nasdaq Capital Market, our committees' charters will be available on our website at www.caliberco.com. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be part of this prospectus.

***Audit Committee***

Our audit committee will consist of William J. Gerber, Daniel P. Hansen, and Michael Trzupek. Our Board of Directors has determined that each William J. Gerber, Daniel P. Hansen, and Michael Trzupek satisfies the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chair of our audit committee will be Mr. Trzupek, who our Board of Directors has determined is an "audit committee financial expert" within the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, our Board of Directors has examined each audit committee member's scope of experience and the nature of their employment in the corporate finance sector.

The principal duties and responsibilities of our audit committee will include, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;· appointing, approving the
 compensation of, and assessing the independence of our independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;· pre-approving auditing
 and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting
 firm;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing the overall audit
 plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and discussing
 with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures
 as well as critical accounting policies and practices used by us;

&nbsp;&nbsp;&nbsp;&nbsp;· coordinating the oversight
 and reviewing the adequacy of our internal control over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;· establishing policies and
 procedures for the receipt and retention of accounting-related complaints and concerns;

&nbsp;&nbsp;&nbsp;&nbsp;· recommending, based upon
 the audit committee's review and discussions with management and our independent registered public accounting firm, whether
 our audited financial statements shall be included in our Annual Report on Form 10-K;

&nbsp;&nbsp;&nbsp;&nbsp;· monitoring the integrity
 of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements
 and accounting matters;

&nbsp;&nbsp;&nbsp;&nbsp;· preparing the audit committee
 report required by SEC rules to be included in our annual proxy statement;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing all related person
 transactions for potential conflict of interest situations and approving all such transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing quarterly earnings
 releases.

***Compensation Committee***

Our compensation committee will consist of William J. Gerber, Daniel P. Hansen, and Michael Trzupek. The chair of our compensation committee will be Mr. Hansen. Our Board of Directors has determined that each of William J. Gerber, Daniel P. Hansen, and Michael Trzupek is independent under Nasdaq listing standards, a "non-employee director" as defined in Rule 16b-3 promulgated under the Exchange Act.

The principal duties and responsibilities of our compensation committee will include, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;· evaluating the performance
 of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation: (i) recommending
 to the board of directors the cash compensation of our Chief Executive Officer, and (ii) reviewing and approving grants and
 awards to our Chief Executive Officer under equity-based plans;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and recommending
 to the board of directors the cash compensation of our other executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and establishing
 our overall management compensation, philosophy, and policy;

&nbsp;&nbsp;&nbsp;&nbsp;· overseeing and administering
 our compensation and similar plans;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and approving
 the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters and evaluating
 and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable
 Nasdaq rules;

&nbsp;&nbsp;&nbsp;&nbsp;· retaining and approving
 the compensation of any compensation advisors;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and approving
 our policies and procedures for the grant of equity-based awards;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and recommending
 to the board of directors the compensation of our directors; and

&nbsp;&nbsp;&nbsp;&nbsp;· preparing the compensation committee
 report required by SEC rules, if and when required, to be included in our annual proxy statement.

***Nominating and Corporate Governance Committee***

Our nominating and corporate governance committee will consist of William J. Gerber, Daniel P. Hansen, and Michael Trzupek. The chair of our nominating and corporate governance committee will be Mr. Gerber. Our Board of Directors has determined that each of William J. Gerber, Daniel P. Hansen, and Michael Trzupek is independent under Nasdaq listing standards.

The nominating and corporate governance committee's responsibilities include, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;· developing and recommending
 to the board of directors' criteria for board and committee membership;

&nbsp;&nbsp;&nbsp;&nbsp;· establishing procedures
 for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing the composition
 of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;

&nbsp;&nbsp;&nbsp;&nbsp;· identifying individuals
 qualified to become members of the board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;· recommending to the board
 of directors the persons to be nominated for election as directors and to each of the board's committees;

&nbsp;&nbsp;&nbsp;&nbsp;· reviewing and recommending
 to the board of directors' appropriate corporate governance guidelines; and

&nbsp;&nbsp;&nbsp;&nbsp;· overseeing the evaluation
 of our board of directors.

**Corporate Governance**

Prior to the effectiveness of the registration statement of which this prospectus is a part, we will adopt a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. Following the effectiveness of the registration statement of which this prospectus is a part, a current copy of this code will be posted on the Corporate Governance section of our website, which is located at www.caliberco.com. The information on our website is deemed not to be incorporated in this prospectus or to be a part of this prospectus. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

**EXECUTIVE COMPENSATION**

**Summary Compensation Table – Years Ended December 31, 2022 and 2021**

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted period. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
| <br>**Name** | <br>**Position** | **Salary<br> ($)** | **Bonus<br> ($) <sup>(1)</sup>** | **All Other <br> Compensation<br> ($) <sup>(2)</sup>** | **Total<br> ($)** | **Salary<br> ($)** | **Bonus<br> ($) <sup>(1)</sup>** | **All Other <br> Compensation<br> ($) <sup>(2)</sup>** | **Total<br> ($)** |
| Chris Loeffler | Chief Executive Officer/Co-Founder | 343846 | 165000 | 13785 | 522631 | 255693 | 31810 | 10211 | 297714 |
| Jennifer Schrader | President and Chief Operating Officer/Co-Founder | 334616 | 165000 | 16419 | 516035 | 255693 | 31810 | 9995 | 297498 |
| Jade Leung | Chief Financial Officer | 301923 | 165852 | 12700 | 480475 | 233402 | 53630 | 9558 | 296590 |
| Roy Bade | Chief Development Officer | 311539 | 150000 | 10846 | 472385 | 225965 | 41472 | 8499 | 275936 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The amounts reported
 in this column reflect the annual cash bonus payments made for performance.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The amounts reported
 in this column represent employer 401(k) contributions.

***Director Compensation***

In April and May 2019, our advisory board entered into agreements with the Company to serve as the Company's board of directors. Effective upon formal approval of the board the annual compensation for the board will be $150,000, comprised 50% of cash compensation and 50% of stock compensation.

During the years ended December 31, 2021 and 2020, the Company's advisory board of directors each earned total compensation of $50,000, resulting in total board of director compensation of $150,000.

***Employment Agreements***

In September 2022, Caliber adopted new compensation arrangements for its Named Executive Officers; these arrangements are in the process of being reduced to formal agreements which will replace existing agreements in place with such officers. Other than as set forth below, each of the formal agreements will contain identical terms and conditions. The agreements will (i) provide for at-will employment, (ii) provide an auto allowance equal to $19,500 per year, (iii) provide for severance equal to 12 months of salary upon termination without cause or voluntary resignation for good reason and (iv) require that the Named Executive Officer shall devote substantially all of his/her time and attention to the performance of his/her duties and responsibilities for and on behalf of Caliber except as may be consented to by Caliber.

The following table sets forth the agreed to compensation arrangements with each of our Named Executive Officers:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Executive** | **Base <br> Salary<br> ($)** | **Maximum Bonus as<br> a percentage of Base Salary** | **Maximum <br> Bonus<br> ($) <sup>(1)</sup>** | **Long Term Incentive (LTI)<sup>(2)</sup><br> ($)** | **Total Compensation Potential<br> ($)** |
| John C. Loeffler | 490000 | 200% | 980000 | 450000 | 1920000 |
| Jennifer Schrader | 450000 | 150% | 675000 | 450000 | 1575000 |
| Jade Leung | 375000 | 100% | 375000 | 350000 | 1100000 |
| Roy Bade | 350000 | 150% | 525000 | 225000 | 1100000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Bonuses
 are discretionary, will be dependent on both individual and company performance and
 will be issued following the close of each year. The amounts listed in the Bonus $ are target totals assuming the Named
 Executive Officer achieves his/her designated goals and expected outcomes in the annual plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The LTI will be payable in the form of
 RSU's from the 2017 Incentive Stock Plan and are subject to vesting further to the provisions of the Plan. The calculation of
 total shares to issue for the year will be completed annually as of the first business day each year and the corresponding share
 price average for the preceding 20 trading days, or as otherwise agreed upon by the Board of Directors.

Other than the employment arrangements described above, we have not entered into any arrangements providing for payments or benefits in connection with the resignation, severance, retirement or other termination of any of our named executive officers, changes in their compensation or a change in control.

In general, Caliber's pay philosophy with respect to its Named Executive Officers is to target at or about the market median of peer group companies for a Named Executive Officer's total compensation, with actual compensation varying based on performance and tenure.

Caliber makes such compensation decisions for the Named Executive Officers based on:

· The
 Company's strategic and human resources objectives;

· Competitive
 data for peer group companies and for a broader group of asset management firms;

· Corporate and
 individual performance on key initiatives;

· Corporate performance
 compared to our competitors;

· Economic conditions;

· Advice of outside
 executive compensation consultants and that of our Advisory Board; and

· How the elements
 of compensation contribute to and interrelate to total compensation.

The peer group of companies was compiled by an unaffiliated compensation consultant's study. The compensation consultant recommends an appropriate peer group of public, similarly sized, asset management companies, considering the Company's and the competitors' strategy, mix of business and size, as measured primarily by annual revenues, market capitalization and total assets. These companies are the major competitors in one or more of the Company's businesses, but none represent the exact business mix of the Company. Caliber strives to target compensation for the Named Executive Officers at the median of the compensation of the named executive officers at the peer group companies.

***2017 Incentive Stock Plan***

We have adopted a 2017 Incentive Stock Plan (the "Plan"). An aggregate of 5,000,000 shares of our Class A common stock is reserved for issuance and available for awards under the Plan, including incentive stock options granted under the Plan. In December 2021 the Plan was amended and restated to increase the number of shares of our common stock reserved for issuance to 10,000,000 aggregate shares. The Plan administrator may grant awards to any employee, director, consultant or other person providing services to us or our affiliates. As of September 30, 2022 and December 31, 2021 options representing 1,996,569 and 2,053,931 shares, respectively, have been awarded and are outstanding under the Plan. As of December 31, 2020, 2,052,926 shares have been awarded and are outstanding under the Plan. As of September 30, 2022 and December 31, 2021, restricted stock units representing 396,956 and 405,874 shares have been awarded and are outstanding under the Plan, respectively. No restricted stock units were awarded or were outstanding during the year ended December 31, 2020.

The Plan is currently administered by the Board. The Plan administrator has the authority to determine, within the limits of the express provisions of the Plan, the individuals to whom awards will be granted, the nature, amount and terms of such awards and the objectives and conditions for earning such awards. The Board may at any time amend or terminate the Plan, provided that no such action may be taken that adversely affects any rights or obligations with respect to any awards previously made under the Plan without the consent of the recipient. No awards may be made under the Plan after the tenth anniversary of its effective date.

Awards under the Plan may include incentive stock options, nonqualified stock options, restricted shares of common stock and restricted stock units.

*Stock Options*. The Plan administrator may grant to a participant options to purchase our common stock that qualify as incentive stock options for purposes of Section 422 of the Internal Revenue Code ("incentive stock options"), options that do not qualify as incentive stock options ("non-qualified stock options") or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise will be determined by the Plan administrator. The exercise price for stock options will be determined by the Plan administrator in its discretion, but non-qualified stock options and incentive stock options may not be less than 100% of the fair market value of one share of our Company's common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted. Stock options must be exercised within a period fixed by the Plan administrator that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise period may not exceed five years. At the Plan administrator's discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of our common stock held by the participant or in any other form of consideration acceptable to the Plan administrator (including one or more forms of "cashless" or "net" exercise).

*Restricted Shares and Restricted Units*. The Plan administrator may award to a participant shares of common stock subject to specified restrictions ("restricted shares"). Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period and/or the attainment of specified performance targets over the forfeiture period.

***Key Man Insurance***

We own key man life insurance policies in the amounts of $15.6 million for Mr. Loeffler and Ms. Schrader, respectively. If Mr. Loeffler were to pass away, the proceeds of the key man policy could be utilized by his surviving spouse as a source of cash to require Caliber to acquire all or part of Mr. Loeffler's stock holdings and place them back into Caliber's treasury, with the proceeds being forwarded to Mr. Loeffler's estate. Mr. Loeffler's surviving spouse would have discretion in deciding to utilize the funds for this purpose. The funds could also be utilized to offset the cost of finding and recruiting a new CEO. If Ms. Schrader were to pass away, the proceeds of that policy would be required to be utilized by the Company as a source of cash to acquire all or part of her stock holdings to be placed in Caliber's treasury with the proceeds being paid to Ms. Schrader's estate. Part of the proceeds may also be utilized to offset the cost of sourcing and recruiting a replacement executive leader for Ms. Schrader.

**PRINCIPAL STOCKHOLDERS**

The following table sets forth information with respect to the beneficial ownership of our shares as of September 30, 2022 by:

&nbsp;&nbsp;&nbsp;&nbsp;· each named executive officer;

· each of our directors and director nominees;

· our directors, director
 nominees and executive officers as a group; and

· each person or entity known
 by us to own beneficially more than 5% of our Class A common stock and Class B common stock (by number or by voting power).

In accordance with the rules and regulations of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership before the offering is based on 12,583,587 shares of Class A common stock, giving effect to the automatic conversion of all Series B Preferred Stock into Class A common stock on the effective date of this offering, and 7,416,413 shares of Class B common stock outstanding as of September 30, 2022, Applicable percentage ownership after the offering is based on (1) 14,183,587 shares of Class A common stock and (2) 7,416,413 shares of Class B common stock outstanding immediately after the completion of this offering, assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock from us. In computing the number of shares beneficially owned by a person and the percentage ownership of such person, we deemed to be outstanding all shares subject to options held by the person that are currently exercisable, or exercisable or would vest based on service-based vesting conditions within 60 days of September 30, 2022. However, except as described above, we did not deem such shares outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated, the address for each beneficial owner listed in the table below is c/o CaliberCos Inc. 8901 E. Mountain View Rd., Ste 150, Scottsdale, Arizona 85258.

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Shares Beneficially Owned <sup>(1)</sup>** | **Beneficial Ownership after the Offering** | **Beneficial Ownership after the Offering** | **Beneficial Ownership after the Offering** | **Beneficial Ownership after the Offering** | **Beneficial Ownership after the Offering** | **Beneficial Ownership after the Offering** |
| | **Class A<br> Common Stock** | **Class A<br> Common Stock** | **Class B<br> Common Stock** | **Class B<br> Common Stock** | **Class B<br> Common Stock** |  | **% Total Voting** | **Class A<br> Common Stock** | **Class A<br> Common Stock** | **Class B<br> Common Stock** | **Class B<br> Common Stock** |  | **% Total Voting** |
| <br>**Name of Beneficial Owner** | **Shares** | **%** | **Shares** |  | **%** |  | **Power <sup>(2)</sup>** | **Shares** | **%** | **Shares** | **%** |  | **Power <sup>(2)</sup>** |
|  **Named Executive Officers and Directors** |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Jennifer Schrader <sup>(3)</sup> |  |  | 3709693 |  | 50.02 | % | 42.76% |  |  | 3709693 | 50.02 | % | 41.99% |
| John C. Loeffler, II |  |  | 3706720 | <sup>(4)</sup> | 49.98 | % | 42.73% |  |  | 3706720 | 49.98 | % | 41.96% |
| Roy Bade | 518206<sup>(5)</sup> | 3.98% |  |  |  |  | \* | 518206<sup>(5)</sup> | 3.54% |  |  |  | \* |
| Jade Leung | 551175<sup>(6)</sup> | 4.20% |  |  |  |  | \* | 551175<sup>(6)</sup> | 3.74% |  |  |  | \* |
| William Gerber | 26320<sup>(7)</sup> | \* |  |  |  |  | \* | 26320<sup>(7)</sup> | \* |  |  |  | \* |
| Michael Trzupek | 13006<sup>(7)</sup> | \* |  |  |  |  | \* | 13006<sup>(7)</sup> | \* |  |  |  |  |
| Daniel P. Hansen | -<sup>(8)</sup> |  |  |  |  |  |  | -<sup>(8)</sup> | \* |  |  |  |  |
|  **Directors, Director Nominees and Executive Officers as a Group (7 Persons)** | 1108707<sup>(9)</sup> | 8.16% | 7416413 |  | 100.00 | % | 85.60% | 1108707<sup>(9)</sup> | 7.28% | 7416413 | 100.00 | % | 84.05% |
| 5% Beneficial Owners: |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  Donnie Schrader <sup>(3)(10)</sup> | 3450187 | 27.42% |  |  |  |  | 3.98% | 3450187 | 24.33% |  |  |  | 3.91% |
|  David Baker | 787928 | 6.26% |  |  |  |  |  | 787928 | 5.56% |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Does
 not give effect to (i) the conversion of Class B common stock to Class A common stock, (ii) the conversion of convertible debt securities
 into Class A common stock or (iii) the vesting of any issued and outstanding stock options or restricted stock units outstanding
 as of the date hereof and excludes shares of Class A common stock reserved for future grant or issuance under our 2017 Plan. None
 of the named executive officers and directors or Donnie Schrader beneficially own any convertible debt securities. In addition, no
 holder of convertible debt would become a beneficial owner of 5% or more of the Company's Class A common stock should any such
 holder convert all convertible debt held by such holder within 60 days of September 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Percentage
 total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a
 single class. Each holder of Class B common stock shall be entitled to ten votes per share of Class B common stock and each holder
 of Class A common stock shall be entitled to one vote per share of Class A common stock on all matters submitted to our stockholders
 for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote
 of our stockholders, except as may otherwise be required by law. The Class B common stock is convertible at any time by the holder
 into shares of Class A common stock on a share-for-share basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Jennifer
 Schrader and Donnie Schrader are married, and each disclaims beneficial ownership of the
 other's stock holdings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Includes 1,853,360 shares held in The C LO 2021
 Irrevocable Trust under agreement of which Mr. Loeffler is trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Includes 447,544 stock options vested as of and
 exercisable within 60 days of September 30, 2022. Mr. Bade holds the Class A Common Stock through Wave Investments LLC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Includes 432,271 stock options vested as of and
 exercisable within 60 days of September 30, 2022 and 118,903 vested restricted stock units which vest on the consummation of this
 offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Represents stock options vested as of and exercisable within 60 days of September 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Mr. Hansen has been a member of our Advisory Board
 since May 2022. Included in his agreement are 14,863 stock options none of which are vested or exercisable within 60 days of September
 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Includes 999,957 vested stock options and options exercisable within
 60 days of September 30, 2022 and 118,903 vested restricted stock units which vest on the consummation of this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Does not include 23,781 shares repurchased by the
 Company since September 30, 2022 pursuant to that Buyback Program further described in "Certain Relationships and Related Party
 Transactions – Buyback Program". In addition, does not reflect the Company's agreement to repurchase 35,671 shares
 held by Mr. Schrader immediately prior to the effective date of this offering which represents shares required to purchase by the
 Company further to the Buyback Program for the six month period following the effective date of the offering.

**CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**

***Notes Receivable – Related Parties***

**Notes Receivable – Related Parties of consolidated funds**

The Company, through its consolidated VIEs, entered into unsecured promissory notes with related parties. The following table summarizes the notes receivable - related parties as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Receivable - Related Parties** | **September 30, 2022** | **December 31, 2021** | **Interest Rate** | **Maturity Date** |
| SF Alaska, LP | $10435 | $8032 | 12.00% | May 2023 |
| The Ketch, LLC | 4627 | 3647 | 12.00% | May 2023 |
| CDOF II, LP | 436 | 365 | 12.00% | May 2023 |
| 1040 N VIP Blvd, LLC |  | 735 | 12.00% | May 2023 |
| J-25 Development Group, LLC | 5502 | 3942 | 12.00% | May 2023 |
| Tucson East, LLC | 3668 | 3381 | 12.00% | May 2023 |
| Ridge II, LLC | 197 |  | 12.00% | August 2023 |
| Encore, LLC | 330 | - | 12.00% | August 2023 |
| **Total Notes Receivable - Related Parties** | $25195 | $20102 |  |  |

---

No payments are required prior to the maturity of the notes. The notes may be prepaid in whole, or in part, without penalty. During the nine months ended September 30, 2022 and 2021, the Company earned approximately $2.1 million and $1.5 million, respectively, of interest in connection with the notes, which is included in consolidated funds - other revenue on the accompanying condensed consolidated statements of operations. Less than $5,000 was due from the consolidated funds at September 30, 2022. No interest was due from the consolidated funds at December 31, 2021.

***Business Segments***

Fund Management, Development and Brokerage revenues are presented on a consolidated basis, net of intercompany eliminations (see Note 10 – Segment Reporting for presentation on a gross basis).

**Fund Management**

We manage multiple private equity real estate funds. In general, the Company generates the following Fund Management revenues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Asset Management Fees
 – We receive an annual asset management fee typically equal to 1.0% - 1.5% of all the non-affiliate capital contributions related
 to the assets owned by the particular fund to compensate us for the overall administration of that fund. We are also entitled to
 receive reimbursement for certain expenses incurred or paid on behalf of the fund, which may include an allocation of certain administrative
 and overhead costs. During nine months ended September 30, 2022 and 2021, the Company earned $3.0 million and $1.7 million, respectively,
 of asset management fees from related parties.

· Performance allocations
 – We are entitled to a disproportionate allocation of the income otherwise allocable to the limited partners/members of the
 funds we manage, commonly referred to as carried interest. Generally we receive 20% – 35% of all cash distributions from (i) the
 operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns
 and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real
 estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns
 and repayment of initial preferred capital contributions. Our funds' preferred returns typically range from 6% for common equity
 to 10-12% for preferred equity, which does not participate in profits. During the nine months ended September 30, 2022 and 2021,
 the Company earned $2.5 million and $0.4 million, respectively, of performance allocations from related parties.

· Transaction and Advisory
 Fees – We receive fees for services primarily relating to set up and formation services, marketing, offering, registering, and selling of equity and debt
 instruments of the affiliates (collectively, "Fund Formation Fees"), loan placement and guarantee fees. During the nine
 months ended September 30, 2022 and 2021, the Company earned $5.9 million and $1.3 million, respectively, of transaction and advisory
 fees from related parties.

As of September 30, 2022 and December 31, 2021, amounts due to the Company from related parties for fund management services was $6.5 million and $3.9 million, respectively.

**Development**

We provide development related management services to affiliates and third parties, which include ground-up development and repositioning of real estate assets, the build-out of tenant space, the renovation of hospitality, residential, and commercial real estate, and general real estate repair and maintenance services.

During the nine months ended September 30, 2022 and 2021, the Company recognized $1.8 million and $0.9 million, respectively, of development revenue from related parties. As of September 30, 2022 and December 31, 2021, amounts due to the Company from related parties for development services were $1.4 million.

**Brokerage**

We provide real estate brokerage services related to the purchase, sale and leasing of residential and commercial properties owned by the funds which we manage. During the nine months ended September 30, 2022 and 2021, the Company recognized $0.6 million and $0.9 million, respectively, of brokerage commission revenue from related parties. No amounts were due to the Company for brokerage commissions at September 30, 2022 or December 31, 2021.

***Notes Payable – Related Parties***

The Company, through various consolidated VIEs, entered into unsecured promissory notes with related parties. The notes may be repaid in whole, or in part, without penalty. In addition, the Company has a related party unsecured promissory note with a former member of the Company's executive management team.

The following table summarizes the notes payable – related parties at September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable - Related Parties** | **September 30, <br> 2022** | **December 31, <br> 2021** | **Interest<br> Rate** | **Maturity Date** |
| Former Management | $- | $40 | N/A | December 2023 |
| Caliber Residential Advantage Fund, LP | 365 | 815 | 7.50% | May 2023 |
| **Total Notes Payable - Related Parties** | $365 | $855 |  |  |

---

During the nine months ended September 30, 2022 and 2021, the Company incurred $46,000 and $0.1 million of interest expense in connection with the notes payable – related parties. There was $2,000 interest payable due to related parties at September 30, 2022. No interest was payable due to related parties at December 31, 2021. Management expects to extend the Caliber Residential Advantage Fund, LP note at maturity.

**Notes Payable – Related Parties of consolidated funds**

The following table summarizes the notes payable – related parties of consolidated funds as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable - Related Parties** | **September 30,<br> 2022** | **December 31,<br> 2021** | **Interest<br> Rate** | **Maturity Date** |
| Roosevelt III HOLDCO, LLC | $2667 | $2400 | 12.00% | March 2023 |
| CDIF, LLC | 1674 | 1415 | 12.00% | May 2023 |
| Caliber Tax Advantaged Opportunity Zone Fund, LP | 5721 | 850 | 5.5% - 12.00% | October 2022 – June 2023 |
| Caliber Diversified Opportunity Fund II, LP | - | 500 | 10.00% | April 2023 |
| **Total Notes Payable - Related Parties** | $10062 | $5165 |  |  |

---

During the nine months ended September 30, 2022 and 2021, the consolidated funds incurred $0.7 million and $0.3 million of interest expense in connection with the notes payable – related parties. Interest payable at September 30, 2022 and December 31, 2021 was $23,000 and $0.2 million, respectively.

***Withdrawal Agreement***

In November 2014, the Company entered into an agreement with a former co-manager and member of one of the Company's consolidated subsidiaries which outlined the terms of his resignation as co-manager and assignment of his member interest. In consideration for his resignation as co-manager and assignment of his member interest, the Company agreed to issue 33,029 shares of its common stock to the individual or his designee, provide the individual with construction services at no cost to the individual, as outlined in the agreement, and pay the individual or his designee up to $0.5 million in cash, as outlined in the agreement. The Company issued the 33,029 shares of common stock in April 2015. As of September 30, 2022 and December 31, 2021, $32,000 and $0.1 million, respectively, was due to the former co-manager and member of the Company.

***Buyback Program***

In September 2018, we agreed to repurchase all 3,709,693 shares ("Buyback Program") owned by Donnie Schrader, one of our non-participating founders and the spouse of Jennifer Schrader, our President and Co-Chairperson, for $4.54 per share of common stock in exchange for an amendment to Mr. Schrader's stockholder voting rights and other Company protections. Among other things, our obligation to reacquire Mr. Schrader's shares terminates six months after the date when the Company's common stock is listed on a national exchange. The shares are being reacquired at various amounts ranging from 3,500 to 6,000 shares on a monthly basis until such time as we have satisfied the termination conditions or until all of the shares have been reacquired, which could be in 2075. Due to the length of time of the liability, we recorded a liability of $13.6 million and a corresponding reduction to equity in treasury stock at the inception of the Buyback Program using a present value discount rate of 10.00%. As of September 30, 2022 and December 31, 2021, the balance of the liability was $12.5 million and $12.7 million, respectively. The remaining number of shares to be repurchased as of September 30, 2022 and December 31, 2021 was 3,450,187 and 3,503,693, respectively. 23,781 shares have been repurchased by the Company since September 30, 2022 pursuant to the Buyback Program. In addition, the Company has agreed to repurchase 35,671 shares held by Mr. Schrader immediately prior to the effective date of this offering which represents shares required to purchase by the Company further to the Buyback Program for the six month period following the effective date of the offering.

***Other***

In the normal course of business, the Company has various amounts due from related parties, including affiliate entities and individuals, for various expenses paid for by the Company on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due from related parties were $0.8 million and $0.3 million, respectively.

In the normal course of business, the Company has various amounts due to related parties, including affiliated entities and individuals, for various expenses paid for by the affiliates on the Company's behalf and other short-term payment advances. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due to related parties were $22,000 and $0.7 million, respectively.

***Other – consolidated funds***

In the normal course of business, the consolidated funds have various amounts due from and/or due to related parties, including affiliate entities and individuals, for various expenses paid by the funds on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due from related parties were $11,000 and $0.2 million, respectively. As of September 30, 2022 and December 31, 2021, other amounts due to related parties were $0.1 million and $0.2 million, respectively.

**DESCRIPTION OF SECURITIES**

**General**

The following description summarizes the most important terms of our capital stock, giving effect to the automatic conversion of all Series B Preferred Stock into Class A common stock on the effective date of this offering. This summary does not purport to be complete and is qualified in its entirety by the provisions of Caliber's amended and restated certificate of incorporation and bylaws, copies of which have been filed as exhibits to the Registration Statement of which this prospectus is a part. For a complete description of Caliber's capital stock, you should refer to the amended and restated certificate of incorporation and bylaws and to the applicable provisions of Delaware law.

We are authorized to issue up to 137,500,000 shares of capital stock, of which (i) 100,000,000 shares are Class A common stock with a par value $0.001 per share; (ii) 15,000,000 shares are Class B common stock with a par value $0.001 per share; and (iii) 22,500,000 shares are Preferred Stock with a par value of $0.001 per share. As of November 23, 2022, there were 10,933,372 shares of Class A common stock, 7,416,413 shares of Class B common stock and 1,650,215 shares of Preferred Stock issued and outstanding.

**Class A common stock**

As of November 23, 2022, giving effect to the automatic conversion of all Series B Preferred Stock into Class A common stock on the effective date of this offering, there would be 12,583,587 shares of Class A common stock were issued and outstanding.

***Voting.*** The holders of the Class A common stock are entitled to one (1) vote for each share of Class A common stock held at all meetings of stockholders (and written actions in lieu of meetings). The Class A common stock is not subject to cumulative voting. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law.

***Dividends.*** Subject to the preferences applicable to the Preferred Stock, the holders of the Class A common stock are entitled to, on an equal basis with the holders of Class B common stock, receive dividends when and if declared by the Company's board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

**Class B common stock**

As of September 30, 2022, 7,416,413 shares of Class B common stock were issued and outstanding.

***Voting.*** The holders of the Class B common stock are entitled to ten (10) votes for each share of Class B common stock held at all meetings of stockholders (and written actions in lieu of meetings). The Class B common stock is not subject to cumulative voting. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law.

***Dividends.*** Subject to the preferences applicable to the Preferred Stock, the holders of the Class B common stock are entitled to, on an equal basis with the holders of Class A common stock, receive dividends when and if declared by the Company's board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis.

**Preferred Stock**

Series B preferred stock shall, with respect to rights on liquidation, winding up and dissolution, rank senior to the holders of common stock. As of September 30, 2022, 1,650,215 shares of Series B preferred stock were issued and outstanding.

***Voting.*** The holders of the Series B preferred stock shall vote together with common stockholders and not as a separate class as if their shares were converted into shares of common stock, except as may otherwise be required by law.

***Optional conversion.*** The Series B preferred stock is convertible on the optional conversation date at a conversion ratio of one share of Class A common stock, subject to adjustments.

***Mandatory conversion.*** The Series B preferred stock is mandatorily redeemable upon (i) the closing of the sale of shares of Class A common stock to the public in a firm-commitment underwritten public offerings, (ii) a direct listing of Class A common stock on a national stock exchange or the OTC, (iii) the date the Company becomes subject to the reporting requirements of the Securities Exchange Act of 1934, (iv) the date of the sale of all or substantially all of the stock or assets of the Company, or (v) the date of the written consent or affirmative vote of a majority of the Series B preferred stock then outstanding, the Series B preferred stock will automatically be converted into the number of shares of common stock into which such shares of Series B preferred stock would be converted on the date of such occurrence.

 ****

***Liquidation preference.*** In the event of liquidation of the Company, the holders of Series B preferred stock shall be entitled to receive, before any payment of distribution shall be made in respect to any junior securities, cash in an amount equal to $4.00 for each share of Series B preferred stock plus an amount equal to all declared and accrued but unpaid dividends.

**Convertible Notes**

As of September 30, 2022, the Company had outstanding $1.4 million in principal amount of convertible promissory notes bearing interest at a rate of 8.25% per annum due April 2023. Such convertible promissory notes are convertible into Class A common stock at a per share price of $4.50. Management believes it can come to a mutual agreement with each lender to extend the maturities of the notes for an additional 12-month term.

**Anti-Takeover Provisions**

***Certificate of Incorporation and Bylaws and Class B Common Stock***

Because our stockholders do not have cumulative voting rights, our stockholders holding a majority of the outstanding shares of common stock outstanding will be able to elect all of our directors.

The foregoing provisions will make it more difficult for our existing stockholders to replace our Board of Directors as well as for another party to obtain control of us by replacing our Board of Directors. Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.

These provisions are intended to enhance the likelihood of continued stability in the composition of our Board of Directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us. These provisions are also designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management.

In addition, the control vested in our founders by virtue of their holding of Class B common stock may discourage or impede takeover activities.

***Section 203 of the Delaware General Corporation Law***

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

&nbsp;&nbsp;&nbsp;&nbsp;· before such date, the board
 of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming
 an interested stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;· upon closing of the transaction
 that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting
 stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding
 (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors
 and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially
 whether shares held subject to the plan will be tendered in a tender or exchange offer; or

&nbsp;&nbsp;&nbsp;&nbsp;· on or after such date,
 the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders,
 and not by written consent, by the affirmative vote of at least 66 2∕3% of the outstanding voting stock that is not owned by
 the interested stockholder.

In general, Section 203 defines business combination to include the following:

&nbsp;&nbsp;&nbsp;&nbsp;· any merger or consolidation
 involving the corporation and the interested stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;· any sale, transfer, pledge
 or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;· subject to certain exceptions,
 any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;· any transaction involving
 the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation
 beneficially owned by the interested stockholder; or

&nbsp;&nbsp;&nbsp;&nbsp;· the receipt by the interested
 stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.

In general, Section 203 defines an "interested stockholder" as an entity or person who, together with the person's affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.

***Exclusive forum for adjudication of disputes provision which limits the forum to the Delaware Court of Chancery for certain stockholder litigation matters actions against the Company, which may limit an investor's ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers, employees or stockholders.***

Section 7.06(a) of Article VII of our Bylaws dictates that, unless we consent in writing to the selection of an alternative forum, the Delaware Court of Chancery (or, if the Delaware Court of Chancery does not have jurisdiction, the federal district court for the State of Delaware) is, to the fullest extent permitted by law, the sole and exclusive forum for certain actions including derivative action or proceeding brought on behalf of the Company; an action asserting a breach of fiduciary duty owed by an officer, director, employee or to the stockholders of the Company; any claim arising under Delaware corporate law, our amended and restated certificate of incorporation or our amended and restated bylaws; and any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions of Section 7.06 of Article VII of our Bylaws.

A Delaware corporation is allowed to mandate in its corporate governance documents a chosen forum for the resolution of state law-based stockholder class actions, derivative suits and other intra-corporate disputes. With respect to such state law claims, the Company's management believes limiting state law based claims to Delaware will provide the most appropriate outcomes as the risk of another forum misapplying Delaware law is avoided, Delaware courts have a well-developed body of case law and limiting the forum will preclude costly and duplicative litigation and avoids the risk of inconsistent outcomes. Additionally, Delaware Chancery Courts can typically resolve disputes on an accelerated schedule when compared to other forums.

The choice of forum provisions contained in the Company's Bylaws may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, the enforceability of similar choice of forum provisions in other issuers' bylaws and certificates of incorporation has been challenged in legal proceedings, and it is possible that in connection with any applicable action brought against the Company, a court could find the choice of forum provisions contained in the Company's Bylaws to be inapplicable or unenforceable in such action. As a result, the Company could incur additional costs associated with resolving such actions in other jurisdictions, which could harm the Company's business, operating results and financial condition.

**Transfer Agent and Registrar** 

We have appointed Continental Stock Transfer & Trust Company, telephone 800-509-5586, as the transfer agent for our Class A common stock.

**Trading Symbol and Market**

In connection with this offering, we intend to apply to have our shares of Class A common stock listed on the Nasdaq Capital Market under the symbol "CWD".

**SHARES ELIGIBLE FOR FUTURE SALE**

Prior to this offering, there has been no public market for our Class A common stock. Future sales of substantial amounts of our Class A common stock, including shares issued on the exercise of outstanding options, in the public market after this offering, or the possibility of these sales or issuances occurring, could adversely affect the prevailing market price for our Class A common stock or impair our ability to raise equity capital.

Based on our shares outstanding as of September 30, 2022, on the completion of this offering, a total of 14,183,587 shares of Class A common stock and 7,416,413 shares of Class B common stock will be outstanding. Of these shares, all of the Class A common stock sold in this offering by us, plus any shares sold by us on exercise of the underwriters' option to purchase additional Class A common stock, will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by "affiliates," as that term is defined in Rule 144 under the Securities Act.

All 1,650,215 outstanding shares of Series B Preferred Stock which automatically convert into an equal number of shares of Class A common stock on the effective date of this offering were sold under Regulation A+ and the underlying shares of Class A common stock will also be freely tradable without restrictions or further registration under the Securities Act of 1933. The remaining shares of Class A common stock and Class B common stock will be and shares of Class A common stock or Class B common stock subject to stock options will be on issuance, "restricted securities," as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below. Restricted securities may also be sold outside of the United States to non-U.S. persons in accordance with Rule 904 of Regulation S.

Subject to the lock-up agreements described below and the provisions of Rule 144 or Regulation S under the Securities Act, as well as our insider trading policy, these restricted securities will be available for sale in the public market after the date of this prospectus.

**Rule 144**

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, an eligible stockholder is entitled to sell such shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. To be an eligible stockholder under Rule 144, such stockholder must not be deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and must have beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144, subject to the expiration of the lock-up agreements described below.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell shares on expiration of the lock-up agreements described below. Beginning 90 days after the date of this prospectus, within any three-month period, such stockholders may sell a number of shares that does not exceed the greater of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· 1%
 of the number of Class A common stock then outstanding, which will equal approximately
 141,836 shares immediately after this offering, assuming no exercise of the underwriters'
 option to purchase additional shares of Class A common stock from us; or

&nbsp;&nbsp;&nbsp;&nbsp;· the
 average weekly trading volume of our Class A common stock on Nasdaq during the four calendar weeks preceding the filing of a
 notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

**Rule 701**

Rule 701 generally allows a stockholder who was issued shares under a written compensatory plan or contract and who is not deemed to have been an affiliate of our Company during the immediately preceding 90 days, to sell these shares in reliance on Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our Company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares under Rule 701, subject to the expiration of the lock-up agreements described below.

**Form S-8 Registration Statement**

We intend to file a registration statement on Form S-8 under the Securities Act with the SEC to register the offer and sale of shares of our Class A common stock that are issuable under our 2017 Plan. This registration statement will become effective immediately on filing. Shares covered by this registration statement will then be eligible for sale in the public markets, subject to vesting restrictions, any applicable lock-up agreements described below, and Rule 144 limitations applicable to affiliates.

**Lock-up Agreements**

We, and all of our directors and officers have agreed, or will agree, with the underwriters that, until 180 days after the date of this prospectus (the "restricted period"), subject to certain exceptions, we and they will not, without the prior written consent of the Representatives, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any of our shares of common stock, any options or warrants to purchase any of our shares of common stock or any securities convertible into or exchangeable for or that represent the right to receive shares of our common stock; the Representatives may release any of the securities subject to these lock-up agreements at any time, subject to applicable notice requirements.

**MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES**

The following is a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of common stock (which, for purposes of this discussion, includes our Class A common stock and Class B common stock) This discussion is limited to holders who purchase our common stock pursuant to this offering and who hold common stock as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment).

This discussion is based on the provisions of the Code, U.S. Treasury regulations, administrative rulings and judicial decisions, all as of the date hereof, and all of which are subject to change, possibly with retroactive effect. We cannot assure you that a change in law (including, but not limited to, proposed legislation) will not significantly alter the tax considerations that we describe in this summary. We have not sought any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.

This discussion does not address the U.S. federal income tax consequences to the Sponsor, the anchor investors, or our founders, officers or directors. This summary does not address the Medicare contribution tax on certain net investment income, the alternative minimum tax, special tax accounting rules under Section 451(b) of the Code, U.S. federal estate or gift tax laws, or any state, local or non-U.S. tax laws. In addition, this discussion does not address all U.S. federal income tax considerations that may be important to a particular holder in light of the holder's circumstances, or to certain categories of investors that may be subject to special rules, such as:

&nbsp;&nbsp;&nbsp;&nbsp;· banks or other financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;· tax-exempt entities;

&nbsp;&nbsp;&nbsp;&nbsp;· insurance companies;

&nbsp;&nbsp;&nbsp;&nbsp;· dealers in securities or foreign currencies;

&nbsp;&nbsp;&nbsp;&nbsp;· traders in securities subject to a mark-to-market method
 of accounting for U.S. federal income tax purposes with respect to our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;· partnerships or other pass-through entities for
 U.S. federal income tax purposes or holders of interests therein;

&nbsp;&nbsp;&nbsp;&nbsp;· regulated investment companies, mutual funds or real estate investment
 trusts;

&nbsp;&nbsp;&nbsp;&nbsp;· "controlled foreign corporations" or "passive foreign
 investment companies;"

&nbsp;&nbsp;&nbsp;&nbsp;· persons that acquired our common stock through
 the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan;

&nbsp;&nbsp;&nbsp;&nbsp;· U.S. Holders (as defined below) whose functional
 currency is not the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;· former citizens or long-term residents of the
 United States;

&nbsp;&nbsp;&nbsp;&nbsp;· persons that hold our common stock as a part of
 a straddle, hedge, integrated transaction or similar transaction;

&nbsp;&nbsp;&nbsp;&nbsp;· persons that directly, indirectly or constructively
 own 5 percent or more (by vote or value) of our common stock; or

&nbsp;&nbsp;&nbsp;&nbsp;· persons deemed to sell our Combined Company Class A
 Common Stock under the constructive sale provisions of the Code.

If a partnership (including an entity or arrangement treated as a partnership or other pass-thru entity for U.S. federal income tax purposes) holds our common stock the tax treatment of a partner, member or other beneficial owner in such partnership will generally depend upon the status of the partner, member or other beneficial owner, the activities of the partnership and certain determinations made at the partner, member or other beneficial owner level. If you are a partner, member or other beneficial owner of a partnership holding our common stock, you are urged to consult your tax advisor regarding the tax consequences of the acquisition, ownership and disposition of such common stock.

**IF YOU ARE CONSIDERING THE PURCHASE OF OUR COMMON STOCK, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SUCH CLASS A COMMON STOCK, AS WELL AS THE CONSEQUENCES TO YOU ARISING UNDER OTHER U.S. FEDERAL TAX LAWS, THE LAWS OF ANY OTHER TAXING JURISDICTION, OR ANY APPLICABLE TAX TREATY. IN ADDITION, YOU SHOULD CONSULT WITH YOUR TAX ADVISOR WITH RESPECT TO ANY POTENTIAL CHANGES IN U.S. FEDERAL TAX LAW AS WELL AS ANY POTENTIAL CHANGES IN STATE, LOCAL OR NON-U.S. TAX LAWS. U.S. Holders**

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our common stock, that is, for U.S. federal income tax purposes:

&nbsp;&nbsp;&nbsp;&nbsp;· an individual who is a citizen or resident of
 the United States;

&nbsp;&nbsp;&nbsp;&nbsp;· a corporation or other entity treated as a corporation,
 created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;· an estate, the income of which is includible in
 gross income for U.S. federal income tax purposes regardless of its source; or

&nbsp;&nbsp;&nbsp;&nbsp;· a trust (A) the administration of which is
 subject to the primary supervision of a U.S. court and that has one or more United States persons who have the authority to control
 all substantial decisions of the trust or (B) that has made a valid election under applicable U.S. Treasury regulations to be
 treated as a United States person.

*Taxation of Distributions*

If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. Holders of common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder's adjusted tax basis in its common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of its common stock, as applicable, and will be treated as described under "*U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of our Combined Entity Class A Common Stock*" below.

Dividends we pay to a U.S. Holder that is treated as a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder may constitute "qualified dividend income" that will be subject to tax at the maximum tax rate accorded to long-term capital gains. If the applicable holding period requirements are not satisfied, then a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate

U.S. Holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.

*Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of our common stock*

Upon a sale or other taxable disposition of common stock, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder's adjusted tax basis in such common stock. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder's holding period for its common stock so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. Holders may be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.

Generally, the amount of gain or loss recognized by a U.S. Holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder's adjusted tax basis in its common stock so disposed of. A U.S. Holder's adjusted tax basis in its common stock generally will equal the U.S. Holder's acquisition cost less any prior distributions treated as a return of capital.

*Information Reporting and Backup Withholding*

In general, information reporting requirements may apply to distributions paid or deemed paid to a U.S. Holder and to the proceeds of the sale or other disposition of our common stock, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a credit against a U.S. Holder's U.S. federal income tax liability and may entitle such Holder to a refund, provided the required information is timely furnished to the IRS.

**Non-U.S. Holders**

A "Non-U.S. Holder" is a beneficial owner of our common stock that is, for U.S. federal income tax purposes, an individual, corporation, estate or trust that is not a U.S. Holder.

*Taxation of Distributions*

If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to Non-U.S. Holders of common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the Non-U.S. Holder's adjusted tax basis in its common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Non-U.S. Holder's common stock, and will be treated as described under "*Non U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of our common stock*."

Subject to the discussions below regarding effectively connected income, backup withholding and FATCA, any dividend paid to a Non-U.S. Holder generally will be subject to U.S. federal withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and the holder's country of residence. In order to receive a reduced treaty rate, a Non-U.S. Holder must provide us or the applicable paying agent with an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. Under applicable Treasury Regulations, we may withhold up to 30% of the gross amount of the entire distribution even if the amount constituting a dividend, as described above, is less than the gross amount. A Non-U.S. Holder may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If a Non-U.S. Holder holds our common stock through a financial institution or other agent acting on the holder's behalf, the holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries. In addition, if we determine that we are likely to be classified as a "United States real property holding corporation" (see the section entitled "*Non-U.S. Holders—Gain on Sale, Exchange or Other Taxable Disposition of our common stock*" below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.

Dividends received by a Non-U.S. Holder that are treated as effectively connected with the holder's conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, that are attributable to a permanent establishment or fixed base maintained by the holder in the United States) are generally exempt from the 30% U.S. federal withholding tax, subject to the discussions below regarding backup withholding and FATCA. In order to obtain this exemption, a Non-U.S. Holder must provide us or the applicable withholding agent with a properly executed IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to U.S. federal withholding tax, generally are taxed at the U.S. federal income tax rates applicable to U.S. persons, net of certain deductions and credits. In addition, dividends received by corporate

Non-U.S. Holders that are effectively connected with the holder's conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty between the United States and the holder's country of residence.

Non-U.S. Holders should consult their tax advisor regarding the tax consequences of the ownership and disposition of our common stock, including the application of any applicable tax treaties that may provide for different rules.

*Gain on Sale, Exchange or other Taxable Disposition of our common stock*

Subject to the discussions below regarding backup withholding and FATCA, a Non-U.S. Holder generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:

&nbsp;&nbsp;&nbsp;&nbsp;· the gain is effectively connected with the Non-U.S. Holder's
 conduct of a U.S. trade or business (and, if an applicable income tax treaty so provides, the gain is attributable to a permanent
 establishment or fixed base maintained by the holder in the United States);

&nbsp;&nbsp;&nbsp;&nbsp;· the Non-U.S. Holder is an individual
 who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale
 or disposition occurs and certain other conditions are met; or

&nbsp;&nbsp;&nbsp;&nbsp;· our common stock constitutes a United States real
 property interest, or USRPI, by reason of our status as a "United States real property holding corporation," or a USRPHC,
 for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the Non-U.S. Holder's
 disposition of, or the holder's holding period for, our common stock, as applicable.

We believe that we are not currently a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our U.S. and worldwide real property interests plus our other assets used or held for use in a trade or business, there can be no assurance that we will not become a USRPHC in the future. Even if we are or become a USRPHC, however, in the case where shares of our common stock are regularly traded on an established securities market, the Non-U.S. Holder disposing of our common stock will be treated as disposing of a USRPI only if it has owned, directly or constructively, more than 5% of our common stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. Holder's holding period for the shares of our common stock. There can be no assurance that our common stock will be treated as regularly traded or not regularly traded on an established securities market for this purpose.

Non-U.S. Holders described in the first bullet above generally will be required to pay tax on the gain derived from the sale (net of certain deductions and credits) under U.S. federal income tax rates applicable to U.S. persons, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. Individual Non-U.S. Holders described in the second bullet above will be subject to tax at 30% (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, which gain may be offset by U.S. source capital losses for the year, provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

Non-U.S. Holders should consult their tax advisors regarding any applicable income tax or other treaties that may provide for different rules.

*Information Reporting and Backup Withholding*

We must report annually to the IRS and to each Non-U.S. Holder the gross amount of the dividends we pay or are deemed to pay to such Holder and the tax withheld, if any, with respect to such dividends. A Non-U.S. Holder will have to comply with specific certification procedures to establish that the Holder is not a United States person (as defined in the Code) in order to avoid backup withholding at the applicable rate with respect to dividends. A Non-U.S. Holder generally will not be subject to U.S. backup withholding with respect to payments of dividends if such Holder establishes an exemption by certifying his, her or its Non-U.S. status by providing a valid IRS Form W-8BEN or W-8BEN-E or other appropriate IRS From W-8 (or other applicable or successor form); provided we do not have actual knowledge or reason to know that such Non-U.S. Holder is a U.S. person (as defined in the Code).

Information reporting and backup withholding will generally apply to the proceeds of a taxable disposition of our common stock by a Non-U.S. Holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the Holder establishes an exemption by certifying his, her or its status as a Non-U.S. Holder and satisfies certain other requirements. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the U.S. through a Non-U.S. office of a broker. However, for information reporting purposes, taxable dispositions effected through a Non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker.

Non-U.S. Holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available to the tax authorities of the country in which the Non-U.S. Holder resides or is incorporated under the provisions of a specific treaty or agreement.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. Holder may be allowed as a credit against the Non-U.S. Holder's U.S. federal income tax liability, if any, and may entitle such Holder to a refund, provided that the required information is timely furnished to the IRS.

*Additional Withholding Requirements under the Foreign Account Tax Compliance Act*

Subject to the following paragraph, the Foreign Account Tax Compliance Act and the Treasury Regulations and other official IRS guidance issued thereunder (collectively, "FATCA") generally imposes a U.S. federal withholding tax of 30% on dividends (including constructive dividends) on, and the gross proceeds from a sale or other disposition of, our common stock paid to a "foreign financial institution" (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners) or otherwise establishes an exemption. Subject to the following paragraph, FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends (including constructive dividends) on, and the gross proceeds from a sale or other disposition of, our common stock paid to a "non-financial foreign entity" (as specially defined under these rules) unless such entity provides the withholding agent with a certification identifying the substantial direct and indirect U.S. owners of the entity, certifies that it does not have any substantial U.S. owners, or otherwise establishes an exemption. The withholding tax will apply regardless of whether the payment otherwise would be exempt from the U.S. nonresident withholding tax described above and backup withholding, including under the exemptions described above. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and the holder's country of residence may modify the requirements described in this section. Holders should consult with your own tax advisors regarding the application of FATCA to your ownership and disposition of our common stock.

The U.S. Treasury Department has issued proposed regulations that, if finalized in their present form, would eliminate FATCA withholding on gross proceeds of the sale or other disposition of our common stock (but not on payments or constructive payments of dividends). The preamble of such proposed regulations states that they may be relied upon by taxpayers until final regulations are issued or until such proposed regulations are rescinded.

**THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.**

**UNDERWRITING**

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Revere Securities LLC and Spartan Capital Securities, LLC are acting as representatives (the "Representatives"), have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

---

| | |
|:---|:---|
| **Name** | **Number of Shares** |
| Revere Securities LLC |  |
| Spartan Capital Securities, LLC |  |
| Total: | 1600000 |

---

The underwriters and the Representatives are collectively referred to as the "underwriters" and the "Representatives," respectively. The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below. The obligation of the underwriters to purchase the shares of Class A common stock is conditioned upon our receiving approval to list the shares of Class A common stock on Nasdaq.

The underwriters initially propose to offer part of the shares of Class A common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of Class A common stock, the offering price and other selling terms may from time to time be varied by the Representatives. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

We have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to additional shares of Class A common stock (representing 15% of the total number of shares of Class A common stock sold in this offering) at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of Class A common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of Class A common stock as the number listed next to the underwriter's name in the preceding table bears to the total number of shares of Class A common stock listed next to the names of all underwriters in the preceding table.

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $1.2 million.

We intend to apply to have our Class A common stock approved for listing on the Nasdaq Capital Market under the symbol "<u>CWD</u>."

**Discounts and Commissions; Expenses**

The underwriting discounts and commissions are a cash fee equal to: (i) eight percent (8%) of gross proceeds from the sale of securities in this offering. We have been advised by the Representatives that the underwriters propose to offer the Class A common stock to the public at the public offering price set forth on the cover of this prospectus and to dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the offering, the Representatives may change the public offering price and other selling terms.

The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional 240,000 shares of Class A common stock.

---

| | | | |
|:---|:---|:---|:---|
|  | | **Total** | **Total** |
|  |<br>**Per<br> Share** | **Without<br> Over-Allotment <br> Option** | **With <br> Over-Allotment <br> Option** |
| Public offering price | $5.00 | $8000000 | $9200000 |
| Underwriting discounts and commissions to be paid by us (1) | $0.40 | $640000 | $736000 |
| Proceeds, before expenses, to us | $4.60 | $7360000 | $8464000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Does not include amounts representing reimbursement of certain out-of-pocket expenses, as described below.

We have agreed to reimburse the Representatives for out-of-pocket expenses incurred by the Representatives in connection with this offering, regardless of whether the offering is consummated, up to $162,900. The Representatives' out-of-pocket expenses include road show expenses, fees of Representatives' legal counsel, and the cost of background checks. As of the date of this prospectus, we have paid the Representatives an advance of $10,000 which shall be applied against its actual out-of-pocket accountable expenses. Such advance payments will be returned to us to the extent any portion of the advance is not actually incurred, in accordance with FINRA Rule 5110(g)(4)(A).

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of Class A common stock offered by them.

**Lock-Up Agreement**

We and all directors and officers have agreed that, without the prior written consent of the Representatives on behalf of the underwriters, subject to certain exceptions, we and they will not, during the period ending 180 days after the date of this prospectus (the "restricted period"):

&nbsp;&nbsp;&nbsp;&nbsp;· offer,
 pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
 right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any
 securities convertible into or exercisable or exchangeable for shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;· file
 any registration statement with the Securities and Exchange Commission relating to the offering of any shares of common stock or
 any securities convertible into or exercisable or exchangeable for common stock; or

&nbsp;&nbsp;&nbsp;&nbsp;· enter
 into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership
 of the common stock

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise.

The Representatives, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time, subject to applicable notice requirements.

In order to facilitate the offering of the Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price of the Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The Representatives may agree to allocate a number of shares of Class A common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the Representatives to underwriters that may make Internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging. financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

**Directed Share Program**

At our request, the underwriters have reserved up to 10% of the shares of Class A common stock offered in this offering for sale at the initial public offering price to certain persons who are our directors, officers and employees, and certain friends and family members of these persons, and certain clients and prospective clients, through a directed share program. Any sales made through the directed share program to the directors and officers will be made by the underwriters. We do not know if these persons will choose to purchase all or any portion of these reserved shares of Class A common stock, but any purchases they do make will reduce the number of shares of Class A common stock available for sale to the general public in this offering. Any directed shares not purchased will be offered by the underwriters to the general public on the same terms as all other shares of Class A common stock offered by this prospectus. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the directed shares. The underwriters will receive the same underwriting discount on any directed shares purchased pursuant to this program as they will on any other shares sold to the public in this offering. Shares purchased through the directed share program by the directors and officers, who will sign a lock-up agreement in connection with the offering, will be subject to the same 180-day lock-up period and restrictions described above. Shares purchased under this program by persons not signing the lock-up agreement are not subject to the 180-day lock-up period and restrictions.

**Pricing of the Offering**

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price was determined by negotiations between us and the Representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

The public offering price set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the Representatives can assure investors that an active trading market will develop for our Class A common stock, or that the shares will trade in the public market at or above the initial public offering price.

**LEGAL MATTERS**

The validity of the shares of Class A common stock offered by this prospectus will be passed upon for us by Manatt, Phelps & Phillips, LLP, Costa Mesa, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Bevilacqua PLLC.

**EXPERTS**

The financial statements as of December 31, 2021 and 2020, and for each of the two years in the period ended December 31, 2021, included in this Prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. Such financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Class A common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Class A common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is http://www.sec.gov.

On the completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available at http://www.sec.gov.

We also maintain a website at www.caliberco.com. Information contained in, or accessible through, our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is only as an inactive textual reference.

![](tm2230806d1_s1aimg006.jpg)

**CaliberCos Inc. and Subsidiaries**

**Unaudited Condensed CONSOLIDATED**

**FINANCIAL STATEMENTS**

**FOR THE Nine Months ENDED**

**September 30, 2022 AND 2021**

**CaliberCos Inc. and Subsidiaries**

**Contents**

---

| | |
|:---|:---|
| **Financial Statements (Unaudited)** |  |
| [Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021](#Q_01) | [F-1](#Q_01) |
| [Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022 and 2021](#Q_02) | [F-2](#Q_02) |
| [Condensed Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2022 and 2021](#Q_03) | [F-3](#Q_03) |
| [Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021](#Q_04) | [F-4 - F-5](#Q_04) |
| [**Notes to Condensed Consolidated Financial Statements (Unaudited)**](#Q_06) | [**F-6 - F-30**](#Q_06) |

---

**CaliberCos Inc. and Subsidiaries**

**Condensed Consolidated Balance Sheets (Unaudited)**

**(AMOUNTS in thousands, except for share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **December 31, 2021** |
| **Assets** |  |  |
| Cash | $4731 | $1606 |
| Restricted cash | 23 | 1000 |
| Real estate investments, net | 2030 | 126 |
| Real estate assets held for sale |  | 1816 |
| Due from related parties | 8646 | 5618 |
| Investments in unconsolidated entities | 3260 | 2382 |
| Prepaid and other assets | 3523 | 1433 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Assets of consolidated funds* |  |  |
| Cash | 6247 | 6772 |
| Restricted cash | 7408 | 7154 |
| Real estate investments, net | 172699 | 184472 |
| Real estate assets held for sale | 21778 | 9142 |
| Accounts receivable, net | 1597 | 1215 |
| Notes receivable - related parties | 25195 | 20102 |
| Due from related parties | 12 | 205 |
| Prepaid and other assets | 3102 | 2605 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $260251 | $245648 |
| **Liabilities and Stockholders' Equity** |  |  |
| Notes payable | $13444 | $6810 |
| Notes payable - related parties | 365 | 855 |
| Accounts payable and accrued expenses | 2534 | 6551 |
| Buyback obligation | 12469 | 12704 |
| Due to related parties | 25 | 727 |
| Other liabilities | 353 | 867 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Liabilities of consolidated funds* |  |  |
| Notes payable, net | 128147 | 147389 |
| Notes payable - related parties | 10062 | 5165 |
| Accounts payable and accrued expenses | 8539 | 8534 |
| Due to related parties | 162 | 390 |
| Other liabilities | 6547 | 5963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 182647 | 195955 |
| **Commitments and Contingencies** |  |  |
| **Stockholders' Equity** |  |  |
| Preferred stock Series B, $0.001 par value; 12,500,000 shares authorized, 1,650,215 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively |  |  |
| Common stock Class A, $0.001 par value; 100,000,000 shares authorized, 10,933,372 and 10,428,107 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 11 | 10 |
| Common stock Class B, $0.001 par value; 15,000,000 shares authorized, 7,416,413 shares issued and outstanding as September 30, 2022 and December 31, 2021, respectively | 7 | 7 |
| Paid-in capital | 33019 | 29249 |
| Less treasury stock, at cost, 259,507 and 206,000 shares repurchased and 3,450,186 and 3,503,693 forward repurchase shares as of September 30, 2022 and December 31, 2021, respectively | (13626) | (13626) |
| Accumulated deficit | (20240) | (24729) |
| &nbsp;&nbsp;&nbsp; Stockholders' deficit attributable to CaliberCos Inc. | (829) | (9089) |
| &nbsp;&nbsp;&nbsp; Stockholders' equity attributable to noncontrolling interests | 78433 | 58782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Stockholders' Equity** | 77604 | 49693 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Liabilities and Stockholders' Equity** | $260251 | $245648 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**CaliberCos Inc. and Subsidiaries**

**Condensed Consolidated Statements of Operations (UNAUDITED)**

**(AMOUNTS in thousands, except per share data)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2022** | **2021** |
| **Revenues** |  |  |
| &nbsp;&nbsp;&nbsp; Asset management fees | $3048 | $1706 |
| &nbsp;&nbsp;&nbsp; Performance allocations | 2508 | 396 |
| &nbsp;&nbsp;&nbsp; Transaction and advisory fees | 8261 | 3116 |
| &nbsp;&nbsp;&nbsp; Consolidated funds - Hospitality revenue<sup>(1)</sup> | 43801 | 27021 |
| &nbsp;&nbsp;&nbsp; Consolidated funds - Other revenue<sup>(1)</sup> | 4871 | 3833 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | 62489 | 36072 |
| **Expenses** |  |  |
| &nbsp;&nbsp;&nbsp; Operating costs | 8421 | 6045 |
| &nbsp;&nbsp;&nbsp; General and administrative | 5389 | 2075 |
| &nbsp;&nbsp;&nbsp; Marketing and advertising | 1293 | 1329 |
| &nbsp;&nbsp;&nbsp; Depreciation and amortization | 23 | 74 |
| &nbsp;&nbsp;&nbsp; Consolidated funds - Hospitality expenses<sup>(1)</sup> | 44786 | 39312 |
| &nbsp;&nbsp;&nbsp; Consolidated funds - Other expenses<sup>(1)</sup> | 6146  | 4406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 66058  | 53241 |
| Consolidated funds - Gain on sale of real estate investment | 21530  |  |
| Other income, net | (241) | (856) |
| Gain on extinguishment of debt | (1421) |  |
| Interest income | (112) |  |
| Interest expense | 685 | 546 |
| **Net Income (Loss) Before Income Taxes** | 19050 | (16859) |
| Provision for income taxes | - | - |
| **Net Income (Loss) Before Income Taxes** | 19050 | (16859) |
| Net income (loss) attributable to noncontrolling interests | 14561 | (16603) |
| **Net Income (Loss) Attributable to CaliberCos Inc.** | $4489 | $(256) |
| Basic net income (loss) per share attributable to common stockholders | $0.25 | $(0.01) |
| Diluted net income (loss) per share attributable to common stockholders | $0.23 | $(0.01) |
| Weighted average common shares outstanding: |  |  |
| Basic | 18033 | 17816 |
| Diluted | 19878 | 17816 |

---

1 See Note 2 – Summary of Significant Accounting Policies – Segment Information for a discussion of our segment accounting policies and Note 3 – VIEs for a discussion of our consolidation policies.

The accompanying notes are an integral part of these condensed consolidated financial statements.

**CaliberCos Inc. and Subsidiaries**

**condensed Consolidated Statements of Changes in Stockholders' Equity (UNAUDITED)**

**(AMOUNTS in thousands)**

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | | |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | | | | | |
|  | | | **Common Stock** | **Common Stock** | **Class A** | **Class A** | **Class B** | **Class B** | | | | | |
|  | <br>**Shares** |<br>**Par<br> Value** | **Shares** | **Par<br> Value** | **Shares** | **Par<br> Value** | **Shares** | **Par<br> Value** |<br>**Paid in<br> Capital** |<br>**Treasury<br> Stock** |<br>**Accumulated<br> Deficit** |<br><br>**Noncontrolling<br> Interests** |<br><br>**Total<br> Stockholders'<br> Equity** |
| Balances as of December 31, 2021 | 1650 | $- |  | $- | 10523 | $10 | 7416 | $7 | $29249 | $(13626) | $(24729) | $58782 | $49693 |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock |  |  |  |  | 505 | 1 | - |  | 3311 |  |  |  | 3312 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity based compensation expense |  |  |  |  |  |  | - |  | 459 |  |  |  | 459 |
| &nbsp;&nbsp;&nbsp;&nbsp; Contributions from noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | 20408 | 20408 |
| &nbsp;&nbsp;&nbsp;&nbsp; Redemptions of noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | (1885) | (1885) |
| &nbsp;&nbsp;&nbsp;&nbsp; Distributions to noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | (3168) | (3168) |
| &nbsp;&nbsp;&nbsp;&nbsp; Consolidation of VIE |  |  |  |  |  |  | - |  |  |  |  | 3864 | 3864 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deconsolidation of VIE |  |  |  |  |  |  | - |  |  |  |  | (14129) | (14129) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income | - | - | - | - | - | - | - | - | - | - | 4489 | 14561 | 19050 |
| Balances as of September 30, 2022 | 1650 | $- | - | $- | 11028 | $11 | 7416 | $7 | $33019 | $(13626) | $(20240) | 78433 | $77604 |
| Balances as of December 31, 2020 | 506 | $- |  | $- | 10523 | $10 | 7416 | $7 | $22051 | $(13626) | $(24780) | $64776 | 48438 |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of preferred stock | 1144 |  |  |  |  |  | - |  | 7174 |  |  |  | 7174 |
| &nbsp;&nbsp;&nbsp;&nbsp; Contributions from noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | 22256 | 22256 |
| &nbsp;&nbsp;&nbsp;&nbsp; Redemptions of noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | (5868) | (5868) |
| &nbsp;&nbsp;&nbsp;&nbsp; Distributions to noncontrolling interest holders |  |  |  |  |  |  | - |  |  |  |  | (2906) | (2906) |
| &nbsp;&nbsp;&nbsp;&nbsp; Consolidation of VIE |  |  |  |  |  |  | - |  |  |  |  | (34) | (34) |
| &nbsp;&nbsp;&nbsp;&nbsp; Deconsolidation of VIE |  |  |  |  |  |  | - |  |  |  | 942 | (6026) | (5084) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other |  |  |  |  |  |  | - |  |  |  | (193) |  | (193) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net loss | - | - | - | - | - | - | - | - | - | - | (256) | (16603) | (16859) |
| Balances as of September 30, 2021 | 1650 | $- | - | $- | 10523 | $10 | 7416 | $7 | $29225 | $(13626) | $(24287) | $55595 | $46924 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**CaliberCos Inc. and Subsidiaries**

**condensed Consolidated Statements of Cash Flows (UNAUDITED)**

**(AMOUNTS in thousands)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2022** | **2021** |
| **Cash Flows From Operating Activities** |  |  |
| Net income (loss) | $19050 | $(16859) |
| Adjustments to reconcile net income (loss) to net cash from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 23 | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity based compensation | 459 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on disposition of real estate | (27) | (450) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on extinguishment of debt | (1421) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of real estate | 9 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate assets held for sale |  | (3082) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | (3029) | 214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | (2099) | (100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (695) | (503) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | (703) | 83 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (514) | (199) |
| Adjustments to reconcile net income (loss) to net cash from operating activities of consolidated funds: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 6809 | 7885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on the disposition of real estate | (21547) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of real estate | 144 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on extinguishment of debt | (3131) | (3416) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of advanced key money | (56) | (56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of above market/below market leases, net | (61) | (81) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 583 | 839 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities of consolidated funds: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (381) | (276) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | 194 | (8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | 42 | 257 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 783 | 1670 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 382 | 207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 1370 | 1233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (3816) | (12568) |
| **Cash Flows From Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate assets | (228) | (96) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of real estate assets | 144 | 1877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in unconsolidated entities | (877) | (368) |
| **Cash Flows From Investing Activities of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidation of VIE | 1393 | 790 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deconsolidation of VIE | (17246) | (408) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of real estate assets | 30705 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate assets | (32676) | (7967) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of real estate assets |  | (4867) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funding of notes receivable - related party | (6485) | (6695) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment received of notes receivable – related party | 1393 | 3134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (23877) | (14600) |
| **Cash Flows From Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable | 9015 | 1400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable | (981) | (530) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable - related parties | (490) | (1885) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the issuance of preferred stock |  | 7174 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the issuance of common stock | 12 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of treasury stock - buyback obligation | (236) | (238) |
| **Cash Flows From Financing Activities of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of deferred financing costs | (355) | (547) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable | 27085 | 18417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable | (26012) | (6088) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable - related parties | (9257) | (6616) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable - related parties | 15243 | 8743 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contributions from noncontrolling interest holders | 20408 | 22256 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redemptions of noncontrolling interests | (1885) | (5868) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions to noncontrolling interest holders | (2977) | (2906) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 29570 | 33312 |
| **Net Increase in Cash and Restricted Cash** | 1877 | 6144 |
| **Cash and Restricted Cash at Beginning of Period** | 16532 | 10815 |
| **Cash and Restricted Cash at End of Period** | $18409 | $16959 |

---

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2022** | **2021** |
| **Reconciliation of Cash and Restricted Cash** |  |  |
| &nbsp;&nbsp;&nbsp;Cash at beginning of period | $8378 | $6532 |
| &nbsp;&nbsp;&nbsp;Restricted cash at beginning of period | 8154 | 4283 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash at beginning of period | 16532 | 10815 |
| &nbsp;&nbsp;&nbsp;Cash at end of period | 10978 | 7819 |
| &nbsp;&nbsp;&nbsp;Restricted cash at end of period | 7431 | 9140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash at end of period | $18409 | $16959 |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest for the nine months ended September 30, 2022 and 2021, respectively | $978 | $452 |
| **Supplemental Disclosure of Cash Flow Information of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest, net of capitalized interest of $10 and $243 for the nine months ended Sepotember 30, 2022 and 2021, respectively | 7245 | 6420 |
| **Supplemental Disclosures of Non-cash Investing and Financing Activities** |  |  |
| Real estate investments moved to held for sale |  | 3082 |
| Real estate investments moved from held for sale | 1703 |  |
| Increase in note payable due to Deconsolidation of VIEs |  | 2705 |
| Note receivable eliminated in consolidation |  | 3110 |
| Cost of real estate investments included in accounts payable |  |  |
| Issuance of common stock in connection with legal settlement | 3200 |  |
| Issuance of common stock in lieu of cash payment for accounts payable | 100 |  |
| **Supplemental Disclosures of Non-cash Investing and Financing Activities of Consolidated Funds** |  |  |
| Real estate investments moved to held for sale | 21282 |  |
| Cost of real estate investments included in accounts payable | 76 | 151 |
| Cost of real estate investments included in due to related parties | 181 | 0 |
| Consolidation of VIEs |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate investments, net |  | 14936 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 568 | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable |  | 8300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable – related parties |  | 4400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 130 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 688 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interests | 1972 | 824 |
| Deconsolidation of VIEs |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate investments, net | 15905 | 3046 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 2 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable |  | 85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 53 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 791 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable | 16953 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable – related parties | 1615 | 826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 298 | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 4 | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit |  | 942 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interests | 2882 | 6435 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**Note 1 – Organization and Liquidity**

***Organization***

CaliberCos Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, the "Company", "Caliber", "we", "our", and "us"), is an alternative asset manager of private syndication and direct investment real estate funds, and provider of a full suite of traditional real estate services. The Company was formed in November 2014, and originally began as Caliber Companies, LLC, an Arizona limited liability company, which commenced operations in January 2009. We also provide various support services to the investments we manage including set up and fund formation services, lending support, construction and development management, and real estate brokerage. Our business is organized into three reportable segments Fund Management, Development and Brokerage. As of September 30, 2022 we had operations in Alaska, Arizona, Colorado, Nevada, Texas and Utah.

In general, our private equity real estate funds are organized as operating partnerships, in which multiple unrelated passive investors own partnership interests. In addition, we are designated as the manager and/or general partner of the partnership. Depending on the legal structure and arrangements between us and the funds, we may or may not consolidate the partnerships for financial reporting purposes. For funds in which we are determined to be the controlling party or primary beneficiary for financial reporting purposes, the fund is consolidated, and the passive investors' ownership is presented as noncontrolling interest in the accompanying condensed consolidated financial statements. For funds in which we are not determined to be the controlling party for financial reporting purposes, the fund is not consolidated, and any fees earned from the fund are included in fund management revenue in the accompanying condensed consolidated financial statements. See Note 2 – Summary of Significant Accounting Policies for more detail.

***Liquidity***

The Company, through guarantees of loans held by its consolidated funds, has five separate loans outstanding with maturity dates within the 12-month period subsequent to when these financial statements were issued with outside lenders totaling $82.8 million at September 30, 2022. Management is actively managing the potential amendments to the applicable loan agreements to include additional extension options, pay off or refinancing of these facilities. Management believes that we will be able to enter into new financing arrangements with third-party lenders. See Note 5 – Notes Payable for additional details.

***Impact of COVID-19***

The Company continues to operate its business through the COVID-19 pandemic, including recent variants, and has taken steps to manage the effect of the pandemic on our corporate business and on the assets we manage which include, but are not limited to: (i) implementation of remote work arrangements, which has not had a material effect on our ability to maintain our business operations; (ii) participating in the Paycheck Protection Plan program ("PPP"); and (iii) having constant communications with lenders to receive additional facilities, convert current reserves into operational reserves and suspend the minimum debt service coverage ratio requirements, when applicable, for a 12-month period.

The overall impact of COVID-19 will depend on the length of time that the pandemic continues, its effect on demand drivers for our investments, the extent to which it affects our ability to raise capital into our investment products, and the effect of governmental regulations imposed in response to the pandemic. Due to these uncertainties, the Company's accounting estimates may change, as management's assessment of the impacts of the COVID-19 pandemic continues to evolve.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**Note 2 –** **Summary of Significant Accounting Policies**

**Accounting Policies of the Company**

***Basis of Presentation and Consolidation***

The accompanying condensed consolidated financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries, which include variable interest entities ("VIEs") where we are considered the primary beneficiary and voting interest entities ("VOEs"), where we have determined that we have a controlling financial interest, under the "Consolidations" Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") (Topic 810). The equity and net income or loss attributable to noncontrolling interests in subsidiaries is shown separately in the accompanying condensed consolidated balance sheets, statements of operations, and statements of changes in stockholders' equity. All intercompany balances and transactions have been eliminated in consolidation.

<u>Variable Interest Entities</u>

We determine if an entity is a VIE based on several factors, including whether the equity holders, as a group, lack the characteristics of a controlling financial interest. We make judgments regarding which types of activities most significantly impact the entity's economic performance first on a qualitative analysis, then a quantitative analysis, if necessary. We analyze any investments in VIEs to determine if we are the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE.

Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative analysis focused on identifying which reporting entity has both (i) the power to direct the activities of the entity that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgement. We consolidate any VIE for which we are the primary beneficiary and disclose significant VIEs of which we are not the primary beneficiary, as well as disclose our maximum exposure to loss related to the VIEs that are consolidated. See Note 3 – VIEs for additional VIE disclosures.

<u>Voting Interest Entities</u>

Entities that do not qualify as VIEs are generally assessed for consolidation as VOEs. For VOEs, we consolidate the entity if we have a controlling financial interest in the entity. We have a controlling financial interest in a VOE if (i) for legal entities other than partnerships, we own a majority voting interest in the entity or, for limited partnerships and similar entities, we own a majority of the entity's kick-out rights through voting limited partnership interests and (ii) non-controlling shareholders or partners do not hold substantive participating rights, and no other conditions exist that would indicate that we do not control the entity.

***Interim Unaudited Financial Data***

Our condensed consolidated financial statements reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements, including notes, are unaudited, and exclude some of the disclosures required for annual consolidated financial statements, and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021.

***Use of Accounting Estimates***

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

***Reclassification***

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have any impact on our condensed consolidated balance sheets, condensed consolidated statements of changes in stockholders' equity, or condensed consolidated statements of cash flows. In addition, during 2021, the Company realigned our operating segments to better reflect the internal management of our business based on a change to the way our chief operating decision maker monitors performance, aligns strategies, and allocates resources.

These condensed consolidated financial statements and related footnotes, including prior year financial information, are presented to reflect the new reportable segments. The groupings on the accompanying condensed consolidated statements of operations now segregate the consolidated fund revenues and expenses, which are also included in non-controlling interest. This change in presentation did not impact total revenues, total expenses, or net loss. See Note 2 – Summary of Significant Accounting Policies – Segment Information for additional information.

On January 17, 2023, the Company's board of directors approved an amendment to its certificate of incorporation to effect a 1-for- 1.6820384 reverse stock split of Class A common stock, Class B common stock and Series B preferred stock. The reverse stock split was effected on January 17, 2023. Certain prior period amounts have been updated to reflect the reverse stock split including share and per share amounts, additional paid-in capital, Class A common stock, Class B common stock and Series B preferred stock, convertible corporate notes conversion price, stock options and restricted stock units on the consolidated balance sheets, consolidated statement of operations, consolidated statements of equity and notes to the financial statements. The reverse stock split did not affect the Company's total stockholder's equity, the par value per share or the Company's authorized shares of Class A common stock, Class B common stock, or the Series B preferred stock.

***Cash***

Cash includes cash in bank accounts. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC") up to an insurance limit of $250,000. At times, the Company's cash balances may exceed FDIC limits; although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held.

***Restricted Cash***

Restricted cash consists tenant security deposits and amounts held in escrow accounts by contractual agreement with the Company's lender as part of financial loan covenant requirements.

***Investments in Unconsolidated Entities***

If an entity is not a VIE, our determination of the appropriate accounting method with respect to our investments in limited liability companies and other investments is based on voting control. For our managing member interests in limited liability companies, we are presumed to control (and therefore consolidate) the entity, unless the other limited partners have substantive rights that overcome this presumption of control. These substantive rights allow the limited partners to remove the general partner with or without cause or to participate in significant decisions made in the ordinary course of the entity's business. We account for our non-controlling investments in these entities under the equity method. Our investments in unconsolidated subsidiaries in which we have the ability to exercise significant influence over operating and financial policies, but do not control, or entities which are VIE in which we are not the primary beneficiary are accounted for under the equity method.

The Company uses the hypothetical-liquidation-at-book-value ("HLBV") approach to account for its equity method investments as the capital structure of its equity method investments results in different liquidation rights and priorities than what is reflected by the underlying percentage ownership interests as defined by the equity method agreements. Simply applying the percentage ownership interest to GAAP net income in order to determine earnings or losses does not accurately represent the income allocation and cash flow distributions that will ultimately be received by the investors. Under the equity method, the investor's share of the investee's earnings or loss is calculated by the investor's capital account at the end of the period assuming that the investee was liquidated or sold at book value, plus cash distributions received by the investor during the period, minus the investor's new investments in the investee during the period, and minus the investor's capital account at the beginning of the period assuming that the investee was liquidated or sold at book value. Accordingly, our share of the earnings or loss from these equity-method investments are included in consolidated net income (loss) for the nine months ended September 30, 2022 and 2021.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

Our determination of the appropriate accounting treatment for an investment in a subsidiary requires judgment of several factors including the size and nature of our ownership interest and the other owners' substantive rights to make decisions for the entity. If we were to make different judgments or conclusions as to the level of our control or influence, it could result in a different accounting treatment. Accounting for an investment as either consolidated or using the equity method generally would have no impact on our net income or members' equity in any accounting period, but a different treatment would impact individual income statement and balance sheet items, as consolidation would effectively "gross up" our statement of operations and balance sheet. In addition, under the equity method, impairment losses are recognized upon evidence of other-than-temporary losses of value.

As of September 30, 2022 and December 31, 2021, the carrying amount of our investments in unconsolidated entities was $3.2 million and $2.4 million, respectively. In certain situations, the Company has invested only a nominal amount of cash, or no cash at all, into a venture. As the manager of the venture, we are entitled to 25 – 35% of the residual cash flow produced by the venture after the payment of any priority returns.

***Depreciation and Amortization Expense***

Depreciation and amortization expense includes costs associated with the purchase of furniture and equipment and office leasehold improvements which are recorded at cost. Furniture and equipment costs are depreciated using the straight-line method over the estimated useful life of the asset, generally three to seven years beginning in the first full month the asset is placed in service. Office leasehold improvements are amortized using the straight-line method over the shorter of the respective estimated useful life or the lease term. For the nine months ended September 30, 2022 and 2021, depreciation and amortization expense was $23,000 and $0.1 million.

***Real Estate Assets Held for Sale***

An asset or asset group is classified as held for sale when certain criteria are met including management's approval for sale, the availability of the asset or asset group to be sold in its present condition, and the likelihood of the sale occurring within the next twelve months is probable. At such time, if the asset was being depreciated, depreciation is no longer recognized. Assets held for sale are recorded at the lower of their carrying value, or estimated net realizable value, less costs to sell. The estimates used in the determination of the net realizable value of real estate held for sale are based on known factors to the Company at the time such estimates are made and management's expectations of future operations and economic conditions. Should the estimate or expectations used in determining net realizable value deteriorate in the future, the Company may be required to recognize impairment charges or write-offs related to these real estate assets held for sale. In the event an asset classified as held for sale no longer meets the criteria for held for sale classification the asset is reclassified as held for use at the lower of the fair value or the depreciated basis as if the asset had continued to be used.

***Revenue Recognition***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, management applies the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company's revenues primarily consist of fund management and transaction and advisory fees.

<u>Fund Management</u>

Asset Management Fees are generally based on 1.0% - 1.5% of the unreturned capital contributions in a particular fund and include reimbursement for costs incurred on behalf of the fund, including an allocation of certain overhead costs. Asset management fees are recalculated for each fund on an annual basis. These customer contracts require the partnership to provide management services, representing a performance obligation that the partnership satisfies over time.

Performance allocations ("carried interest") are an arrangement in which we are entitled to an allocation of investment returns, generated within the investment funds which we manage, based on a contractual formula. We typically receive 20% – 35% of all cash distributions from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns range from 6% to 12%, typically 6% for common equity or 10-12% for preferred equity, which does not participate in profits. Performance allocations are related to services which have been provided and are recognized when it is determined that they are no longer probable of significant reversal, which is generally satisfied when an underlying fund investment is realized or sold.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

<u>Transaction and Advisory Fees</u>

Revenues from contracts with customers includes fixed fee arrangements with its related party affiliates to provide certain associated activities which are ancillary to and generally add value to the assets we manage, such as set up and fund formation services associated with marketing, soliciting, and selling member interests in the affiliated limited partnerships, brokerage services, construction and development management services, loan placement and guarantees. The recognition and measurement of revenue is based on the assessment of individual contract terms. For performance obligations satisfied at a point in time, there are no significant judgments made in evaluating when the customer obtains control of the promised service.

For performance obligations satisfied over time, significant judgment is required to determine how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on appropriate measurement of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company's estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company. Revenues are recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Set up services are a one-time fee for the initial formation, administration, and set up of certain private equity real estate fund. These fees are recognized at the point in time when the performance under the contract is complete.

Fund formation fees are earned at a point in time at a fixed rate based on the amount of capital raised into certain managed funds. Services include marketing, offering, registering, and ultimately raising capital.

***Noncontrolling Interests in Consolidated Real Estate Partnerships***

We report the unaffiliated partners' interests in the net assets of our consolidated real estate partnerships as noncontrolling interests within the accompanying condensed consolidated statements of changes in stockholders' equity. Noncontrolling interests consist primarily of equity interests held by limited partners in consolidated real estate partnerships. We generally attribute to noncontrolling interests their share of income or loss of the consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity and partners' capital accounts.

The terms of the partnership agreements generally require the partnerships to be liquidated following the sale of the underlying real estate assets. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of noncontrolling interests. The terms of certain partnership agreements outline differing classes of equity ownership, some of which are redeemable by the partnership at the partnership manager's discretion.

***Related Parties***

In the normal course of business, the Company enters into transactions with related parties. Related parties include affiliates of the entity, entities under common control of the Company, significant stockholders and executive management and members of their immediate families, and other parties that can significantly influence the management and operating policies of the Company.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

***Segment Information***

During 2021, we realigned our operating segments to better reflect the internal management of our business. This realignment demonstrates a strategic shift in the growth and maturation of the Caliber model into an alternative asset manager generating fees from managed capital and growing a portfolio of high value diversified assets. The Company's activities are organized into three operating segments which constitute three reportable segments based on similarities with both their qualitative and economic characteristics. These segments distinguish all of the primary revenue generating activities of the business but group them together by their nature. The Company's chief operating decision maker ("CODM") uses total revenue, operating income and key operating statistics to evaluate performance and allocate resources to the Company's operations. Under this revised structure, the Company's operations are now organized into three reportable segments for management and financial reporting purposes, Fund Management, Development and Brokerage.

Management has concluded that based on the strategic shift in our operating strategies the consolidated investment funds which previously comprised the Hospitality, Residential, Commercial and Diversified segments, no longer meet the requirements in ASC 280, *Segment Reporting*, as operating segments. The consolidated investment funds are consolidated based on the requirement in ASC 810, *Consolidation*, as the Company was determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. The Company's CODM no longer regularly reviews the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds.

The non-reportable segments include certain business activities which do not meet the requirement to be a reportable segment because they are immaterial. These activities represent the operating activity of our single-family assets which involve both the sale and rental of real estate assets. In addition, the Company has not and does not allocate its assets or liabilities specifically to the operating segments and the Company's CODM does not review assets or liabilities by segment to make operating decisions. Assets, liabilities and corporate expenses are recorded at the legal entity level, which is not consistent to the operating segment and is therefore not reported by segment. See Note 10 – Segment Reporting for additional disclosures regarding the Company's segments.

**Accounting Policies of Consolidated Funds**

***Accounting for Real Estate Investments***

Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset acquisition or a business combination. The determination is primarily based on whether the assets acquired, and liabilities assumed meet the definition of a business. The determination of whether the assets acquired, and liabilities assumed meet the definition of a business includes a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired, and liabilities assumed are not considered a business. Most of our consolidated fund acquisitions meet the single or similar asset threshold, due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate assets acquired.

Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. Our consolidated funds allocate the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. Our consolidated funds determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs and other available information and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. Our consolidated funds determine the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition.

If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

***Cost Capitalization and Depreciation***

Our consolidated funds capitalize costs, including certain indirect costs, incurred in connection with their development and construction activities. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with capital addition activities at the asset level. Interest, property taxes and insurance are also capitalized during periods in which redevelopment, development and construction projects are in progress. Capitalization of costs, including certain indirect costs, incurred in connection with our capital addition activities, commence at the point in time when activities necessary to get the assets ready for their intended use are in progress. This includes when assets are undergoing physical construction, as well as when apartment homes are held vacant in advance of planned construction, provided that other activities such as permitting, planning and design are in progress. Our consolidated funds cease the capitalization of costs when the assets are substantially complete and ready for their intended use, which is typically when construction has been completed and apartment homes or other properties are available for occupancy. Cost of ordinary repairs, maintenance and resident turnover are charged to operating expense, as incurred.

Depreciation for all tangible real estate assets is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of our real estate assets are as follows:

Building and building improvements 15 – 40 years <br>Furniture, fixtures, and equipment 3 – 7 years

For the nine months ended September 30, 2022 and 2021, depreciation expense was $6.8 million and $7.9 million, respectively.

***Cash***

Cash includes cash in bank accounts. The consolidated funds deposit cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC") up to an insurance limit of $250,000. At times, cash balances may exceed FDIC limits. Although the consolidated funds bear risk on amounts in excess of those insured by the FDIC, they have not experienced and do not anticipate any losses due to the high quality of the institutions where the deposits are held.

***Restricted Cash***

Restricted cash consists of tenant security deposits and cash reserves required by certain loan agreements for capital improvements and repairs. As improvements and repairs are completed, related costs incurred by the consolidated funds are funded from the reserve accounts. Restricted cash also includes cash held in escrow and lockbox accounts by mortgage companies on behalf of the consolidated funds for seasonality reserves and payment of property taxes, insurance, and interest.

***Deferred Financing Costs***

Deferred financing costs represent costs incurred in connection with obtaining long-term debt and are capitalized and amortized over the term of the related debt obligation using the straight-line method. Capitalized deferred financing costs, net of accumulated amortization, are offset against and included in notes payable, net on the accompanying condensed consolidated balance sheets.

***Consolidated Fund Revenues***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, our consolidated funds apply the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Our consolidated funds' revenues primarily consist of hospitality revenues and rental income.

<u>Consolidated funds – Hospitality revenue</u>

Hospitality revenues are comprised of charges for room rentals, food and beverage sales, and other hotel operating activities. Revenues are recognized as earned, which is defined as the date upon which a guest occupies a room or utilizes the hotel's services. Revenues are recorded net of sales tax.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

Our consolidated funds have performance obligations to provide accommodations and other ancillary services to hotel guests. As compensation for such goods and services, the consolidated funds are typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased. These fees are generally payable at the time the hotel guest checks out of the hotel. The consolidated funds generally satisfy the performance obligations over time and recognize the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied, and the services have been rendered.

For food and beverage, revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the consolidated funds received in exchange for those services, which is generally when payment is tendered at the time of sale.

The consolidated funds receive deposits for events and rooms. Such deposits are deferred and included in other liabilities on the accompanying consolidated balance sheets. The deposits are credited to consolidated funds – hospitality revenue when the specific event takes place.

<u>Consolidated funds – Other revenue</u>

Consolidated funds – other revenue primarily consists of rental revenue of $2.8 million and $2.4 million for the nine months ended September 30, 2022 and 2021, respectively. Rental revenue includes the revenues generated primarily by the rental operations of the residential (multi-family and single-family) properties of our consolidated funds. The consolidated funds' revenues generated by residential properties, consists of rental revenue that each tenant pays in accordance with the terms of each lease and are reported on a straight-line basis over the initial noncancelable term of the lease, net of any concessions, and recognized when earned and collectability is reasonably assured. These revenues are recorded net of any sales and occupancy taxes collected from tenants. Rental revenue is not within the scope of ASC 606 and would fall under ASC 840 — Leases.

In addition, consolidated funds – other revenue consists of $2.1 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively, of interest income generated by a consolidated fund's lending activity. Interest income is recognized on the accrual basis of accounting in accordance with the lending agreements over the term of the respective loan agreement.

***Consolidated Fund Expenses***

Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise related to, our consolidated funds, including, without limitation, operating costs, depreciation and amortization, interest expense on debt held by our consolidated funds, gain on extinguishment of debt, insurance expenses, professional fees and other costs associated with administering and supporting those funds.

***Fair Value of Financial Instruments***

The fair value of financial instruments is disclosed in accordance with ASC 825, *Financial Instruments*. The fair value of our financial instruments is estimated using available market information and established valuation methodologies. The estimates of fair value are not necessarily indicative of the amounts the consolidated funds could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

***Fair Value Measurements***

Fair value measurements and disclosures consist of a three level valuation hierarchy. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the ability to observe the inputs employed in the measurement using market participant assumptions at the measurement date. An asset's or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that
 can be accessed at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 2 – Inputs include quoted prices included within Level 1 that are observable for the
 asset or liability either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must
 be observable for substantially the full term of the asset or liability.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 3 – Unobservable inputs for the asset or liability. These unobservable inputs reflect
 assumptions about what market participants would use to price the asset or liability and are developed based on the best information
 available in the circumstances (which might include the reporting company's own data).

***Recently Issued Accounting Pronouncements***

**<u>Leases</u>**

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended by subsequent ASUs on this topic, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right-of-use asset and a lease liability and the disclosure of key information about the entity's leasing arrangements. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current U.S. GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current U.S. GAAP. The amendments in ASU 2016-02 are effective for the Company for its fiscal year beginning after December 15, 2021, and interim periods in its fiscal year beginning after December 15, 2022, with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption. We are currently evaluating the potential impact the adoption of ASU 2016-02, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

**Note 3 –** **VIEs**

As of each September 30, 2022 and December 31, 2021, the Company's condensed consolidated financial statements included 12 entities consolidated as VIEs. In March 2022, the Company deconsolidated one VIE which sold its investment in a 164-unit apartment complex because the Company was no longer determined to be the primary beneficiary (See Note 4 – Real Estate Investments for additional information). In September 2022, the Company deconsolidated one VIE that is developing a mutli-family property because the Company was no longer determined to be the primary beneficiary upon refinancing the loan agreement. In February 2021, the Company deconsolidated one VIE which owned various single family real estate assets, because the Company was no longer determined to be the primary beneficiary. In November 2021, the Company deconsolidated one VIE which owned a hotel property, because the Company was no longer determined to be the primary beneficiary. We aggregate and report the results of operations of these VIEs in consolidated fund revenues and consolidated fund expenses within the accompanying condensed consolidated statements of operations.

The Company consolidated Northsight Crossing AZ, LLC ("Northsight") in January 2022 and Southpointe Fundco, LLC ("Southpointe") in June 2022 because the Company was determined to be the primary beneficiary as we have the power to direct the activities of Northsight and Southpointe and the right to absorb their losses through its guarantee of their indebtedness which is significant to the fund. The consolidation of Northsight and Southpointe consisted of the following (in thousands):

---

| | |
|:---|:---|
| **Assets** | |
| &nbsp;&nbsp;&nbsp;Total real estate investments, net | $23611 |
| &nbsp;&nbsp;&nbsp;Cash | 233 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 1325 |
| &nbsp;&nbsp;&nbsp;Prepaid and other assets | 748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $25917 |
| **Liabilities** |  |
| &nbsp;&nbsp;&nbsp;Notes payable, net | $15824 |
| &nbsp;&nbsp;&nbsp;Notes payable - related parties | 5301 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 51 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 58 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 7 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 688 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | $21929 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Stockholders' Equity** | 3988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Stockholders' Equity** | $25917 |

---

Management has determined that the equity holders in our consolidated entities, as a group, lack the power to direct the activities that most significantly impact the entity's economic performance and/or have disproportionate voting rights relative to their equity. The Company was determined to be the primary beneficiary of each of these entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual entities.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

Generally, the assets of the individual consolidated VIEs can be used only to settle liabilities of each respective individual consolidated VIEs and the liabilities of the individual consolidated VIEs are liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company. When the VIE is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the consolidated funds on a gross basis, and the interests in the VIEs are included in non-controlling interest in the consolidated financial statements. The Company has provided financial support to certain consolidated VIEs in the form of short-term financing and guarantees of the debts of certain VIEs. In general, our maximum exposure to loss due to involvement with the consolidated VIEs is limited to the amount of capital investment in the VIE, if any, or the potential obligation to perform on the guarantee of debts.

**Note 4 –** **Real Estate Investments**

***Acquisitions by Consolidated Funds***

 ****

During the nine months ended September 30, 2021, the consolidated funds acquired commercial buildings, from a related party, for an aggregate purchase price of $4.9 million with the acquisition being accounted for as an asset acquisition under U.S. GAAP. The allocation of the purchase price amongst the assets acquired at their relative fair value as of the acquisition date, consisted of the following (in thousands):

---

| | |
|:---|:---|
| Real estate investments, at cost |  |
| &nbsp;&nbsp;&nbsp;Land | $1300 |
| &nbsp;&nbsp;&nbsp;Building | 3567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total purchase price of assets acquired | $4867 |

---

***Dispositions by Consolidated Funds***

During the nine months ended September 30, 2022, the consolidated funds sold its investment in a 164-unit apartment complex located in Phoenix, Arizona which was previously held as investments in real estate, classified as held for sale for $31.0 million. The consolidated funds recognized a gain on the disposition of $21.5 million which is included in consolidated funds – gain on sale of real estate investment on the accompanying condensed consolidated statements of operations.

***Held for Sale by Consolidated Funds***

At September 30, 2022, the consolidated funds had $21.8 million of assets, which included commercial real estate investments, classified as held for sale.

At December 31, 2021, the consolidated funds had $9.1 million of assets, which included a multi-family apartment building, classified as held for sale.

**Note 5 –** **Notes Payable**

Notes payable consisted of the following as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable** | **September 30,**<br> **2022** | **December 31,**<br> **2021** | **Interest Rate** | **Maturity date** |
| Payroll Protection Program Loans | $- | $1399 | 1.00% | January 2026 |
| Corporate Notes | 12070 | 3919 | 10.00% - 12.00 | April 2023 - June 2024 |
| Convertible Corporate Notes | 1374 | 1492 | 8.25% | April 2023 |
| **Total Notes Payable** | $13444 | $6810 |  |  |

---

***Payroll Protection Program ("PPP") Loans***

In January 2021, management was granted a PPP loan totaling $1.4 million. The loan is unsecured and has a fixed interest rate of 1.0% and matures in January 2026. The loan allows the Company to prepay the amount plus accrued interest prior to maturity. According to the terms of the PPP, the potential loan forgiveness for all or a portion of the PPP loan are determined, subject to limitations, on the use of loan proceeds over the 8- to 24-weeks after the loan proceeds are disbursed for payment of payroll costs and other eligible expenses. In August 2022, the $1.4 million outstanding PPP loan was forgiven.

***Corporate Notes and Convertible Corporate Notes***

 ****

The Company has entered into multiple general corporate financing arrangements with third parties. The arrangements are generally evidenced in the form of a promissory note, which are secured by the otherwise unencumbered assets of the Company and require monthly or quarterly interest-only payments until maturity. The loans generally have a 12-month term and may be extended upon the mutual agreement of the lender and the borrower. Management believes it can come to a mutual agreement with each lender to extend the maturities of the notes for an additional 12-month term.

As of September 30, 2022, there were 113 individual corporate notes outstanding, with an average outstanding principal balance of $0.1 million, interest rates ranging from 8.25% to 12.00%, with a weighted average interest rate of 10.23%, and maturity dates ranging from April 2023 to June 2024. During the nine months ended September 30, 2022, there were no conversions of debt into common or preferred stock.

As of December 31, 2021, there were 71 individual corporate notes outstanding, with an average outstanding principal balance of $0.1 million, interest rates ranging from 8.25% to 15.00%, with a weighted average interest rate of 10.98%, and maturity dates ranging from January 2022 to December 2022. During the year ended December 31, 2021, there were no conversions of debt into common or preferred stock.

The Company has issued corporate notes with a conversion feature. The conversion price is $4.50 per share of common stock. The holders of the convertible corporate notes can elect to convert all or any portion of the balance at any time. As of September 30, 2022 and December 31, 2021, the value of the conversion feature was zero.

***Future Minimum Payments***

 ****

The following table summarizes the scheduled principal repayments of our indebtedness as of September 30, 2022 (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $- |
| 2023 | 8054 |
| 2024 | 5390 |
| 2025 |  |
| 2026 |  |
| Thereafter | - |
| Total | $13444 |

---

Notes payable of consolidated funds consisted of the following as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Notes Payable** | **September 30, 2022** | **December 31, 2021** | **Interest Rate at<br> September 30, 2022** | **Maturity date** |
| &nbsp;&nbsp;&nbsp;Real Estate Loans |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hampton Inn & Suites Hotel | $6184 | $6345 | 6.12% | July 2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four Points by Sheraton Hotel | 11000 | 11000 | 6.58% | April 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holiday Inn Ocotillo Hotel | 9250 | 9250 | 11.00% | May 2023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Airport Hotel Portfolio | 56470 | 56470 | 6.21% | October 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DoubleTree by Hilton Tucson Convention Center | 18964 | 18980 | 5.32% | August 2027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GC Square Apartments <sup>(1)</sup> |  | 11581 |  | October 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DT Mesa Holdco II, LLC | 5000 | 6015 | 6.60% | Various |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Circle Lofts, LLC | 4909 | 4965 | 5.25% | August 2050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ironwood Fundco, LLC <sup>(2)</sup> |  | 8255 |  | Various |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Northsight Crossings AZ, LLC | 14043 |  | 3.75% | February 2029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Southpointe Fundco, LLC | 1050 | - | 9.99% | June 2023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate Loans | 126870 | 132861 |  |  |
| &nbsp;&nbsp;&nbsp;Payroll Protection Program Loans |  | 3564 |  | Various |
| &nbsp;&nbsp;&nbsp;Economic Injury Disaster Loans | 450 | 450 | 3.75% | June 2050 |
| &nbsp;&nbsp;&nbsp;Revolving Line of Credit |  | 3750 |  | August 2023 |
| &nbsp;&nbsp;&nbsp;Convertible Notes |  | 7620 |  | April 2023 |
| &nbsp;&nbsp;&nbsp;Member Note | 1420 | - | 10.00% | June 2025 |
| **Total Notes Payable** | 128740 | 148245 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred Financing Costs, net | (593) | (856) |  |  |
| **Total Notes Payable, Net** | $128147 | $147389 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) In March 2022,
 GC Square, LLC sold its investment in the multi-family property and paid its existing property loan amount in full. As a result,
 the Company determined it was no longer the primary beneficiary of the fund and therefore the fund was deconsolidated. Refer to Note
 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information
 on the Company's accounting for VIEs.

(2) In September 2022,
 the Company deconsolidated Ironwood Fundco, LLC as the Company was no longer determined to be the primary beneficiary of the fund
 upon refinancing the loan agreement. Refer to Note 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs .

***Real Estate Loans***

<u>Hampton Inn & Suites Hotel</u>

In July 2015, the consolidated fund entered into a $7.3 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Scottsdale, Arizona. The terms of the note require monthly principal and interest payments, with a balloon payment due at maturity The loan bore interest at a fixed annual rate of 4.50% through July 31, 2022, at which time, the interest rate is the Treasury Rate in effect on July 31, 2022 plus 3.00%, or 6.12% through the maturity date in July 2025. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date, subject to a prepayment premium fee. The loan is guaranteed by an individual who is an affiliate of the Company. The terms of the loan agreement include covenant clauses, which requires certain key financial ratios and liquidity be met. As of December 31, 2021, the debt service coverage ratio covenant required by the loan agreement was not satisfied, however, a waiver of the breach of covenant was obtained from the lender. As of September 30, 2022, the loan was in compliance with the required covenants.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

<u>Four Points by Sheraton Hotel</u>

In June 2018, the consolidated fund entered into an $11.0 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Phoenix, Arizona. Upon entering into the loan, $1.6 million of the loan proceeds were placed into reserve accounts to be drawn against and pay for the conversion of hotel rooms (the "Conversion Reserve"), pay for the property improvement plans required by the franchisor (the "PIP Reserve"), and pay interest on the loan (the "Interest Reserve"). As of September 30, 2022 and December 31, 2021, the balance of the Conversion Reserve, PIP Reserve, and Interest Reserves was $1.1 million in aggregate, which is included in restricted cash on the accompanying condensed consolidated balance sheets. Once the Interest Reserve is depleted, the loan continues to require monthly interest-only payments until maturity. The loan is guaranteed by the Company. In December 2021, an agreement was negotiated to extend the maturity of the loan to April 2022. Per the terms of this agreement, the original interest rate terms, which set the interest rate at the greater of 5.75% or 360 LIBOR Rate plus 4.00%, are extended through March 2022 and thereafter 12.0% until maturity. As of the date of this filing, the Company had not repaid the outstanding loan balance and the lender had not declared an event of default. The Company is negotiating with the lender to amend the loan agreement to extend the maturity date of the loan. The lender applied an interest rate of 6.58% to calculate the monthly interest payments for each of the nine months ended September 30, 2022 and for October, November, and December 2022 and the fund has paid all monthly interest incurred at this interest rate through December 2022.

The terms of the loan include, among other things, certain covenants, as defined in the loan agreement, including a debt service coverage ratio ("DSCR") requirement. As of September 30, 2022 and December 31, 2021, the loan was not in compliance with its loan covenants as the hotel property's operating results were below the required DSCR threshold. As of the date of this filing, the lender had not declared an event of default related to the DSCR requirement. As of September 30, 2022, and through the date of this filing, the Company has been in communication with the lender to negotiate an agreement to mitigate any event of default. Compliance with all other covenants was met as of September 30, 2022.

There can be no assurance, but management believes we will be able to come to an agreement with the lender in order to mitigate any events of default and extend the maturity of the loan. Upon occurrence of an event of default, the lender may, at its sole option and in its sole discretion, but is not limited to, demand payment of the outstanding loan balance or commence foreclosure proceedings on the hotel property.

<u>Holiday Inn Ocotillo Hotel</u>

In July 2018, the consolidated fund entered into a $9.3 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Chandler, Arizona. Upon entering into the loan, $0.9 million of the loan proceeds were placed into reserve accounts to be drawn against and pay for operating expenses (the "Operating Reserve"), pay for the property improvement plan required by the franchisor (the "PIP Reserve"), and pay interest on the loan (the "Interest Reserve"). The Interest Reserve and Operating Reserve have a floor of $0.1 million, respectively, where if the balance falls below the floor, the Company is required to fund the reserves back to their original amounts. As of September 30, 2022 and December 31, 2021, the balance held in reserves related to the loan agreement were $0.3 million and $0.2 million, respectively, which are included in restricted cash on the accompanying condensed consolidated balance sheets. The loan requires monthly interest-only payments. In August 2021, the loan agreement was amended and restated with the lender extending the maturity date to August 2022. Per the terms of the restated loan agreement, the interest rate on the loan is equal to 1-month LIBOR plus 6.00%, with a floor rate of 9.00% which increased to 11% in June 2022. In August 2022, the loan agreement was amended and restated with the lender extending the maturity date to May 2023, with an option to extend the maturity date to October 2023 contingent on meeting a minimum net operating income and no event of default, as defined in the agreement, has occurred and is continuing. The amended and restated loan agreement requires the Company to fund an additional $0.2 million to the Interest Reserve. The loan is guaranteed by the Company. As of September 30, 2022, the interest rate on the loan was 11.00%.

<u>Airport Hotel Portfolio</u>

In September 2018, the consolidated fund entered into a $62.2 million portfolio loan. Initial funding of the loan was $56.5 million with the option to receive an additional $5.7 million once certain operating performance thresholds are met. The loan is secured by a deed of trust and assignment of leases and rents of the Airport Hotel Portfolio. The loan has a variable interest rate equal to one-month LIBOR plus 3.75%, resulting in a rate of 6.21% as of September 30, 2022. The loan requires interest-only payments until maturity.

The terms of the loan agreement require an exit fee equal to 0.25% of the original principal amount of the loan at the time the loan is repaid in full. The exit fee of $0.2 million was accrued upon entering into the loan and recorded as a deferred financing cost to be amortized over the life of the loan. The loan is guaranteed by the Company and individuals who are affiliates of the Company.

The terms of the loan include, among other things, certain covenants, as defined in the loan agreement, including a DSCR requirement. The DSCR contains a "cash management" provision that is triggered when the property's operating results are below a certain DSCR threshold. As of June 30, 2020, the testing period, and December 31, 2020, the hotel properties' operational results were below that certain DSCR and certain other required financial covenants were not met. In December 2020, the lender provided notification to management exercising their right under the "cash management" provision, and as such the hotel properties' operating cash is subject to "cash management". In April 2021, the terms of the loan agreement were renegotiated extending the maturity date of the loan to October 2022. Per the terms of the renegotiated loan agreement, $3.2 million was placed into reserve accounts for the payment of debt service, which is included in restricted cash on the accompanying consolidated balance sheets. The terms of the renegotiated loan agreement include a waiver of the breach of covenants at December 31, 2020 and further waives the financial covenants through the loan maturity date. In November 2022, loan agreement was amended with the lender and the first option extends the initial maturity date to November 5, 2022 and the second option extends the first extended maturity date to January 5, 2023, subject to certain terms, conditions and fees. The consolidated fund exercised the options, extending the maturity date to January 5, 2023. In December 2022, the maturity date was extended to January 19, 2023.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

<u>DoubleTree by Hilton Tucson Convention Center Hotel</u>

In August 2019, the consolidated fund entered into a loan agreement with a maximum borrowing amount of $19.0 million, which is secured by a deed of trust and assignment of rents of the DoubleTree by Hilton Tucson Convention Center located in Tucson, Arizona. The loan has a variable interest rate per annum equal to LIBOR plus 2.50% resulting in a rate of 5.32% as of September 30, 2022. The loan requires interest-only payments until September 2022 and principal and interest payments thereafter until maturity. The terms of the loan allow the prepayment of the outstanding balance in whole or in part at any time prior to the maturity date. The terms of the loan include, among other things, certain financial covenants, as defined in the loan agreement, including a DSCR and a loan-to-value requirement. As of September 30, 2022, the loan was in compliance with the required covenants. The loan matures in August 2027 and is guaranteed by the Company.

<u>GC Square Apartments</u>

In October 2020, the consolidated fund entered into an $11.6 million loan which was secured by a deed of trust and assignment of rents of a multi-family property in Phoenix, Arizona. The loan bore interest at a fixed annual rate of 3.125% for the first three years, thereafter, the interest rate was adjusted annually to a rate which is equal to the sum of the highest published prime rate as defined by the agreement and a margin of 0.123% with a floor of 3.125% and a ceiling of 16.0% per year. The maturity date of the loan was October 2028. The loan required interest only payments for the first year and thereafter principal and interest payments as defined by the agreement. The loan agreement contained certain usual and customary restrictions and covenants relating to, among other things, liens, insurance, and other indebtedness. The loan was guaranteed by the Company. At December 31, 2021, amounts held in escrow for the payment of interest and taxes were $0.1 million, which is included in restricted cash on the accompanying condensed consolidated balance sheets. In March 2022, the consolidated fund sold its investment in the multi-family property and paid the loan amount in full.

<u>DT Mesa Holdco II, LLC</u>

In May 2019, the consolidated fund entered into a $1.0 million loan, which was secured by a deed of trust of a commercial building in Mesa, Arizona. The loan had a variable rate per annum equal to prime rate plus 1.00%. The loan required interest-only payments until maturity and the terms of the loan allowed the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. In February 2022, the terms of the loan agreement were renegotiated extending the maturity date of the loan to September 2022. In September 2022, the consolidated fund paid the loan amount outstanding in full.

In November 2019, the consolidated fund entered into a $5.0 million loan secured by the deed of trust of a commercial building in Mesa, Arizona. The loan has a variable interest rate per annum and is the lesser of (i) the three-year federal home loan bank rate plus 2.75% or (ii) the default rate of 5.00%, resulting in a rate of 6.60% as of September 30, 2022. The loan requires interest-only payments until maturity and the terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. In December 2022, the terms of the loan agreement were renegotiated extending the maturity date of the loan to November 2023 from November 2022. The loan is guaranteed by the Company and the terms of the loan include certain financial covenants including a debt service coverage ratio and loan-to-value requirement. As of September 30, 2022, the loan was not in compliance with its debt service coverage ratio requirement based on the operation of the related property. Per the loan agreement, the lender is entitled to declare an event of default unless the Company agrees to partially repay the loan in an amount and on terms satisfactory to the lender. As of September 30, 2022, and through the date of this filing, the Company has been in communication with the lender to negotiate an agreement to mitigate any event of default. There can be no assurance, but management believes we will be able to come to an agreement with the lender in order to mitigate any defaults. Compliance with all other covenants was met as of September 30, 2022.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

<u>Circle Lofts, LLC</u>

In July 2020, the consolidated fund entered into a $5.0 million loan, which is secured by a deed of trust and assignment of rents of a multi-family property located in Scottsdale, Arizona. The loan bears interest at a fixed annual rate of 5.25% until August 1, 2023. On August 1, 2023 and each six months thereafter until the maturity date, the interest rate will be adjusted to a rate which is equal to the sum of the six-month LIBOR and 3.75%. The loan matures in August 2050. The loan requires interest only payments until July 2021 and principal and interest payments thereafter until maturity. The loan amount may be prepaid prior to maturity subject to certain conditions and terms outlined in the agreement which defines the schedule of prepayment premiums based on the timing of the exercise of this option. The loan agreement contains certain usual and customary restrictions and covenants relating to, among other things, liens, insurance, and other indebtedness. The loan is guaranteed by individuals who are affiliates of the Company.

<u>Ironwood Fundco, LLC</u>

In April 2021, the fund entered into a $5.8 million loan, which is secured by a deed of trust and assignment of rents of a property in Scottsdale, Arizona. The loan has a variable rate per annum equal to prime rate plus 1.50%, resulting in a rate of 7.43% as of September 30, 2022. In March 2022, the fund negotiated an agreement extending the maturity date of the loan to November 2022 and in October 2022, the fund negotiated an agreement extending the maturity date of the loan to February 2023. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty.

In April 2021, the consolidated fund entered into a $2.5 million loan (the "2021 Ironwood Loan"), which is secured by a deed of trust and assignment of rents of a property in Scottsdale, Arizona. The 2021 Ironwood Loan had a fixed rate per annum equal to 4.5% and a maturity date in May 2022. In September 2022, the fund refinanced the 2021 Ironwood Loan, repaying the outstanding balance and borrowing $2.4 million (the "2022 Ironwood Loan"). The 2022 Ironwood Loan bears an annual interest rate of 10.99% and matures in September 2023. The terms of the 2022 Ironwood Loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. The 2022 Ironwood Loan is not guaranteed by the Company or any individuals who are affiliates of the Company. During the three months ended September 30, 2022, the Company deconsolidated Ironwood Fundco, LLC as the Company was no longer determined to be the primary beneficiary upon refinancing the loan agreement.

<u>Northsight Crossing AZ, LLC</u>

In January 2022, the consolidated fund entered into an $15.0 million loan which was secured by a deed of trust and assignment of rents of commercial property in Scottsdale, Arizona. Upon entering into the loan, $1.3 million was placed into reserve accounts for tenant improvements, operating expenses and capital expenditures, which are included in restricted cash on the accompanying condensed consolidated balance sheets. The loan bears interest at an annual rate of 3.75% for the first five years, thereafter, the interest rate is adjusted annually to a rate which is equal to the sum of the published prime rate as defined by the agreement and a margin of 0.5% with a floor of 3.75%. The loan matures in February 2029. Except for an annual maximum principal reduction of 20% of the original principal balance, the loan may be prepaid subject to a 1.0% prepayment premium on the outstanding balance at the time of prepayment during the first two years of the loan. The loan agreement contains certain usual and customary restrictions and covenants relating to, among other things, liens, insurance, and other indebtedness and includes a minimum DSCR requirement which begins in 2023. The loan is guaranteed by the Company.

<u>Southpointe Fundco, LLC</u>

In June 2022, the consolidated fund entered into a $1.1 million loan, which is secured by a deed of trust and assignment of rents of a residential development property in Phoenix, Arizona. The loan has a fixed rate per annum equal to 9.99% and matures in June 2023. The terms of the loan allow for a 6-month extension subject to certain conditions per the agreement. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. The loan is guaranteed by an individual who is an affiliate of the Company.

***Payroll Protection Program Loans***

In April 2020, the consolidated funds were granted PPP loans totaling $3.4 million (the "2020 PPP Loans"). During the year ended December 31, 2021, the 2020 PPP Loans were forgiven. In March and April 2021, the consolidated funds were granted a second round of PPP loans totaling $3.6 million (the "2021 PPP Loans", together with the 2020 PPP Loans, the "PPP Loans"). During the nine months ended September 30, 2022, the 2021 PPP Loans were forgiven. The gain recognized on the forgiveness of the PPP Loans is recorded in consolidated funds - hospitality expenses on the accompanying condensed consolidated statements of operations.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

***Economic Injury Disaster Loans***

In June 2020, the consolidated funds were granted Economic Injury Disaster Loans ("EIDL") loans totaling $0.6 million. The loans are secured by the assets of the respective funds and have a fixed interest rate of 3.75 % and mature in June 2050. Principal and interest payments are deferred for the first 12 months of the loans. The loans allow for prepayment of principal plus accrued interest prior to maturity. The loan agreements contain certain usual and customary restrictions and covenants relating to, among other things, insurance, and other indebtedness. In addition, the terms of the loans include a cross-default provision whereby the Small Business Administration ("SBA") may, in its discretion, without notice or demand require immediate payment of all amounts outstanding under the loans.

*R**evolving Line of Credit***

In August 2019, a consolidated fund entered into a revolving line of credit ("LOC") with a maximum borrowing amount of $4.5 million. The LOC is secured by the partnership's assets and is guaranteed by the Company. The LOC has a variable interest rate equal to the greater of (i) Wall Street Journal Prime Rate plus 0.25% per annum or (ii) 4.75%, resulting in a rate of 6.50% as of September 30, 2022. The Company is required to pay a fee of 0.20% of the unused revolving balance. The LOC matured in August 2021. In November 2021, the agreement was amended extending the maturity date of the LOC to August 2022. In August 2022, the agreement was amended extending the maturity date of the LOC to August 2023 and removing certain restrictive covenants. The terms of the LOC include certain financial covenants and as of September 30, 2022 the fund was in compliance with all such covenants.

***Convertible Notes***

The fund, Ironwood Fundco, LLC ("Ironwood"), entered into 10.0% convertible notes with individual investors. The notes have a 12-month term which may be extended an additional 12 months by the fund manager. The notes require monthly or quarterly interest only payments until maturity and may be redeemed by the holder at any time prior to maturity into Class A Units of Ironwood at a post-money valuation determined by the fund manager at the time of conversion. During the three months ended September 30, 2022, the Company deconsolidated Ironwood Fundco, LLC as the Company was no longer determined to be the primary beneficiary upon refinancing the loan agreement. At December 31, 2021, $7.6 million of convertible notes were outstanding and the value of the conversion feature was zero.

***Member Note***

During the nine months ended September 30, 2022, the consolidated fund, Southpointe Fundco, LLC ("Southpointe"), entered into a 10.0% unsecured promissory note with an individual investor. The note matures in June 2025 and may be extended up to two additional twelve month periods by the fund manager. The note requires quarterly interest only payments. The terms of the note allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. At September 30, 2022, the outstanding balance on the note was $1.4 million.

***Future Minimum Payments***

The following table summarizes the scheduled principal repayments of the consolidated funds' indebtedness as of September 30, 2022 (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $72746 |
| 2023 | 11424 |
| 2024 | 1173 |
| 2025 | 8159 |
| 2026 | 1051 |
| Thereafter | 34187 |
| Total | $128740 |

---

***Deferred Financing Costs***

During the nine months ended September 30, 2022 and 2021, amortization of deferred financing costs was $0.4 million and $0.8 million, respectively. There was $0.1 million of deferred financing cost write-offs during the nine months ended September 30, 2022. There were no write-offs during the nine months ended September 30, 2021.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

**Note 6 –** **Related Party Transactions**

***Notes Receivable – Related Parties***

The Company, through its consolidated VIEs, entered into unsecured promissory notes with related parties. The notes mature on various dates through August 2023 and have interest rates of 12.00% per annum. No payments are required prior to the maturity of the notes. The notes may be prepaid in whole, or in part, without penalty. During the nine months ended September 30, 2022 and 2021, the Company earned approximately $2.1 million and $1.5 million, respectively, of interest in connection with the notes, which is included in consolidated funds - other revenue on the accompanying condensed consolidated statements of operations. Less than $5,000 was due from related parties at September 30, 2022. No interest was due from related parties at December 31, 2021. As of September 30, 2022 and December 31, 2021, the outstanding principal balance was $25.2 million and $20.1 million, respectively.

***Fund Management***

The Company manages multiple private equity real estate funds. See Note 2 – Summary of Significant Accounting Policies for detail on our revenues related to Fund Management. In general, the Company generates the following Fund Management revenues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Asset Management Fees
 – We receive an annual asset management fee equal to 1.0% - 1.5% of all the non-affiliate capital contributions related to
 the assets owned by the particular fund to compensate us for the overall administration of that fund. We are also entitled to receive
 reimbursement for certain expenses incurred or paid on behalf of the fund, which may include an allocation of certain administrative
 and overhead costs. During the nine months ended September 30, 2022 and 2021, the Company earned $3.0 million and $1.7 million, respectively,
 of asset management fees from related parties, which are included in asset management fees on the accompanying condensed consolidated
 statements of operations.

· Performance allocations
 – We are entitled to a disproportionate allocation of the income otherwise allocable to the limited partners/members of the
 funds we manage, commonly referred to as carried interest. Generally we receive 20% – 35% of all cash distributions from (i) the
 operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns
 and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real
 estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns
 and repayment of initial preferred capital contributions. Our funds' preferred returns typically range from 6% for common equity
 to 10-12% for preferred equity, which does not participate in profits. During the nine months ended September 30, 2022 and 2021,
 the Company earned $2.5 million and $0.4 million, respectively, of performance allocations from related parties, which are included
 in performance allocations on the accompanying condensed consolidated statements of operations.

· Transaction and
 Advisory Fees – We receive fees for services primarily relating to the set up of certain funds, marketing, offering,
 registering, and selling of equity and debt instruments of the affiliates (collectively, "Fund Formation Fees"), loan
 placement and guarantee fees. During the nine months ended September 30, 2022 and 2021, the Company earned $5.9 million and $1.3
 million, respectively, of transaction and advisory fees from related parties, which are included in transaction and advisory fees on
 the accompanying condensed consolidated statements of operations.

As of September 30, 2022 and December 31, 2021, amounts due to the Company from related parties for fund management services was $6.5 million and $3.9 million, respectively, which are included in due from related parties on the accompanying condensed consolidated balance sheets.

***Development***

The Company provides development related management services to affiliates and third parties, which include ground-up development and repositioning of real estate assets, the build-out of tenant space, the renovation of hospitality, residential, and commercial real estate, and general real estate repair and maintenance services.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

During the nine months ended September 30, 2022 and 2021, the Company recognized $1.8 million and $0.9 million, respectively, of development revenue from related parties, which are included in transaction and advisory fees on the accompanying condensed consolidated statements of operations. As of each September 30, 2022 and December 31, 2021, amounts due to the Company from related parties for development services were $1.4 million, which are included in due from related parties on the accompanying condensed consolidated balance sheets.

***Brokerage***

The Company provides real estate brokerage services related to the purchase, sale and leasing of residential and commercial properties owned by the funds which we manage. During the nine months ended September 30, 2022 and 2021, the Company recognized $0.6 million and $0.9 million, respectively, of brokerage commission revenue from related parties, which are included in transaction and advisory fees on the accompanying condensed consolidated statements of operations. No amounts were due to the Company for brokerage commissions at September 30, 2022 or December 31, 2021.

***Notes Payable – Related Parties***

The Company, through various consolidated VIEs, entered into unsecured promissory notes with related parties. The notes may be repaid in whole, or in part, without penalty. In addition, the Company had a related party unsecured promissory note with a former member of the Company's executive management team that was repaid during the nine months ended September 30, 2022.

The following table summarizes the notes payable – related parties as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable – Related Parties** | **September 30,**<br> **2022** | **December 31, 2021** | **Interest Rate** | **Maturity Date** |
| Former Management | $- | $40 | N/A | December 2023 |
| Caliber Residential Advantage Fund, LP | 365 | 815 | 7.50% | May 2023 |
| **Total Notes Payable – Related Parties** | $365 | $855 |  |  |

---

During the nine months ended September 30, 2022 and 2021, the Company incurred $46,000 and $0.1 million of interest expense in connection with the notes payable – related parties, which is included in interest expense on the accompanying condensed consolidated statements of operations. There was $2,000 of interest payable due to related parties at September 30, 2022 and there was no interest payable due to related parties at December 31, 2021. Management expects to extend the Caliber Residential Advantage Fund, LP note at maturity.

***Notes Payable – Related Parties of consolidated funds***

The following table summarizes the notes payable – related parties of consolidated funds as of September 30, 2022 and December 31, 2021, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable – Related Parties** | **September 30,**<br> **2022** | **December 31,<br> 2021** | **Interest Rate** | **Maturity Date** |
| Roosevelt III HOLDCO, LLC | $2667 | $2400 | 12.00% | March 2023 |
| CDIF, LLC | 1674 | 1415 | 12.00% | May 2023 |
| Caliber Tax Advantaged Opportunity Zone Fund, LP | 5721 | 850<sup>1</sup> | 5.5% - 12.00% | June 2023– December 2023 |
| Caliber Diversified Opportunity Fund II, LP | - | 500<sup>1</sup> | 10.00% | April 2023 |
| **Total Notes Payable – Related Parties** | $10062 | $5165 |  |  |

---

1 Amounts at December 31, 2021 represent notes payable held by a fund that was deconsolidated during the nine months ended September 30, 2022.

During the nine months ended September 30, 2022 and 2021, the consolidated funds incurred $0.7 million and $0.3 million of interest expense in connection with the notes payable – related parties, which is included in consolidated funds – hospitality expenses and consolidated funds – other expenses on the accompanying condensed consolidated statements of operations. Interest payable at September 30, 2022 and December 31, 2021 was $23,000 million and $0.2 million, respectively, which is included in due to related parties on the accompanying condensed consolidated balance sheets.

***Withdrawal Agreement***

In November 2014, the Company entered into an agreement with a former co-manager and member of one of the Company's consolidated subsidiaries which outlined the terms of his resignation as co-manager and assignment of his member interest. In consideration for his resignation as co-manager and assignment of his member interest, the Company agreed to issue 33,029 shares of its common stock to the individual or his designee, provide the individual with construction services at no cost to the individual, as outlined in the agreement, and pay the individual or his designee up to $0.5 million in cash, as outlined in the agreement. The Company issued the 33,029 shares of common stock in April 2015. As of September 30, 2022 and December 31, 2021, $32,000 and $0.1 million, respectively, was due to the former co-manager and member of the Company, which is included in other liabilities on the accompanying condensed consolidated balance sheets.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

***Other***

In the normal course of business, the Company has various amounts due from related parties, including affiliate entities and individuals, for various expenses paid for by the Company on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due from related parties were $0.8 million and $0.3 million, respectively, which are included in due from related parties on the accompanying condensed consolidated balance sheets.

In the normal course of business, the Company has various amounts due to related parties, including affiliated entities and individuals, for various expenses paid for by the affiliates on the Company's behalf and other short-term payment advances. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due to related parties were $22,000 and $0.7 million, respectively, which are included in due to related parties on the accompanying condensed consolidated balance sheets.

***Other – consolidated funds***

In the normal course of business, the consolidated funds have various amounts due from and/or due to related parties, including affiliate entities and individuals, for various expenses paid by the funds on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of September 30, 2022 and December 31, 2021, other amounts due from related parties were $11,000 and $0.2 million, respectively, which are included in due from related parties on the accompanying condensed consolidated balance sheets. As of September 30, 2022 and December 31, 2021, other amounts due to related parties were $0.1 million and $0.2 million, which are included in due to related parties on the accompanying condensed consolidated balance sheets.

**Note 7 – Commitments and Contingencies**

***Legal Matters***

In August 2014, the Company entered into a consulting agreement with Mercadyne Advisors, LLC ("Mercadyne") and 6831614 Manitoba Ltd. ("Manitoba") (collectively, the "Consultants"). Per the agreement, the services to be provided by the Consultants were business consulting related services primarily focused on assisting the Company in accessing capital markets and designing, implementing, and completing a public offering. In exchange for the services, the agreement outlined the Consultants' compensation to include a $25,000 monthly fee paid in cash and a contingently exercisable warrant to purchase a 15.0% equity interest in the Company for an aggregate exercise price of $1,000, exercisable upon the completion of a public offering. The agreement was amended in February 2015, for the purposes of amending the compensation to be a grant of equity rather than a warrant to purchase a 15.0% equity interest in the Company on a fully diluted basis as of the date of the amendment, for a price of $1,000, and to memorialize that all services required to be provided in connection with the agreement had been provided, although a public offering had not been completed. The agreement does not include a stated number of shares of common stock to be issued in exchange for the services provided. In March 2017, the Company and Mercadyne entered into a stock subscription agreement which finalized the number of shares of common stock to be issued to Mercadyne in connection with the consulting agreement and related amendment. The final number of shares issued to Mercadyne in connection with the agreement was 787,927. At the time of the settlement our liability was reduced by $1.1 million, with a corresponding increase to stockholders' equity.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

On January 27, 2020, Manitoba, and its President, filed a complaint in Maricopa County Superior Court in the State of Arizona against the Company and each of the members of its Board of Directors claiming among other things, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment and fraud in the inducement, in connection with the above equity grant. The complaint sought damages in the amount of $10.9 million, but in no event less than $8.1 million, treble damages under the argument that the unissued shares are wages under Arizona law, or, alternatively, specific performance that the Company issue Manitoba 1,296,709 shares of Class A common stock, but in no event less than 966,282 shares. The complaint also sought fees, costs, interest and such other relief as the court deems just and proper. At the Company's urging, a stipulation to place the entire matter into private, binding arbitration before the American Arbitration Association ("AAA") in accord with the parties' prior agreement documentation was executed by counsel for the parties. On March 27, 2020, the Court ordered the parties to AAA arbitration, to be commenced within thirty days of said order. The arbitration commenced and, on May 29, 2020, the respondents submitted their answering statement and counterclaim to the AAA which included the Company's request to submit a dispositive motion on legal issues on which the Company believed it was likely to succeed as a matter of law. Following a March 29, 2021 initial preliminary hearing conference with the arbitration panel in which the panel approved the Company's request to submit the dispositive motion, the Company indeed successfully obtained dismissal of four (4) of the alleged claims brought by the prior consultant, including the claim against it for "treble damages", as well as dismissal of four (4) of the alleged respondent parties, and one of the claimant parties. None of the Company's counterclaims were dismissed. The Company had engaged in and continued to be engaged in ongoing confidential settlement negotiations with Manitoba for settlement of all claims and counterclaims arising from or relating to the facts and circumstances underlying their complaint. In April 2022, Company management determined it was necessary to increase the accrual related to this matter to $3.2 million, as of December 31, 2021. The arbitration hearing on the claims and counterclaims commenced on June 20, 2022.

On June 21, 2022, the Company and Manitoba entered into a confidential settlement agreement providing for dismissal with prejudice of both the AAA Arbitration (No. 01-20-0005-0734) and the underlying complaint filed in Maricopa County Superior Court in the State of Arizona (Case No. CV2020-001299), notification to the court of the settlement, and issuance of an order dismissing the complaint in its entirety, with prejudice, with each party to the complaint to bear their own attorneys' fees and costs. The agreement also provides for the arbitration to be completely dismissed, with prejudice, as well. The principal terms of the settlement are:

&nbsp;&nbsp;&nbsp;&nbsp;· Cash
 payments by Caliber to Manitoba aggregating to a total amount of $525,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The
 issuance of 475,613 shares of Caliber Class A common stock to Manitoba, subject to a Right of First Refusal in favor of Caliber as
 stipulated per the terms of the confidential settlement agreement

&nbsp;&nbsp;&nbsp;&nbsp;· Releases
 by both parties of all claims and discharge of the complaint.

By entering into the settlement, the Company and Manitoba have resolved the complaint to their mutual satisfaction. Caliber has not made any admissions as to the validity of the claims or allegations in the complaint and Manitoba has not made any admissions that any claims or allegations in the complaint lack merit or foundation.

***Environmental Matters***

In connection with the ownership and operation of real estate assets, the Company may potentially be liable for costs and damages related to environmental matters. The Company believes we are in material compliance with current laws and regulations and do not know of any existing environmental condition and has not been notified by any governmental authority of any non-compliance, liability or other claim, in each case, that could result in a material adverse effect on our financial condition or results of operations.

**Note 8 –** **Net Income (Loss) Per Share**

Basic earnings per common share for the nine months ended September 30, 2022 and 2021 are calculated by dividing net income (loss) attributable to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting of stock options and warrants using the treasury stock method, and convertible debt and preferred stock using the if-converted method.

The Company considered the two-class method in calculating the basic and diluted earnings per share for the nine months ended September 30, 2022 and 2021, however, it was determined that there was no impact to the calculation of basic and diluted net income (loss) per share attributable to common stockholders as Class A and Class B Common Stock share in the same earnings and profits, thus, having no impact on the calculation.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

The following table summarizes the Company's calculation of basic and diluted earnings per share attributable to common stockholders during the nine months ended September 30, 2022 and 2021, respectively (in thousands, except per share data):

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2022** | **2021** |
| **Numerator:** |  |  |
| &nbsp;&nbsp;&nbsp; Net income (loss) attributable to CaliberCos Inc. | $4489 | $(256) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Convertible debt interest | 67 | 97 |
| &nbsp;&nbsp;&nbsp; Net income (loss) attributable to common shareholders of CaliberCos Inc. | $4556 | $(159) |
| **Denominator:** |  |  |
| &nbsp;&nbsp;&nbsp; Weighted average shares outstanding – basic | 18033 | 17816 |
| &nbsp;&nbsp;&nbsp; Dilutive shares – options, net | 1663 |  |
| &nbsp;&nbsp;&nbsp; Dilutive shares – convertible debt | 182 | - |
| &nbsp;&nbsp;&nbsp; Weighted average shares outstanding – diluted | 19878 | 17816 |
| Basic net income (loss) per share attributable to common shareholders | $0.25 | $(0.01) |
| Diluted net income (loss) per share attributable to common shareholders | $0.23 | $(0.01) |

---

The number of antidilutive shares during the nine months ended September 30, 2021, consisted of the potential exercise of stock options and potential conversion of convertible debt. The following table summarizes these potential exercises and conversions during the nine months ended September 30, 2021, which have been excluded from the computation of diluted loss per share attributable to common stockholders (in thousands):

---

| | |
|:---|:---|
|  | **Nine Months Ended** <br> **September 30, 2021**  |
| Additional common shares, if stock options were exercised | 1428 |
| Additional common shares, if convertible debt were converted | 197 |
|  | 1625 |

---

**Note 9 – Fair Value of Financial Instruments**

**Fair Value of Financial Instruments Held By Consolidated Funds**

Fair values of financial instruments held by consolidated funds are estimated using available market information and established valuation methodologies. Accordingly, the estimates presented are not necessarily indicative of the amounts the consolidated funds could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

Financial instruments that approximate fair value due to the short-term nature of the instruments consist of cash, restricted cash, accounts receivable, and accounts payable. The fair values of long-term debt, advance key money, and interest rate caps have been estimated based on current rates available for similar instruments with similar terms, maturities, and collateral. The carrying values of the consolidated funds' long-term debt, advance key money, and interest rate caps as of September 30, 2022 and December 31, 2021, approximated fair value, except for the long-term debt instruments listed below, all of which were measured with Level 2 inputs. The estimated fair values for the instruments below were determined based on a discounted future cash-flow model (in thousands).

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **September 30, 2022** | **September 30, 2022** | **December 31, 2021** | **December 31, 2021** |
| <br>**Note Payable** | **Carrying<br> Value** | **Fair Value** | **Carrying<br> Value** | **Fair Value** |
| Hampton Inn & Suites Hotel | $6181 | $4536 | $6345 | $4408 |
| GC Square Apartments<sup>(1)</sup> |  |  | 11581 | 7946 |
| Ironwood Fundco, LLC <sup>(2)</sup> |  |  | 2500 | 2400 |
| Northsight Crossing AZ, LLC | 14428 | 9205 |  |  |
| Southpointe Fundco, LLC | 1050 | 978 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) In March 2022, GC Square, LLC sold its investment in the multi-family property and paid its existing property loan amount in full. As a result, the Company determined it was no longer the primary beneficiary of the fund and therefore the fund was deconsolidated. Refer to Note 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs and Note 5 – Notes Payable for additional information.

(2) In September 2022,
 the Company deconsolidated Ironwood Fundco, LLC as the Company was no longer determined to be the primary beneficiary of the fund
 upon refinancing the loan agreement. Refer to Note 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs and Note 5 – Notes Payable for
 additional information.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

**Note 10 –** **Segment Reporting**

During 2021, we realigned our operating segments to better reflect the internal management of our business. This realignment demonstrates a strategic shift in the growth and maturation of the Caliber model into an alternative asset manager generating fees from managed capital and growing a portfolio of high value diversified assets. Management has concluded that based on the strategic shift in our operating strategies the consolidated investment funds which previously comprised the Hospitality, Residential, Commercial and Diversified segments, no longer meet the requirements in ASC 280, *Segment Reporting*, as operating segments. The consolidated investment funds are consolidated based on the requirement in ASC 810, *Consolidation*, as the Company was determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. Outside of our interests as the manager or general partner of these funds, our benefits in these entities are limited to Caliber's direct membership or partnership interests, if any. The Company's chief operating decision maker ("CODM") no longer regularly reviews the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds. The operating activities, financial results, forecasts or plans for our investment funds are regularly reviewed by our hospitality and real estate asset management managers. The Company's CODM reviews the operating results of our Fund Management, Development and Brokerage operating segments on a monthly basis for the purposes of allocating resources and assessing performance. This review does not include the operating activity of the consolidated funds.

The Company's operations are organized into three operating segments which constitute three reportable segments for management and financial reporting purposes: Fund Management, Development and Brokerage. Each segment is described below:

***Fund Management***

The Fund Management segment represents our fund management activities along with back office and corporate support functions including accounting and human resources. It includes the activities of Caliber Services, LLC and its subsidiaries, ("Caliber Services"), which act as an external manager of our funds that have diversified investment objectives. It also includes the activities associated with Caliber Securities, LLC ("Caliber Securities"), a wholly-owned Arizona registered issuer-dealer, which generates fees from set up services and fund formation. Revenues generated by this segment include asset management fees, performance allocations and transaction and advisory fees, comprised of Fund Formation Fees and loan placement and guarantee fees.

***Development***

The Development segment represents our activities associated with providing real estate development services as their principal developer. These services include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by our funds. Revenues generated by this segment are generally based on 4% of the total expected costs of the development or 4% of the total expected costs of the construction project. Caliber Development, LLC ("Caliber Development"), a wholly-owned subsidiary of Caliber Services and an Arizona licensed general contractor, acts as either the developer, development manager, and/or construction manager on our funds' projects.

***Brokerage***

This segment includes our real estate brokerage operations. The Company generates commission revenue by acting as a broker for residential and commercial real estate owners and investors seeking to buy, sell and/or lease properties, including investment properties, as well as primary residences. The Company provides brokerage services to affiliated entities as well as third parties.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

The information below includes the operating results and measures of profitability for all operating entities which the Company and our chief executive officer, who is our CODM, analyze on a regular basis, for the purposes of allocating resources and assessing performance. The results of each segment are presented on a gross basis, prior to any necessary adjustments to (i) eliminate inter-segment transactions, if any, (ii) eliminate the results of entities that are not included in our accompanying consolidated financial statements, (iii) eliminate revenue activity presented gross when U.S. GAAP requires net, and (iv) reclassify items to reflect U.S. GAAP consolidated presentation.

The following tables present the revenues and net income (loss) of each of our reportable segments for the nine months ended September 30, 2022 and 2021. Consolidated fund revenues and consolidated fund net income (loss) are presented in order to meet the U.S. GAAP requirement to reconcile the total segment revenues to total revenues on the consolidated statement of operations which includes consolidated fund revenues. Interest income, gain on extinguishment of debt, interest expense, depreciation and amortization expense, and other expenses (income) are excluded from our segment presentation as these amounts are immaterial.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** | **Nine Months Ended September 30, 2022** |
|  | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Non-Controlling<br> Interests** | **Eliminations** | |
|  | Fund<br> Management | Development | Brokerage | Total | Consolidated<br> Funds | Intercompany<br> Eliminations |<br>**CaliberCos Inc. &<br> Subsidiaries** |
| **Revenues<sup>1</sup>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $6095 | $- | $- | $6095 | $- | $(3047) | $3048 |
| &nbsp;&nbsp;&nbsp;Performance allocations | 2508 |  |  | 2508 |  |  | 2508 |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 6276 | 2596 | 1221 | 10093 |  | (1832) | 8261 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality revenue |  |  |  |  | 43801 |  | 43801 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Other revenue | - | - | - | - | 4871 | - | 4871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 14879 | 2596 | 1221 | 18696 | 48672 | (4879) | 62489 |
| **Net Income** | $2242 | $1576 | $840 | $4658 | $19270 | $(4878)<sup>2</sup> | $19050 |

---

1 For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP basis because these fees are eliminated in consolidation when they are derived from a consolidated fund.

2 This amount eliminates the intercompany fees and expenses of CaliberCos Inc. and its wholly-owned subsidiaries and our consolidated funds.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** | **Nine Months Ended September 30, 2021** |
|  | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Non-Controlling<br> Interests** | **Eliminations** | |
|  | Fund<br> Management | Development | Brokerage | Total | Consolidated Funds | Intercompany<br> Eliminations |<br>**CaliberCos Inc. &<br> Subsidiaries** |
| **Revenues<sup>1</sup>** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Asset management fees | $4824 | $- | $- | $4824 | $- | $(3118) | $1706 |
| &nbsp;&nbsp;&nbsp;Performance allocations | 396 |  |  | 396 |  |  | 396 |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 1768 | 1615 | 940 | 4323 |  | (1207) | 3116 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality revenue |  |  |  |  | 27021 |  | 27021 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Other revenue | - | - | - | - | 3833 | - | 3833 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 6988 | 1615 | 940 | 9543 | 30854 | (4325) | 36072 |
| **Net (Loss) Income** | $(996) | $(291) | $1061 | $(226) | $(12864) | $(3769)<sup>2</sup> | $(16859) |

---

1 For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP basis because these fees are eliminated in consolidation when they are derived from a consolidated fund.

2 This amount eliminates the intercompany fees and expenses of CaliberCos Inc. and its wholly-owned subsidiaries and our consolidated funds.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO condensed CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)** 

**Note 11 –** **Subsequent Events**

Management has evaluated events and transactions that have occurred after September 30, 2022 through January 19, 2023, the date of this filing. See Note 2 – Summary of Significant Accounting Policies and Note 5 – Notes Payable for a description of significant events and transactions that took place during this period.

![](tm2230806d1_s1aimg007.jpg)

**CaliberCos Inc. and Subsidiaries**

**CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE YEARS ENDED**

**DECEMBER 31, 2021 AND 2020**

**CaliberCos Inc. and Subsidiaries**

**Contents**

---

| | |
|:---|:---|
| [**Report of Independent Registered Public Accounting Firm**](#t_001) | [F-1](#t_001) |
| **Financial Statements** |  |
| [Consolidated Balance Sheets](#c_012) | [F-2 – F-3](#c_012) |
| [Consolidated Statements of Operations](#c_014) | [F-4](#c_014) |
| [Consolidated Statements of Changes in Stockholders' Equity](#c_015) | [F-5](#c_015) |
| [Consolidated Statements of Cash Flows](#c_016) | [F-6 – F-7](#c_016) |
| [**Notes to Consolidated Financial Statements**](#c_017) | [F-8 – F-52](#c_017) |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Stockholders and the Board of Directors of CaliberCos, Inc. and subsidiaries

 **Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of CaliberCos, Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

 **Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Tempe, Arizona<br> August 9, 2022 (September 29, 2022, as to Note 6 and January 19, 2023, as to the effects of the reverse stock split described in Note 2)

We have served as the Company's auditor since 2020.

**CaliberCos Inc. and Subsidiaries**

**Consolidated Balance Sheets**

**(amounts in thousands, except for share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| **Assets** |  |  |
| Cash | $1606 | $1821 |
| Restricted cash | 1000 | 11 |
| Real estate investments, net | 126 | 3215 |
| Real estate assets held for sale | 1816 |  |
| Due from related parties | 5618 | 1300 |
| Investments in unconsolidated entities | 2382 | 1543 |
| Prepaid and Other assets | 1433 | 871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assets of consolidated funds |  |  |
| Cash | 6772 | 4711 |
| Restricted cash | 7154 | 4272 |
| Real estate investments, net | 184472 | 191796 |
| Real estate assets held for sale | 9142 |  |
| Accounts receivable, net | 1215 | 701 |
| Notes receivable - related parties | 20102 | 14641 |
| Due from related parties | 205 | 150 |
| Prepaid and Other assets | 2605 | 2305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $245648 | $227337 |

---

The accompanying notes are an integral part of these consolidated financial statements

**CaliberCos Inc. and Subsidiaries**

**Consolidated Balance Sheets (Continued)**

**(amounts in thousands, except for share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| **Liabilities and Stockholders' Equity** |  |  |
| Notes payable | $6810 | $5940 |
| Notes payable - related parties | 855 | 95 |
| Accounts payable and accrued expenses | 6551 | 3690 |
| Buyback obligation | 12704 | 13021 |
| Due to related parties | 727 | 242 |
| Other liabilities | 867 | 1067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liabilities of consolidated funds |  |  |
| Notes payable, net | 147389 | 140286 |
| Notes payable - related parties | 5165 | 2216 |
| Accounts payable and accrued expenses | 8534 | 6758 |
| Due to related parties | 390 |  |
| Other liabilities | 5963 | 5584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 195955 | 178899 |
| **Commitments and Contingencies** |  |  |
| **Stockholders' Equity** |  |  |
| Preferred stock Series B, $0.001 par value; 12,500,000 shares authorized, 1,650,215 shares and 506,204 shares issued and outstanding as of December 31, 2021 and 2020, respectively |  |  |
| Common stock Class A, $0.001 par value; 100,000,000 shares authorized, 10,428,107 and 10,389,066 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 10 | 10 |
| Common stock Class B, $0.001 par value; 15,000,000 shares authorized, 7,416,413 shares issued and outstanding as December 31, 2021 and 2020, respectively | 7 | 7 |
| Paid-in capital | 29249 | 22051 |
| Less treasury stock, at cost, 206,000 and 134,658 shares repurchased and 3,503,693 and 3,575,035 forward repurchase shares as of December 31, 2021 and 2020, respectively | (13626) | (13626) |
| Accumulated deficit | (24729) | (24780) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' deficit attributable to CaliberCos Inc. | (9089) | (16338) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity attributable to noncontrolling interests | 58782 | 64776 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Stockholders' Equity** | 49693 | 48438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Liabilities and Stockholders' Equity** | $245648 | $227337 |

---

The accompanying notes are an integral part of these consolidated financial statements

**CaliberCos Inc. and Subsidiaries**

**Consolidated Statements of Operations**

**(Amounts in thousands, except per share data)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| **Revenues** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset management fees | $3476 | $2754 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Performance allocations | 733 | 299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transaction and advisory fees | 5666 | 3415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated funds – Hospitality revenue<sup>1</sup> | 40837 | 27676 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated funds – Other revenue<sup>1</sup> | 5321 | 3733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | 56033 | 37877 |
| **Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating Costs | 9685 | 10972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative | 5307 | 2751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketing and Advertising | 1536 | 1086 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 83 | 151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated funds - Hospitality expenses<sup>1</sup> | 55999 | 44718 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated funds - Other expenses<sup>1</sup> | 5532 | 4509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total expenses | 78142 | 64187 |
| Other expenses (income), net | (1653) | (86) |
| Interest income | (1) | (7) |
| Interest expense | 712 | (672) |
| **Net Loss Before Income Taxes** | (21167) | (25545) |
| Provision for (benefit from) income taxes | - | - |
| **Net Loss** | (21167) | (25545) |
| Net loss attributable to noncontrolling interests | (20469) | (20099) |
| **Net Income (Loss) Attributable to CaliberCos Inc.** | $(698) | $(5446) |
| Basic net income (loss) per share attributable to common stockholders | $(0.03) | $(0.32) |
| Diluted net income (loss) per share attributable to common stockholders | $(0.03) | $(0.32) |
| Weighted average common shares outstanding: |  |  |
| Basic | 17824 | 17474 |
| Diluted | 17824 | 17474 |

---

1 See Note 2 – Summary of Significant Accounting Policies and Note 3 - VIEs

The accompanying notes are an integral part of these consolidated financial statements

**CaliberCos Inc. and Subsidiaries**

**Consolidated Statements of Changes in Stockholders' Equity**

**(Amounts in thousands)**

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | **CaliberCos Inc.** | | |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** | | | | | |
|  | | | **Common Stock** | **Common Stock** | **Class A** | **Class A** | **Class B** | **Class B** | | | | | |
|  |<br> **Shares** |<br> **Par Value** | **Shares** | **Par<br> Value** | **Shares** | **Par<br> Value** | **Shares** | **Par<br> Value** |<br> **Paid in Capital** |<br> **Treasury Stock** |<br> **Accumulated Deficit** |<br><br> **Noncontrolling Interests** |<br><br> **Total<br> Stockholders'<br> Equity** |
| Balances as of December 31, 2019 |  | $- |  | $- | 9280 | $9 | 7416 | $7 | $14872 | $(13626) | $(19090) | $28015 | $10187 |
| Issuance of common stock |  |  |  |  | 11 |  |  |  | 35 |  |  |  | 35 |
| Conversion of Series A preferred stock to Class A Common Stock |  |  |  |  | 1232 | 1 |  |  | 3848 |  |  |  | 3849 |
| Issuance of preferred stock | 506 |  |  |  |  |  |  |  | 3406 |  |  |  | 3406 |
| Equity based compensation expense |  |  |  |  |  |  |  |  | (110) |  |  |  | (110) |
| Distribution to preferred stockholders |  |  |  |  |  |  |  |  |  |  | (244) |  | (244) |
| Contributions from noncontrolling interest holders |  |  |  |  |  |  |  |  |  |  |  | 14131 | 14131 |
| Redemptions of noncontrolling interest |  |  |  |  |  |  |  |  |  |  |  | (3720) | (3720) |
| Distributions to noncontrolling interest holders |  |  |  |  |  |  |  |  |  |  |  | (2439) | (2439) |
| Consolidation of VIEs |  |  |  |  |  |  |  |  |  |  |  | 48888 | 48888 |
| Net loss | - | - |  | - | - | - | - | - | - | - | (5446) | (20099) | (25545) |
| Balances as of December 31, 2020 | 506 | $- |  | $- | 10523 | $10 | 7416 | $7 | $22051 | $(13626) | $(24780) | $64776 | 48438 |
| Issuance of preferred stock | 1144 |  |  |  |  |  |  |  | 7174 |  |  |  | 7174 |
| Issuance of common stock |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Equity based compensation expense |  |  |  |  |  |  |  |  | 24 |  |  |  | 24 |
| Contributions from noncontrolling interest holders |  |  |  |  |  |  |  |  |  |  |  | 24983 | 24983 |
| Redemptions of noncontrolling interest holders |  |  |  |  |  |  |  |  |  |  |  | (7108) | (7108) |
| Distributions to noncontrolling interest holders |  |  |  |  |  |  |  |  |  |  |  | (3907) | (3907) |
| Consolidation of VIE |  |  |  |  |  |  |  |  |  |  |  | (34) | (34) |
| Deconsolidation of VIEs |  |  |  |  |  |  |  |  |  |  | 942 | 541 | 1483 |
| Other |  |  |  |  |  |  |  |  |  |  | (193) |  | (193) |
| Net (loss) income | - | - |  | - | - | - | - | - | - | - | (698) | (20469) | (21167) |
| Balances as of December 31, 2021 | 1650 | $- |  | $- | 10523 | $10 | 7416 | $7 | $29249 | $(13626) | $(24729) | $58782 | $49693 |

---

The accompanying notes are an integral part of these consolidated financial statements

**CaliberCos Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows**

**(amounts in thousands)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| **Cash Flows From Operating Activities** |  |  |
| Net loss | $(21167) | $(25545) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 83 | 146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation | 24 | (110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on the disposition of real estate | (450) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on extinguishment of debt |  | (1399) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate assets held for sale | (3082) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | (4318) | 3835 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | (562) | 681 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 2861 | (19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 485 | (859) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (200) | (32) |
| Adjustments to reconcile net loss to net cash used in operating activities of consolidated funds: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 10402 | 7886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on the disposition of real estate |  | (122) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on extinguishment of debt | (3416) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on retirement of real estate assets |  | 458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of advanced key money | (75) | (75) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of above-market ground lease | (110) | (125) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 1009 | 1216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities of consolidated funds: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (651) | 1231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | (71) | (68) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | (589) | 366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 1791 | (2411) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 2314 | (208) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 707 | (615) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (15015) | (15769) |
| **Cash Flows From Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of real estate assets held for sale | 1877 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate assets | (110) | (209) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in unconsolidated entities | (839) | (171) |
| **Cash Flows From Investing Activities of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidation of VIE | 790 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deconsolidation of VIE | (408) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in real estate assets | (9311) | (6368) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of real estate assets | (4867) | (2869) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funding of notes receivable - related party | (7661) | (3670) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment received of notes receivable - related party | 6215 | 3619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (14314) | (9668) |

---

The accompanying notes are an integral part of these consolidated financial statements

**CaliberCos Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows (Continued)**

**(amounts in thousands)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| **Cash Flows From Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable | 1400 | 1399 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable | (530) | (1225) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable - related parties | (2160) | (65) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the issuance of preferred stock | 7174 | 3406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the issuance of common stock |  | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of treasury stock - buyback obligation | (317) | (291) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends to preferred stockholders |  | (244) |
| **Cash Flows From Financing Activities of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital lease payments |  | (133) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of deferred financing costs | (648) | (432) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable | 21342 | 26417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable | (8460) | (16222) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable - related parties | (6617) | (1076) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable - related parties | 9894 | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contributions from noncontrolling interest holders | 24983 | 14131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redemptions of noncontrolling interests | (7108) | (3720) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions to noncontrolling interest holders | (3907) | (2439) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 35046 | 19561 |
| **Net Increase (Decrease) in Cash and Restricted Cash** | 5717 | (5876) |
| **Cash and Restricted Cash at Beginning of Period** | 10815 | 16691 |
| **Cash and Restricted Cash at End of Period** | $16532 | $10815 |

---

---

| | | |
|:---|:---|:---|
| **Reconciliation of Cash and Restricted Cash** |  |  |
| &nbsp;&nbsp;&nbsp;Cash at beginning of period | $6532 | $11832 |
| &nbsp;&nbsp;&nbsp;Restricted cash at beginning of period | 4283 | 4859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash at beginning of period | 10815 | 16691 |
| &nbsp;&nbsp;&nbsp;Cash at end of period | 8378 | 6532 |
| &nbsp;&nbsp;&nbsp;Restricted cash at end of period | 8154 | 4283 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and restricted cash at end of period | $16532 | $10815 |

---

The accompanying notes are an integral part of these consolidated financial statements

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 – Organization, Liquidity and Impact of COVID-19**

***Organization***

CaliberCos Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, the "Company", "Caliber", "we", "our", and "us"), is an alternative asset manager of private syndication and direct investment real estate funds. and provider of a full suite of traditional real estate services. The Company was formed in November 2014, and originally began as Caliber Companies, LLC, an Arizona limited liability company, which commenced operations in January 2009. We also provide various support services to the investments we manage including fund formation services, lending support, construction and development management, and real estate brokerage. Our business is organized into three reportable segments Fund Management, Development, and Brokerage. As of December 31, 2021, we had operations in Alaska, Arizona, Colorado, Nevada and Utah.

In general, our private equity real estate funds are organized as operating partnerships, in which multiple unrelated passive investors own partnership interests. In addition, we are designated as the manager and/or general partner of the partnership. Depending on the legal structure and arrangements between us and the funds, we may or may not consolidate the partnerships for financial reporting purposes. For funds in which we are determined to be the controlling party or primary beneficiary for financial reporting purposes, the fund is consolidated, and the passive investors' ownership is presented as noncontrolling interest in the accompanying consolidated financial statements. For funds in which we are not determined to be the controlling party for financial reporting purposes, the fund is not consolidated, and any fees earned from the fund are included in fund management revenue in the accompanying consolidated financial statements. See Note 2 – Summary of Significant Accounting Policies for more detail.

In December 2019, the Company filed a Form 1-A related to a Regulation A offering ("Reg A+ Offering"). A Reg A+ Offering is an exemption to the securities registration requirement found in the Securities Act of 1933 which allows private companies to make exempt public offerings of up to $50 million in securities, as required by the Jumpstart Our Business Startups Act. Concurrently with the Reg A+ Offering, the Company entered into an agreement with SI Securities, LLC regarding the Company's proposed offering of Series B preferred stock ("Series B") convertible into Class A common stock pursuant to the Reg A+ Offering. In January and February 2020, the Company made amendments to and refiled its Form 1-A to its Reg A+ Offering. The offering was subsequently qualified by the Securities and Exchange Commission ("SEC") in February 2020 and June 2020. See Note 13 – Preferred Stock for additional details relating to our Series B offered through the Reg A+ Offering.

***Liquidity***

The Company, through guarantees of loans held by its consolidated funds, has eight separate loans outstanding with maturity dates within the 12-month period subsequent to when these financial statements were issued with outside lenders totaling $94.7 million at December 31, 2021. Management is actively managing the potential amendments to the applicable loan agreements to include additional extension options, pay off or refinancing of these facilities. Management believes that we will be able to enter into new financing arrangements with third-party lenders. See Note 6 – Notes Payable for additional details.

***Impact of COVID-19***

The Company continues to operate its business through the COVID-19 pandemic, including recent variants, and has taken steps to manage the effect of the pandemic on our corporate business and on the assets we manage which include, but are not limited to: (i) implementation of remote work arrangements, which has not had a material effect on our ability to maintain our business operations; (ii) suspending/deferring any unnecessary capital improvements to our assets, unless for fire, life and safety; (iii) reducing food and beverage operations, within our hotels, in accordance with government regulations; (iv) furloughing any non-essential employees; (v) participating in the Paycheck Protection Plan program ("PPP"); and (vi) having constant communications with lenders to receive additional facilities, convert current reserves into operational reserves and suspend the minimum debt service coverage ratio requirements, when applicable, for a 12-month period.

The overall impact of COVID-19 will depend on the length of time that the pandemic continues, its effect on demand drivers for our investments, the extent to which it affects our ability to raise capital into our investment products, and the effect of governmental regulations imposed in response to the pandemic. Due to these uncertainties, the Company's accounting estimates may change, as management's assessment of the impacts of the COVID-19 pandemic continues to evolve.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 – Summary of Significant Accounting Policies**

**Accounting Policies of the Company**

***Basis of Presentation and Consolidation***

The accompanying consolidated financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries, which include variable interest entities ("VIEs") where we are considered the primary beneficiary and voting interest entities ("VOEs"), where we have determined that we have a controlling financial interest, under the "Consolidations" Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") (Topic 810). The equity and net income or loss attributable to noncontrolling interests in subsidiaries is shown separately in the accompanying consolidated balance sheets, statements of operations, and statements of changes in stockholders' equity. All intercompany balances and transactions have been eliminated in consolidation.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Variable Interest Entities</u>

We determine if an entity is a VIE based on several factors, including whether the equity holders, as a group, lack the characteristics of a controlling financial interest. We make judgments regarding which types of activities most significantly impact the entity's economic performance first on a qualitative analysis, then a quantitative analysis, if necessary. We analyze any investments in VIEs to determine if we are the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE.

Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative analysis focused on identifying which reporting entity has both (i) the power to direct the activities of the entity that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgement. We consolidate any VIE for which we are the primary beneficiary and disclose significant VIEs of which we are not the primary beneficiary, as well as disclose our maximum exposure to loss related to the VIEs that are consolidated. See Note 3 – VIEs for more detail.

<u>Voting Interest Entities</u>

Entities that do not qualify as VIEs are generally assessed for consolidation as VOEs. For VOEs, we consolidate the entity if we have a controlling financial interest in the entity. We have a controlling financial interest in a VOE if (i) for legal entities other than partnerships, we own a majority voting interest in the entity or, for limited partnerships and similar entities, we own a majority of the entity's kick-out rights through voting limited partnership interests and (ii) non-controlling shareholders or partners do not hold substantive participating rights, and no other conditions exist that would indicate that we do not control the entity.

***Use of Accounting Estimates***

***Reclassification***

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications also did not have any impact on our balance sheet, statement of changes in stockholders' equity, or statement of cash flows. In addition, during 2021 the Company realigned our operating segments to better reflect the internal management of our business based on a change to the way our chief operating decision maker monitors performance, aligns strategies, and allocates resources.

These consolidated financial statements and related footnotes, including prior year financial information, are presented to reflect the new reportable segments. The groupings on the accompanying consolidated statements of operations now segregate the consolidated fund revenues and expenses, which are also included in noncontrolling interest. These changes in presentation did not impact total revenues, total expenses, or net loss. See Note 2 – Summary of Significant Accounting Policies – Segment Information and Note 3 – VIE's for additional information.

On January 17, 2023, the Company's board of directors approved an amendment to its certificate of incorporation to effect a 1-for-1.6820384 reverse stock split of Class A common stock, Class B common stock and Series B preferred stock. The reverse stock split was effected on January 17, 2023. Certain prior period amounts have been updated to reflect the reverse stock split including share and per share amounts, additional paid-in capital, Class A common stock, Class B common stock and Series B preferred stock, convertible corporate notes conversion price, stock options and restricted stock units on the consolidated balance sheets, consolidated statement of operations, consolidated statements of equity and notes to the financial statements. The reverse stock split did not affect the Company's total stockholder's equity, the par value per share or the Company's authorized shares of Class A common stock, Class B common stock, or the Series B preferred stock. The Company evaluated subsequent events through (i) August 9, 2022, the date on which the financial statements were originally issued, (ii) September 29, 2022 as to Note 6, and (iii) January 19, 2023, the date on which the retrospectively revised financial statements were issued giving effect to the reverse stock split.

***Cash***

Cash includes cash in bank accounts. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC") up to an insurance limit of $250,000. At times, the Company's cash balances may exceed FDIC limits. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held.

***Restricted Cash***

Restricted cash consists of held in escrow accounts by contractual agreement with the Company's lender as part of financial loan covenant requirements.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Investments in Unconsolidated Entities***

If an entity is not a VIE, our determination of the appropriate accounting method with respect to our investments in limited liability companies and other investments is based on voting control. For our managing member interests in limited liability companies, we are presumed to control (and therefore consolidate) the entity, unless the other limited partners have substantive rights that overcome this presumption of control. These substantive rights allow the limited partners to remove the general partner with or without cause or to participate in significant decisions made in the ordinary course of the entity's business. We account for our non-controlling investments in these entities under the equity method. Our investments in unconsolidated subsidiaries in which we have the ability to exercise significant influence over operating and financial policies, but do not control, or entities which are VIE in which we are not the primary beneficiary are accounted for under the equity method.

The Company uses the hypothetical-liquidation-at-book-value ("HLBV") approach to account for its equity method investments as the capital structure of its equity method investments results in different liquidation rights and priorities than what is reflected by the underlying percentage ownership interests as defined by the equity method agreements. Simply applying the percentage ownership interest to GAAP net income in order to determine earnings or losses does not accurately represent the income allocation and cash flow distributions that will ultimately be received by the investors. Under the equity method, the investor's share of the investee's earnings or loss is calculated by the investor's capital account at the end of the period assuming that the investee was liquidated or sold at book value, plus cash distributions received by the investor during the period, minus the investor's new investments in the investee during the period, and minus the investor's capital account at the beginning of the period assuming that the investee was liquidated or sold at book value. Accordingly, our share of the earnings or loss from these equity-method investments are included in consolidated net loss for the years ended December 31, 2021 and 2020.

Our determination of the appropriate accounting treatment for an investment in a subsidiary requires judgment of several factors including the size and nature of our ownership interest and the other owners' substantive rights to make decisions for the entity. If we were to make different judgments or conclusions as to the level of our control or influence, it could result in a different accounting treatment. Accounting for an investment as either consolidated or using the equity method generally would have no impact on our net income or members' equity in any accounting period, but a different treatment would impact individual income statement and balance sheet items, as consolidation would effectively "gross up" our statement of operations and balance sheet. In addition, under the equity method, impairment losses are recognized upon evidence of other-than-temporary losses of value.

As of December 31, 2021 and 2020, the carrying amount of our investments in unconsolidated entities was $2.4 million and $1.5 million, respectively. In certain situations, the Company has invested only a nominal amount of cash, or no cash at all, into a venture. As the manager of the venture, we are entitled to 25 – 35% of the residual cash flow produced by the venture after the payment of any priority returns.

***Depreciation and Amortization Expense***

Depreciation expense includes costs associated with the purchase of furniture and equipment and office leasehold improvements which are recorded at cost. Furniture and equipment costs are depreciated using the straight-line method over the estimated useful life of the asset, generally three to seven years beginning in the first full month the asset is placed in service. Office leasehold improvements are amortized using the straight-line method over the shorter of the respective estimated useful life or the lease term. For the years ended December 31, 2021 and 2020, depreciation expense was $0.1 and $0.2 million, respectively.

***Impairment of Long-Lived Assets***

Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is determined to not be recoverable. If events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted net future cash flows resulting from the use of the asset, excluding interest charges. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset.

For the years ended December 31, 2021 and 2020, the Company did not record an impairment loss related to its real estate and other long-lived assets.

***Real Estate Assets Held for Sale***

An asset or asset group is classified as held for sale when certain criteria are met including management's approval for sale, the availability of the asset or asset group to be sold in its present condition, and the likelihood of the sale occurring within the next twelve months is probable. At such time, if the asset was being depreciated, depreciation is no longer recognized. Assets held for sale are recorded at the lower of their carrying value, or estimated net realizable value, less costs to sell. The estimates used in the determination of the net realizable value of real estate held for sale are based on known factors to the Company at the time such estimates are made and management's expectations of future operations and economic conditions. Should the estimate or expectations used in determining net realizable value deteriorate in the future, the Company may be required to recognize impairment charges or write-offs related to these real estate assets held for sale. In the event an asset classified as held for sale no longer meets the criteria for held for sale classification the asset is reclassified as held for use at the lower of the fair value or the depreciated basis as if the asset had continued to be used.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Concentration of Credit Risk***

Substantially all of the Company's revenues are generated from the management, ownership and/or operations of real estate assets located in Alaska, Arizona, Colorado, Nevada, and Utah. The Company mitigates the associated risk by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· diversifying our investments
 in real estate assets across multiple asset types, including office, hospitality, single-family, multi-family, and self-storage properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· diversifying our investments
 in real estate assets across multiple geographic locations including different markets and sub-markets in which our real estate assets
 are located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· diversifying our investments
 in real estate assets across assets at differing points of stabilization, and in varying states of cash flow optimization; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· maintaining financing relationships
 with a diversified mix of lenders (differing size and type), including large national banks, local community banks, private equity
 lenders, and insurance companies.

***Mezzanine Equity***

The Company may issue one or more series of preferred stock. Preferred stock, which is subject to mandatory redemption by the Company, is presented as temporary, or mezzanine equity, and presented separate from permanent equity on the accompanying consolidated balances sheets. The Series A Preferred Stock ("Series A") were mandatorily redeemable at a fixed price on a fixed or determinable date. Series A contained a conversion option which allowed the holder to convert the Series A into Class A common stock of the Company at any time prior to redemption. As a result, the Company concluded that the Series A would not meet the characteristics of being mandatorily redeemable until the conversion option expired. Accordingly, the Series A were presented as mezzanine equity on the accompanying consolidated balance sheets. In April 2020, the Company converted the outstanding shares of Series A to shares of Class A common stock, and as such as of December 31, 2020 no shares of Series A remained outstanding. See Note 12 – Stockholders' Equity and Share-Based Payments and Note 13 – Preferred Stock for more detail relating to preferred stock.

***Noncontrolling Interests in Consolidated Real Estate Partnerships***

We report the unaffiliated partners' interests in the net assets of our consolidated real estate partnerships as noncontrolling interests within the accompanying consolidated statements of changes in stockholders' equity. Noncontrolling interests consist primarily of equity interests held by limited partners in consolidated real estate partnerships. We generally attribute to noncontrolling interests their share of income or loss of the consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity and partners' capital accounts.

The terms of the partnership agreements generally require the partnerships to be liquidated following the sale of the underlying real estate assets. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of noncontrolling interests. The terms of certain partnership agreements outline differing classes of equity ownership, some of which are redeemable by the partnership at the partnership manager's discretion.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Revenue Recognition***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, management applies the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. The Company's revenues primarily consist of fund management and transaction and advisory fees.

<u>Fund Management</u>

Asset Management Fees are generally based on 1.0% - 1.5% of the unreturned capital contributions in a particular fund and include reimbursement for costs incurred on behalf of the fund, including an allocation of certain overhead costs. Asset management fees are recalculated for each fund on an annual basis. These customer contracts require the partnership to provide management services, representing a performance obligation that the partnership satisfies over time.

Performance allocations ("carried interest") are an arrangement in which we are entitled to an allocation of investment returns, generated within the investment funds which we manage, based on a contractual formula. We typically receive 20% – 35% of all cash distributions from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns range from 6% to 12%, typically 6% for common equity or 10-12% for preferred equity, which does not participate in profits. Performance allocations are related to services which have been provided and are recognized when it is determined that they are no longer probable of significant reversal, which is generally satisfied when an underlying fund investment is realized or sold.

<u>Transaction and Advisory Fees</u>

Revenues from contracts with customers includes fixed fee arrangements with its related party affiliates to provide certain associated activities which are ancillary to and generally add value to the assets we manage, such as set up and fund formation services associated with marketing, soliciting, and selling member interests in the affiliated limited partnerships, brokerage services, construction and development management services, loan placement and guarantees. The recognition and measurement of revenue is based on the assessment of individual contract terms. For performance obligations satisfied at a point in time, there are no significant judgments made in evaluating when the customer obtains control of the promised service.

For performance obligations satisfied over time, significant judgment is required to determine how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on appropriate measurement of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company's estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company. Revenues are recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Set up services are a one-time fee for the initial formation, administration, and set up of the private equity real estate fund. These fees are recognized at the point in time when the performance under the contract is complete.

Fund formation fees are earned over time as equity capital is raised into our managed funds in proportion to the total capital specified in the related contract. Effective with the partnering with a third-party managing broker during the first quarter of 2020, fund formation fees are earned at a point in time at a fixed rate based on the amount of capital raised into our managed funds. Services include marketing, offering, registering, and ultimately raising capital.

***Accounts Receivable***

Accounts receivable primarily consists of reimbursable expenses from third-party development projects. The Company continually reviews receivables and determines collectability by taking into consideration the history of past write-offs, collections, current credit conditions, payment history, and the financial condition of the related third-party service providers. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for doubtful accounts. Amounts that are determined to be uncollectible with a high degree of certainty are written-off through bad debt expense, which is included in Operating costs on the accompanying consolidated statements of operations. The Company did not record an allowance for doubtful accounts as of December 31, 2021. As of December 31, 2020, the allowance for doubtful accounts was $0.2 million.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Earnings Per Share***

Basic earnings per share attributable to common stockholders is computed by dividing net income (loss) attributable to the Company less dividends on Series A by the weighted average number of shares outstanding during each period. The computation of diluted income (loss) per share attributable to common stockholders further assumes the potential dilutive effect of potential common shares, which includes common shares, consisting of (a) stock options and warrants using the treasury stock method, and (b) convertible debt and preferred stock using the if-converted method. To the extent the inclusion of potential common shares is anti-dilutive, the potential common shares are excluded from the computation of diluted income (loss) per share attributable to common stockholders. See Note 14 – Net Income (Loss) Per Share for the calculation of earnings per share.

***Related Parties***

In the normal course of business, the Company enters into transactions with related parties. Related parties include affiliates of the entity, entities under common control of the Company, significant stockholders and executive management and members of their immediate families, and other parties that can significantly influence the management and operating policies of the Company.

***Income Taxes***

The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, *Accounting for Income Taxes*. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance is required to reduce the balance of a deferred tax asset if it is determined that it is more-likely-than-not that all or some portion of the deferred tax asset will not be realized due to the lack of sufficient taxable income or other limitation on the Company's ability to utilize the loss carryforward.

We recognize the impact of an income tax position, if that position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 9 – Income Taxes for more detail.

***Share-Based Payments***

The Company has granted stock to non-employees in non-capital raising transactions as compensation for services provided. For stock grants to non-employees, the fair value of the share-based payment is determined based upon the measurement date fair value. The measurement date may be either (i) the date at which a performance commitment is reached or (ii) the date at which the necessary performance to earn the equity instruments is complete. The fair value of the Company's common stock grants is estimated using market factors, such as the current private market selling price of the Company's common stock at the measurement date, depending on the terms of each arrangement. Non-employee share-based payment charges are recognized based on the terms of each arrangement, and share-based payment charges are generally recognized as the related service is provided. The average vesting period is four years.

***Share-Based Compensation***

In July 2017, the Company's Board of Directors approved the 2017 Incentive Stock Plan (the "2017 Plan"), which was amended in June 2018 to authorize the issuance of up to 5.0 million shares of common stock. In June 2018, the Company's Board of Directors approved and issued approximately 1.8 million employee stock options to existing employees. The total stock options outstanding as of December 31, 2021 and 2020, was 2.1 million, respectively. The total restricted stock units outstanding as of December 31, 2021 was 0.4 million. No restricted stock units were outstanding as of December 31, 2020.

The Company estimates the fair value of stock options using the Black-Scholes valuation model, which requires certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, and the expected term of stock option awards. Management elected to recognize forfeitures as they occur pursuant to ASU 2016-09, *Compensation — Stock Compensation*. As a result, no forfeiture rate was assumed. The fair value of restricted stock units is based on the fair value of the Company's common stock at the date of grant.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Segment Information***

During 2021, we realigned our operating segments to better reflect the internal management of our business. This realignment demonstrates a strategic shift in the growth and maturation of the Caliber model into an alternative asset manager generating fees from managed capital and growing a portfolio of high value diversified assets. The Company's activities are organized into three operating segments which constitute three reportable segments based on similarities with both their qualitative and economic characteristics. These segments distinguish all of the primary revenue generating activities of the business but group them together by their nature. The Company's chief operating decision maker uses total revenue, operating income and key operating statistics to evaluate performance and allocate resources to the Company's operations. Under this revised structure, the Company's operations are now organized into three reportable segments for management and financial reporting purposes, Fund Management, Development and Brokerage.

Management has concluded that based on the strategic shift in our operating strategies the consolidated investment funds which previously comprised the Hospitality, Residential, Commercial and Diversified segments, no longer meet the requirements in ASC 280, *Segment Reporting*, as operating segments. The consolidated investment funds are consolidated based on the requirement in ASC 810, *Consolidation*, as the Company was determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. The Company's chief operating decision maker no longer regularly reviews the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds.

The non-reportable segments include certain business activities which do not meet the requirement to be a reportable segment because they are immaterial. These activities represent the operating activity of our single-family assets which involve both the sale and rental of real estate assets. In addition, the Company has not and does not allocate its assets or liabilities specifically to the operating segments and the Company's chief operating decision maker does not review assets or liabilities by segment to make operating decisions. Assets, liabilities and corporate expenses are recorded at the legal entity level, which is not consistent to the operating segment and is therefore not reported by segment. See Note 16 – Segment Reporting for additional disclosures regarding the Company's segments.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Accounting Policies of Consolidated Funds**

***Accounting for Real Estate Investments***

Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset acquisition or a business combination. The determination is primarily based on whether the assets acquired, and liabilities assumed meet the definition of a business. The determination of whether the assets acquired, and liabilities assumed meet the definition of a business includes a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired, and liabilities assumed are not considered a business. Most of our consolidated fund acquisitions meet the single or similar asset threshold, due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate assets acquired.

Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. Our consolidated funds allocate the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. Our consolidated funds determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs and other available information and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition. Our consolidated funds determine the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third-party valuation specialists, depending upon the circumstances of the acquisition.

If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.

***Cost Capitalization and Depreciation***

Our consolidated funds capitalize costs, including certain indirect costs, incurred in connection with their development and construction activities. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with capital addition activities at the asset level. Interest, property taxes and insurance are also capitalized during periods in which redevelopment, development and construction projects are in progress. Capitalization of costs, including certain indirect costs, incurred in connection with our capital addition activities, commence at the point in time when activities necessary to get the assets ready for their intended use are in progress. This includes when assets are undergoing physical construction, as well as when apartment homes are held vacant in advance of planned construction, provided that other activities such as permitting, planning and design are in progress. Our consolidated funds cease the capitalization of costs when the assets are substantially complete and ready for their intended use, which is typically when construction has been completed and apartment homes or other properties are available for occupancy. Cost of ordinary repairs, maintenance and resident turnover are charged to operating expense, as incurred.

Depreciation for all tangible real estate assets is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of our real estate assets are as follows:

Building and building improvements 15 – 40 years <br> Furniture, fixtures, and equipment 3 – 7 years

For the years ended December 31, 2021 and 2020, depreciation expense was $10.4 million and $7.8 million, respectively.

***Impairment of Long-Lived Assets***

Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is determined to not be recoverable. If events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted net future cash flows resulting from the use of the asset, excluding interest charges. If the carrying amount exceeds the aggregate undiscounted future cash flows, our consolidated funds recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset.

For the years ended December 31, 2021 and 2020, our consolidated funds did not record an impairment loss related to its real estate and other long-lived assets.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Cash***

Cash includes cash in bank accounts. The consolidated funds deposit cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC") up to an insurance limit of $250,000. At times, cash balances may exceed FDIC limits. Although the consolidated funds bear risk on amounts in excess of those insured by the FDIC, they have not experienced and do not anticipate any losses due to the high quality of the institutions where the deposits are held.

***Restricted Cash***

Restricted cash consists of tenant security deposits and cash reserves required by certain loan agreements for capital improvements and repairs. As improvements and repairs are completed, related costs incurred by the consolidated funds are funded from the reserve accounts. Restricted cash also includes cash held in escrow accounts by mortgage companies on behalf of the consolidated funds for payment of property taxes, insurance, and interest.

***Advance Key Money***

Our consolidated funds have entered into certain arrangements in which hotel franchisors or their affiliates have provided the consolidated funds with financing as part of a franchise arrangement. The consolidated funds have been advanced funds upon entering into a franchise agreement and are not required to repay the funds as long as the franchise agreement is not terminated prior to its scheduled maturity. The potential amount of funds that would be required to be repaid decreases with the passage of time. The consolidated funds record a liability equal to the initial amount of funds received, which is amortized over the term of the franchise agreement and recorded as a reduction of franchise fee expense, which is included in Consolidated fund expenses in the accompanying consolidated statements of operations.

***Deferred Financing Costs***

Deferred financing costs represent costs incurred in connection with obtaining long-term debt and are capitalized and amortized over the term of the related debt obligation using the straight-line method. Capitalized deferred financing costs, net of accumulated amortization, are offset against and included in Notes payable, net on the accompanying consolidated balance sheets.

***Consolidated Fund Revenues***

In accordance with the ASC 606, *Revenue from Contracts with Customers*, our consolidated funds apply the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Our consolidated funds' revenues primarily consist of hospitality revenues and rental income.

<u>Consolidated funds – Hospitality revenue</u>

Hospitality revenues are comprised of charges for room rentals, food and beverage sales, and other hotel operating activities. Revenues are recognized as earned, which is defined as the date upon which a guest occupies a room or utilizes the hotel's services. Revenues are recorded net of sales tax.

Our consolidated funds have performance obligations to provide accommodations and other ancillary services to hotel guests. As compensation for such goods and services, the consolidated funds are typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased. These fees are generally payable at the time the hotel guest checks out of the hotel. The consolidated funds generally satisfy the performance obligations over time and recognize the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied, and the services have been rendered.

For food and beverage, revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the consolidated funds received in exchange for those services, which is generally when payment is tendered at the time of sale.

The consolidated funds receive deposits for events and rooms. Such deposits are deferred and included in Other liabilities on the accompanying consolidated balance sheets. The deposits are credited to Consolidated funds – Hospitality revenue when the specific event takes place.

**CALIBERCOS INC. AND SUBSIDIARIES** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Consolidated funds – Other revenue</u>

Included in Consolidated funds – Other revenue is rental revenue of $3.3 million and $2.6 million as of December 31, 2021 and 2020, respectively. Rental revenue includes the revenues generated primarily by the rental operations of the residential (multi-family and single-family) properties of our consolidated funds. The consolidated funds' revenues generated by residential properties, consists of rental revenue that each tenant pays in accordance with the terms of each lease and are reported on a straight-line basis over the initial noncancelable term of the lease, net of any concessions, and recognized when earned and collectability is reasonably assured. These revenues are recorded net of any sales and occupancy taxes collected from tenants. Rental revenue is not within the scope of ASC 606 and would fall under ASC 840 — Leases.

***Consolidated Fund Expenses***

Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise related to, our consolidated funds, including, without limitation, operating costs, depreciation and amortization, interest expense on debt held by our consolidated funds, insurance expenses, professional fees and other costs associated with administering and supporting those funds.

***Accounts Receivable***

Accounts receivable primarily consists of amounts due from guests or groups for hotel rooms and services provided by the hotel properties. Accounts receivable also include due, but unpaid, rental payments. Our consolidated funds continually review receivables and determines collectability by taking into consideration the history of past write-offs, collections, current credit conditions, tenant payment history, the financial condition of the tenants, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, our consolidated funds will record an increase in the allowance for doubtful accounts. Amounts that are determined to be uncollectible with a high degree of certainty are written-off through bad debt expense, which is included in Other expenses, net on the accompanying consolidated statements of operations. Our consolidated funds did not record an allowance for doubtful accounts as of December 31, 2021 and 2020.

***Interest Rate Caps***

Our consolidated funds utilize interest rate caps, derivative financial instruments, to reduce interest rate risk. Our consolidated funds do not hold or issue derivative financial instruments for trading purposes. Accounting and reporting standards for derivative instruments and hedging activities require the consolidated funds to recognize all derivatives as either assets or liabilities on the consolidated balance sheets and measure those instruments at fair value. Changes in the fair value of those instruments are reported in earnings or other comprehensive income (loss) depending on the use of the derivative and whether it qualifies for hedge accounting. The accounting for gains and losses associated with changes in the fair value of the derivative and the effect on the financial statements will depend on its hedge designation and whether the hedge is highly effective in achieving offsetting changes in the fair value of cash flows of the asset or liability hedged. As of December 31, 2021 and 2020, the consolidated funds' interest rate caps were estimated to have fair values (Level 2) equal to zero. See Note 6 – Notes Payable for more detail.

***Fair Value of Financial Instruments***

The fair value of financial instruments is disclosed in accordance with ASC 825, *Financial Instruments*. The fair value of our financial instruments is estimated using available market information and established valuation methodologies. The estimates of fair value are not necessarily indicative of the amounts the consolidated funds could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

***Fair Value Measurements***

Fair value measurements and disclosures consist of a three level valuation hierarchy. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the ability to observe the inputs employed in the measurement using market participant assumptions at the measurement date. An asset's or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 1 – Inputs
 are quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 2 – Inputs
 include quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the
 asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the
 asset or liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 3 – Unobservable
 inputs for the asset or liability. These unobservable inputs reflect assumptions about what market participants would use to price
 the asset or liability and are developed based on the best information available in the circumstances (which might include the reporting
 company's own data).

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***<u>Recent Accounting Pronouncements</u>***

**<u>Leases</u>**

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended by subsequent ASUs on this topic, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right-of-use asset and a lease liability and the disclosure of key information about the entity's leasing arrangements. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current U.S. GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current U.S. GAAP. The amendments in ASU 2016-02 are effective for the Company for its fiscal year beginning after December 15, 2021, and interim periods in its fiscal year beginning after December 15, 2022, with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption. We are currently evaluating the potential impact the adoption of ASU 2016-02, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

**<u>Investments – Equity Securities</u>**

In January 2020, the FASB issued ASU 2020-01, *Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force)*, which clarify that an entity should consider observable transactions when determining to apply or discontinue the equity method for the purposes of applying the measurement alternative. The amendments also clarify that an entity would not consider whether a purchased option would be accounted for under the equity method when applying ASC 815-10-15-141(a). The amendments in ASU 2020-01 are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years and should be applied prospectively. Early adoption is permitted. We are currently evaluating the potential impact the adoption of ASU 2020-01, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**<u>Debt</u>**

In August 2020, the FASB issued ASU 2020-06, *Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own Equity (Subtopic 815-40)*, which simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock, removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and also simplifies the diluted earnings per share calculation in certain areas. The amendments in ASU 2020-06 are effective for the Company for reporting periods beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-06, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

***Recent Accounting Pronouncements Adopted***

**<u>Financial Instruments</u>**

In June 2016, the FASB issued an update ASU 2016-13, *Measurement of Credit Losses on Financial Instruments establishing Accounting Standards Codification ("ASC") Topic 326, Financial Instruments – Credit Losses ("ASC 326")*, as amended by subsequent ASUs on the topic. ASU 2016-13 changes how entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current "incurred loss" model with an "expected loss" model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the financial asset. In May 2019, the FASB issued ASU 2019-05 *Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief*, which allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that were previously recorded at amortized cost and are within the scope of ASC Subtopic 326-20 if the instruments are eligible for the fair value option under ASC Subtopic 825-10, *Financial Instruments*. In November 2019, the FASB issued ASU 2019-10, *Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)*, which amends the effective date of the update. The amendments in these updates are effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and applied using a modified-retrospective approach, with certain exceptions. The guidance in ASU 2016-13, as amended, was adopted as of January 1, 2021 and did not result in a cumulative-effect adjustment in retained earnings and did not have a material impact on the consolidated financial statements.

**Note 3 – VIEs**

As of December 31, 2021 and 2020, the Company's accompanying consolidated financial statements included 13 and 14 entities, respectively, all of which are consolidated as VIEs ("consolidated funds"). In February 2021, the Company deconsolidated one VIE which owned various single family real estate assets, because the Company was no longer determined to be the primary beneficiary. In November 2021, the Company deconsolidated one VIE which owned a hotel property, because the Company was no longer determined to be the primary beneficiary. We aggregate and report the results of operations of these VIEs in Consolidated fund revenues and Consolidated fund expenses within the accompanying consolidated statements of operations through the date of deconsolidation.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

For the year ended December 31, 2021, the Company began consolidating Ironwood Fundco, LLC ("Ironwood") in April 2021, because the Company was determined to be the primary beneficiary. The increase in assets, liabilities, and stockholders' equity as a result of the consolidation of Ironwood consisted of the following (in thousands):

---

| | |
|:---|:---|
| **Assets of consolidated fund** |  |
| &nbsp;&nbsp;&nbsp;Real estate investments, net | $14936 |
| &nbsp;&nbsp;&nbsp;Cash | 400 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 390 |
| &nbsp;&nbsp;&nbsp;Prepaid and other assets | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets of consolidated fund** | $15742 |
| **Liabilities of consolidated fund** |  |
| &nbsp;&nbsp;&nbsp;Notes payable, net | $8195 |
| &nbsp;&nbsp;&nbsp;Notes payable - related parties | 7510 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities of consolidated fund** | $15707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Stockholders' Equity of consolidated fund** | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Stockholders' Equity of consolidated fund** | $15742 |

---

For the year ended December 31, 2020, the Company began consolidating Caliber Fixed Income Fund III, LP ("CFIF III") in June 2020, Circle Lofts, LLC ("Circle Lofts") in July 2020 and TCC Inv Fund I, LLC ("TCC") in September 2020, because the Company was determined to be the primary beneficiary. The consolidation of CFIF III, Circle Lofts and TCC consisted of the following (in thousands):

---

| | |
|:---|:---|
| **Assets of consolidated funds** |  |
| &nbsp;&nbsp;&nbsp;Real estate investments, net | $47748 |
| &nbsp;&nbsp;&nbsp;Cash | 2604 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 49 |
| &nbsp;&nbsp;&nbsp;Due from related parties | 130 |
| &nbsp;&nbsp;&nbsp;Notes receivable - related parties | 34493 |
| &nbsp;&nbsp;&nbsp;Prepaid and other assets | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets of consolidated funds** | $85093 |
| **Liabilities of consolidated funds** |  |
| &nbsp;&nbsp;&nbsp;Notes payable, net | $16274 |
| &nbsp;&nbsp;&nbsp;Notes payable - related parties | 14882 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 2941 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 2380 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 238 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities of consolidated funds** | $36751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Stockholders' Equity of consolidated funds** | 48342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Stockholders' Equity of consolidated funds** | $85093 |

---

Management has determined that the equity holders in our consolidated entities, as a group, lack the power to direct the activities that most significantly impact the entity's economic performance and/or have disproportionate voting rights relative to their equity. The Company was determined to be the primary beneficiary of each of these entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual entities.

Generally, the assets of the individual consolidated VIEs can be used only to settle liabilities of each respective individual consolidated VIEs and the liabilities of the individual consolidated VIEs are liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company. When the VIE is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the consolidated funds on a gross basis, and the interests in the VIEs are included in non-controlling interest in the consolidated financial statements. The Company has provided financial support to certain consolidated VIEs in the form of short-term financing and guarantees of the debts of certain VIEs. In general, our maximum exposure to loss due to involvement with the consolidated VIEs is limited to the amount of capital investment in the VIE, if any, or the potential obligation to perform on the guarantee of debts.

See Note 11 – Commitments and Contingencies for additional information related to the commitments and contingencies of these VIEs.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 4 – Real Estate Investments**

***Dispositions***

During the year ended December 31, 2021, the Company sold four single-family homes, which included two single family homes sold to related parties, previously held as investments in real estate for $1.9 million, resulting in a gain on the dispositions of $0.5 million, which is included on the accompanying consolidated statements of operations in Other income.

***Held for Sale***

As of December 31, 2021, the Company had $1.8 million of assets which included one single-family home and land, previously held as investments in real estate, classified as held for sale. As of December 31, 2020, the Company had no assets classified as held for sale.

***Asset Acquisitions by Consolidated Funds***

During the year ended December 31, 2021, the consolidated funds acquired commercial buildings, from a related party, for an aggregate purchase price of $4.9 million with the acquisition being accounted for as an asset acquisition under U.S. GAAP. The allocation of the purchase price among the assets acquired at their relative fair value as of the acquisition date, consisted of the following for the year ended December 31, 2021 (in thousands):

---

| | |
|:---|:---|
|  | **December 31, 2021** |
| Real estate investments, at cost |  |
| &nbsp;&nbsp;&nbsp;Land | $1300 |
| &nbsp;&nbsp;&nbsp;Building | 3567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total purchase price of assets acquired | $4867 |

---

During the year ended December 31, 2020, the consolidated funds acquired a commercial building, from a related party, for a purchase price of $2.9 million, with the acquisition being accounted for as an asset acquisition under U.S. GAAP. The allocation of the purchase price among the assets acquired at their relative fair values as of the acquisition date, consisted of the following (in thousands):

---

| | |
|:---|:---|
|  | **December 31, 2020** |
| Real estate investments, at cost |  |
| &nbsp;&nbsp;&nbsp;Land | $415 |
| &nbsp;&nbsp;&nbsp;Building | 2454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total purchase price of assets acquired | $2869 |

---

***Investments in Real Estate Assets by Consolidated Funds***

During the years ended December 31, 2021 and 2020, the consolidated funds had $9.3 million and $6.6 million, respectively, of capital improvements to real estate investments.

***Dispositions by Consolidated Funds***

For the year ended December 31, 2021, there were no dispositions made by the consolidated funds. For the year ended December 31, 2020, the consolidated funds sold three separate single-family homes previously held as investments in real estate for $0.5 million, resulting in a gain on the dispositions of $0.1 million, which is included in Consolidated funds - Other expenses on the accompanying consolidated statements of operations.

***Held for Sale by Consolidated Funds***

For the year ended December 31, 2021, the consolidated funds reclassified $9.1 million in assets which included a multi-family apartment building, previously classified as investments in real estate, to held for sale. As of December 31, 2020, the consolidated funds had no assets classified as held for sale.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 5 – Prepaid and Other Assets**

Prepaid and other assets consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Prepaid Expenses | $356 | $163 |
| Accounts receivable, net | 58 | 69 |
| Deposits | 43 | 346 |
| Costs in excess of billings | 207 | 274 |
| Inventory | 9 | 9 |
| Other assets | 7 | 10 |
| Pursuit costs | 753 | - |
| &nbsp;&nbsp;&nbsp;Total prepaid and other assets | $1433 | $871 |

---

Prepaid and other assets of the consolidated funds consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Prepaid Expenses | $1024 | $711 |
| Deposits | 681 | 227 |
| Deferred franchise fees, net | 416 | 527 |
| Intangibles, net |  | 252 |
| Inventory | 120 | 74 |
| Other assets | 20 | 514 |
| Pursuit costs | 344 | - |
| &nbsp;&nbsp;&nbsp;Total prepaid and other assets | $2605 | $2305 |

---

**Note 6 – Notes Payable**

Notes payable consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | | |
| <br>**Notes Payable** | **2021** | **2020** |<br>**Interest Rate** | <br>**Maturity date** |
| Corporate Notes | $3919 | $4183 | 10.00% - 15.00% | January - December 2022 |
| Convertible Corporate Notes | 1492 | 1757 | 8.25% | January - December 2022 |
| Payroll Protection Program Loans | 1399 | - | 1.00% | January 2026 |
| **Total Notes Payable** | $6810 | $5940 |  |  |

---

***Corporate Notes and Convertible Corporate Notes***

The Company has entered into multiple general corporate financing arrangements with third parties. The arrangements are generally evidenced in the form of a promissory note, which are secured by the otherwise unencumbered assets of the Company and require monthly or quarterly interest-only payments until maturity. The loans generally have a 12-month term and may be extended upon the mutual agreement of the lender and the borrower. The Company has issued corporate notes with a conversion feature. The conversion price is $4.50 per share of common stock. The holders of the convertible corporate notes can elect to convert all or any portion of the balance at any time. As of December 31, 2021 and December 31, 2020, the value of the conversion feature was zero.

As of December 31, 2021, there were 77 individual corporate notes outstanding, with an average outstanding principal balance of $0.1 million, interest rates ranging from 8.25% to 15.00%, with weighted average interest rate of 10.98%, and maturity dates ranging from January 2022 to December 2022. During the year ended December 31, 2021, there were no conversions of debt into common stock.

As of December 31, 2020, there were 84 individual corporate notes outstanding, with an average outstanding principal balance of $0.1 million, interest rates ranging from 8.25% to 15.00%, with a weighted average interest rate of 10.90%, and maturity dates ranging from January 2021 to December 2021. During the year ended December 31, 2020, there were no conversions of debt into common stock.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Payroll Protection Program Loans***

In April 2020, management was granted a PPP loan totaling $1.4 million. The loan was unsecured and had a fixed interest rate of 1.0 % and a maturity in April 2022. The loan allowed the Company to prepay the amount plus accrued interest prior to maturity. In November 2020, the $1.4 million outstanding PPP loan was forgiven. The gain recognized on the forgiveness of the loan is recorded in Interest expense on the consolidated statements of operations.

In January 2021, management was granted a PPP loan totaling $1.4 million. The loan is unsecured and has a fixed interest rate of 1.0 % and matures in January 2026. The loan allows the Company to prepay the amount plus accrued interest prior to maturity. According to the terms of the PPP, the potential loan forgiveness for all or a portion of the PPP loan are determined, subject to limitations, on the use of loan proceeds over the 8- to 24-weeks after the loan proceeds are disbursed for payment of payroll costs and other eligible expenses. Management believes it has used the proceeds from its PPP loan for purposes consistent with the PPP terms and has submitted applications for forgiveness under this program. In August 2022, the $1.4 million outstanding PPP loan was forgiven.

***Future Minimum Payments***

The following table summarizes the scheduled principal repayments of our indebtedness as of December 31, 2021 (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $5411 |
| 2023 |  |
| 2024 |  |
| 2025 |  |
| 2026 | 1399 |
| Total | $6810 |

---

Notes payable of the consolidated funds consisted of the following as of December 31, 2021 and 2020, respectively (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Notes Payable** | **December 31, 2021** | **December 31, 2020** | **Interest Rate** | **Maturity date** |
| &nbsp;&nbsp;&nbsp;Real Estate Loans |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hampton Inn & Suites Hotel | $6345 | $6556 | 4.50% | July 2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four Points by Sheraton Hotel | 11000 | 11000 | 6.58% | April 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holiday Inn Ocotillo Hotel | 9250 | 9250 | 8.00% | August 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hilton Tucson East Hotel |  | 14000 | 8.50% | November 2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Airport Hotel Portfolio | 56470 | 56470 | 5.75% | October 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DoubleTree by Hilton Tucson Convention Center | 18980 | 12993 | 2.61% | August 2027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GC Square Apartments | 11581 | 11600 | 3.13% | October 2028 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DT Mesa Holdco II, LLC | 6015 | 5292 | Variable | Various |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Circle Lofts, LLC | 4965 | 5000 | 5.25% | August 2050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ironwood Fundco, LLC | 8255 |  | Various | May 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Caliber Residential Advantage Fund LP | - | 826 | 5.41% | January 2024 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Real Estate Loans | 132861 | 132987 |  |  |
| &nbsp;&nbsp;&nbsp;Payroll Protection Program Loans | 3564 | 3416 | 1.00% | Various |
| &nbsp;&nbsp;&nbsp;Economic Injury Disaster Loans | 450 | 600 | 3.75% | June 2050 |
| &nbsp;&nbsp;&nbsp;Revolving Line of Credit | 3750 | 4500 | 4.75% | August 2022 |
| &nbsp;&nbsp;&nbsp;Convertible Notes | 7620 | - | 10.00% | April 2023 |
| **Total Notes Payable** | 148245 | 141503 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred Financing Costs, net | (856) | (1216) |  |  |
| **Total Notes Payable, Net** | $147389 | $140287 |  |  |

---

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Real Estate Loans***

<u>Hampton Inn & Suites Hotel</u>

In July 2015, the consolidated fund entered into a $7.3 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Scottsdale, Arizona. The terms of the note require monthly principal and interest payments, with a balloon payment due at maturity. The loan has a fixed interest rate of 4.50% and matures in July 2025. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date, subject to a prepayment premium fee. The loan is guaranteed by an individual who is an affiliate of the Company. The terms of the loan agreement include covenant clauses, which requires certain key financial ratios and liquidity be met. In June 2020 and August 2020, the terms of the loan agreement were renegotiated temporarily removing certain covenants and payment requirements through November 2020. As of December 31, 2020, the debt service coverage ratio and liquidity covenants required by the loan agreement were not satisfied, however, a waiver of the breach of covenant was obtained from the lender. As of December 31, 2021, the debt service coverage ratio covenant required by the loan agreement was not satisfied, however, a waiver of the breach of covenant was obtained from the lender.

<u>Four Points by Sheraton Hotel</u>

In June 2018, the consolidated fund entered into an $11.0 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Phoenix, Arizona. Upon entering into the loan, $1.6 million of the loan proceeds were placed into reserve accounts to be drawn against and pay for the conversion of hotel rooms (the "Conversion Reserve"), pay for the property improvement plans required by the franchisor (the "PIP Reserve"), and pay interest on the loan (the "Interest Reserve"). At December 31, 2021, the balance of the Conversion Reserve, PIP Reserve, and Interest Reserves was $1.1 million, all of which is included in Restricted cash on the accompanying consolidated balance sheets. Once the Interest Reserve is depleted, the loan continues to require monthly interest-only payments until maturity. The loan matures in December 2021 and the loan terms allow for the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date. In December 2021, an agreement was negotiated to extend the maturity of the loan to April 2022. Per the terms of this agreement, the original interest rate terms are extended through March 2022 and thereafter 12.0% until maturity. As of December 31, 2021, the interest rate was the greater of 5.75% or 360 LIBOR Rate plus 4.00%, resulting in an interest rate of 6.58%. As of the date of this filing, the Company had not repaid the outstanding loan balance and the lender had not declared an event of default. The Company is negotiating with the lender to amend the loan agreement to extend the maturity date of the loan.

The terms of the loan include, among other things, certain covenants, as defined in the loan agreement, including a debt service coverage ratio ("DSCR") requirement. As of December 31, 2021 and December 31, 2020, the loan was not in compliance with its loan covenants as the hotel property's operating results were below the required DSCR threshold. As of the date of this filing, the lender had not declared an event of default related to the DSCR requirement. As of December 31, 2021, and through the date of this filing, the Company has been in communication with the lender to negotiate an agreement to mitigate any event of default. Compliance with all other covenants was met as of December 31, 2021. The loan is guaranteed by the Company.

There can be no assurance, but management believes we will be able to come to an agreement with the lender in order to mitigate any events of default. Upon occurrence of an event of default, the lender may, at its sole option and in its sole discretion, but is not limited to, demand payment of the outstanding loan balance or commence foreclosure proceedings on the hotel property.

<u>Holiday Inn Ocotillo Hotel</u>

In July 2018, the consolidated fund entered into a $9.3 million loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Chandler, Arizona. Upon entering into the loan, $0.9 million of the loan proceeds were placed into reserve accounts to be drawn against and pay for operating expenses (the "Operating Reserve"), pay for the property improvement plan required by the franchisor (the "PIP Reserve"), and pay interest on the loan (the "Interest Reserve"). The Interest Reserve and Operating Reserve have a floor of $0.1 million, respectively, where if the balance falls below the floor, the Company is required to fund the reserves back to their original amounts. At December 31, 2021 and December 31, 2020, the balance held in reserves related to the loan agreement were $0.2 million, respectively, which are included in Restricted cash on the accompanying consolidated balance sheets. The loan requires monthly interest-only payments. In June 2020, an option to extend the original maturity date of the loan to August 2021 was exercised and paid a fee in the amount of $0.1 million was paid. In August 2021, the loan agreement was amended and restated with the lender extending the maturity date to August 2022. Per the terms of the restated loan agreement, the interest rate on the loan is equal to 1-month LIBOR plus 6.00%, with a floor rate of 8.00%, resulting in a rate of 8.00% as of December 31, 2021. The floor rate increases, per the terms of the agreement, to 9.00% in March 2022 and to 11.00% in June 2022. The loan is guaranteed by the Company. In September 2022, the loan agreement was amended and restated with the lender extending the maturity date to May 2023, with an option to extend the maturity date to October 2023 contingent on meeting a minimum net operating income and no event of default, as defined in the agreement, has occurred and is continuing. The amended and restated loan agreement requires the Company to fund an additional $0.2 million to the Interest Reserve.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Hilton Tucson East Hotel</u>

In July 2018, the consolidated fund entered into a $14.0 million loan with a lender. The loan is secured by a deed of trust and assignment of leases and rents of the Hilton Tucson. The interest rate on the loan has a fixed rate of 8.50%. The loan requires monthly interest-only payments. In June 2020, an option to extend the original maturity date of the loan ("first extension period") was exercised and paid a fee was paid in the amount of $0.1 million. In December 2020, upon the expiration of the first extension period an agreement was negotiated to extend the maturity of the loan to June 2021 and a fee of $0.1 million was paid in January 2021, the effective date of the agreement. In July 2021 an agreement was negotiated to extend the maturity of the loan to December 2021 ("second extension period"). Per the terms of this agreement an interest reserve of $0.4 million was required to be deposited with the lender and a principal reduction payment of $4.6 million was made. The terms of the loan allow the Company to prepay the outstanding balance in whole or in part at any time prior to the maturity date, subject to a prepayment premium fee.

In December 2021, the consolidated fund paid the remaining $9.4 million loan in full and entered into a new $12.0 million loan which is secured by a deed of trust and assignment of rents of the Hilton Tucson. The interest rate on the loan has a fixed rate of 6.25% and requires interest-only payments for the first 18 months and principal and interest payments thereafter. The terms of the loan allow the prepayment of the outstanding balance in whole or in part at any time prior to the maturity date, subject to a prepayment premium fee of 2% of the prepaid principal balance in the first year of the loan and a 1% of the prepaid principal balance thereafter. Upon the closing of the loan $1.0 million of the loan proceeds were placed into an interest reserve account. The terms of the loan include, among other things, certain covenants, as defined in the loan agreement, including a DSCR requirement which commence in December 2023. The loan matures in November 2025. As of December 2021, the Company determined it was no longer the primary beneficiary of the fund, as the Company is not the guarantor of the debt and therefore the fund was deconsolidated. Refer to Note 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs.

<u>Airport Hotel Portfolio</u>

In September 2018, the consolidated fund entered into a $62.2 million portfolio loan. Initial funding of the loan was $56.5 million with the option to receive an additional $5.7 million once certain operating performance thresholds are met. The loan is secured by a deed of trust and assignment of leases and rents of the Airport Hotel Portfolio. The loan has a variable interest rate equal to one-month LIBOR plus 3.75%, resulting in a rate of 5.75% as of December 31, 2021. The loan requires interest-only payments until maturity and matures in October 2021 with options to extend the maturity date up to two additional years, subject to certain terms, conditions and fees. The terms of the loan agreement require an exit fee equal to 0.25% of the original principal amount of the loan at the time the loan is repaid in full. The exit fee of $0.2 million was accrued upon entering into the loan and recorded as a deferred financing cost to be amortized over the life of the loan. The loan is guaranteed by the Company and individuals who are affiliates of the Company.

The terms of the loan include, among other things, certain covenants, as defined in the loan agreement, including a DSCR requirement. The DSCR contains a "cash management" provision that is triggered when the property's operating results are below a certain DSCR threshold. As of June 30, 2020, the testing period, and December 31, 2020, the hotel properties' operational results were below that certain DSCR and certain other required financial covenants were not met. In December 2020, the lender provided notification to management exercising their right under the "cash management" provision, and as such the hotel properties' operating cash is subject to "cash management". In April 2021, the terms of the loan agreement were renegotiated extending the maturity date of the loan to October 2022. Per the terms of the renegotiated loan agreement, $3.2 million was placed into reserve accounts for the payment of debt service, which is included in Restricted cash on the accompanying consolidated balance sheets. The terms of the renegotiated loan agreement include a waiver of the breach of covenants at December 31, 2020 and further waives the financial covenants through the loan maturity date.

<u>DoubleTree by Hilton Tucson Convention Center Hotel</u>

Due to the consolidation of TCC Hotel I, LLC, in September 2020, the Company now recognizes a $12.6 million loan at December 31, 2020 with a maximum loan amount of $19.0 million, which is secured by a deed of trust and assignment of rents of the DoubleTree by Hilton Tucson Convention Center located in Tucson, Arizona. The loan has a variable interest rate per annum equal to LIBOR plus 2.50%. The loan requires interest-only payments until September 2022 and principal and interest payments thereafter until maturity. The terms of the loan allow for the prepayment of the outstanding balance in whole or in part at any time prior to the maturity date. The terms of the loan include, among other things, certain financial covenants, as defined in the loan agreement, including a DSCR and a loan-to-value requirement which commence in September 2021. As of December 31, 2021 and 2020, the loan was in compliance with all such covenants. The loan matures in August 2027 and is guaranteed by the Company.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>GC Square Apartments</u>

In October 2017, the consolidated fund entered into an $11.0 million loan, which is secured by a deed of trust and assignment of rents of a multi-family property in Phoenix, Arizona. The loan had a variable interest rate equal to LIBOR plus 5.25%. The loan had options to extend the maturity date up to two additional years, subject to certain terms and conditions. The loan required interest-only payments until maturity. Contemporaneous with entering into the loan, the consolidated fund entered into an interest rate cap agreement, which set a maximum interest rate of 7.00% until November 2018 and 7.75% from November 2018 through maturity. The terms of the loan included, among other things, a debt service coverage ratio, as defined in the loan agreement. The debt coverage ratio contained a "cash trap" provision which was triggered when the property's operating results were below a certain debt service coverage ratio. At December 31, 2019, the property's operating results were below that certain debt service ratio; however, the lender did not exercise their right under the "cash trap" provision. The loan and accrued interest was paid in full in October 2020.

In October 2020, the consolidated fund entered into an $11.6 million loan which is secured by a deed of trust and assignment of rents of a multi-family property in Phoenix, Arizona. The loan bears interest at a fixed annual rate of 3.125% for the first three years, thereafter, the interest rate is adjusted annually to a rate which is equal to the sum of the highest published prime rate as defined by the agreement and a margin of 0.123% with a floor of 3.125% and a ceiling of 16.0% per year. The loan matures in October 2028. The loan requires interest only payments for the first year and thereafter principal and interest payments as defined by the agreement. The terms of the loan agreement provide the option to fix the annual interest rate (the "fixed interest rate option") beginning in year 4 of the loan term. The fixed interest rate option would bear interest at an annual rate equal to the sum of a five-year fixed rate advance index defined by the agreement and a 300 basis point spread, rounded up to the next 0.125% point and requires payment to the lender of an amount equal to one percent of the outstanding principal balance at the time of exercise. The loan may be prepaid prior to maturity subject to certain conditions and terms outlined in the agreement which defines the schedule of prepayment premiums based on the timing of the exercise of this option. The loan agreement contains certain usual and customary restrictions and covenants relating to, among other things, liens, insurance, and other indebtedness. The loan is guaranteed by the Company. At December 31, 2021 and 2020, amounts held in escrow for the payment of interest and taxes were $0.1 million, respectively, which are included in Restricted cash on the accompanying consolidated balance sheets.

<u>DT Mesa Holdco II, LLC</u>

In May 2019, the consolidated fund entered into a $1.0 million loan, which is secured by a deed of trust of a commercial building in Mesa, Arizona. The loan has a variable rate per annum equal to prime rate plus 1.00%, resulting in a rate of 4.25% as of December 31, 2021. The loan requires interest-only payments until maturity and the terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. In April 2021, the terms of the loan agreement were renegotiated extending the maturity date of the loan to January 2022. In February 2022, the terms of the loan agreement were renegotiated extending the maturity date of the loan to September 2022. In September 2022, the consolidated fund paid the loan amount outstanding in full.

In November 2019, the consolidated fund entered into a $5.0 million loan secured by the deed of trust of a commercial building in Mesa, Arizona. The loan has a variable interest rate per annum and is the lesser of (i) the three-year federal home loan bank rate plus 2.75% or (ii) the default rate of 5.00%, resulting in a rate of 3.98% as of December 31, 2021. The loan requires interest-only payments until maturity and the terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. The loan matures in November 2022 and is guaranteed by the Company. The terms of the loan include certain financial covenants including a debt service coverage ratio and loan-to-value requirement which commenced in March 2021. As of December 31, 2021, the loan was not in compliance with its debt service coverage ratio requirement based on the operation of the related property. Per the loan agreement, the lender is entitled to declare an event of default unless the Company agrees to partially repay the loan in an amount and on terms satisfactory to the lender. As of December 31, 2021, and through the date of this filing, the Company has been in communication with the lender to negotiate an agreement to mitigate any event of default. There can be no assurance, but management believes we will be able to come to an agreement with the lender in order to mitigate any defaults. Compliance with all other covenants was met as of December 31, 2021.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Circle Lofts, LLC</u>

In July 2020, the consolidated fund entered into a $5.0 million loan, which is secured by a deed of trust and assignment of rents of a multi-family property located in Scottsdale, Arizona. The loan has a variable interest rate per annum that is equal to LIBOR plus 5.25% with a floor of 5.25% and a ceiling of 11.25% per year resulting in an interest rate of 5.25% at December 31, 2021. The loan matures in August 2050. The loan requires interest only payments until July 2021 and principal and interest payments thereafter until maturity. The loan amount may be prepaid prior to maturity subject to certain conditions and terms outlined in the agreement which defines the schedule of prepayment premiums based on the timing of the exercise of this option. The loan agreement contains certain usual and customary restrictions and covenants relating to, among other things, liens, insurance, and other indebtedness. The loan is guaranteed by individuals who are affiliates of the Company.

<u>Ironwood Fundco, LLC</u>

In April 2021, the consolidated fund entered into a $5.8 million loan, which is secured by a deed of trust and assignment of rents of commercial property in Scottsdale, Arizona. The loan has a variable rate per annum equal to prime rate plus 1.50%, resulting in a rate of 4.91% as of December 31, 2021. The loan requires interest-only payments until maturity. In March 2022, the terms of the loan agreement were renegotiated extending the maturity date of the loan to November 2022. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty.

In April 2021, the consolidated fund entered into a $2.5 million loan, which is secured by a deed of trust and assignment of rents of commercial property in Scottsdale, Arizona. The loan has a fixed rate per annum equal to 4.5% and matures in May 2022. The terms of the loan allow for a 12-month extension subject to certain conditions per the agreement and an extension fee of 0.25%. The terms of the loan allow the prepayment of the outstanding balance in part or in whole at any time prior to the maturity date with no prepayment penalty. The loan is guaranteed by the Company and individuals who are affiliates of the Company.

<u>Caliber Residential Advantage Fund LP</u>

In January 2019, the consolidated fund entered into a $1.8 million loan secured by the deeds of trust of each collateralized single-family home. The loan had a variable interest rate per annum which was the greater of (i) the rate of 5.00% or (ii) 2.85% plus the five-year treasury rate. The loan required principal and interest payments until maturity and the terms of the loan allowed the outstanding balance to be prepaid in part or in whole at any time prior to the maturity date with no prepayment penalty. The loan originally matured in January 2024 and was guaranteed by the Company and included certain covenants, as defined in the loan agreement, including a DSCR and a loan-to-value requirement. As of December 31, 2020, the Company was in compliance with all such covenants. In February 2021, the loan was paid down by an amount whereby the Company determined it was no longer the primary beneficiary of the investment fund and therefore the fund was deconsolidated. Refer to Note 2 – Summary of Significant Accounting Policies – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs.

***Payroll Protection Program Loans***

In April 2020, the consolidated funds were granted PPP loans totaling $3.4 million. The loans are unsecured and have a fixed interest rate of 1.0 % and mature in April 2022. The loans allow the Company to prepay the amount plus accrued interest prior to maturity. According to the terms of the PPP, the potential loan forgiveness for all or a portion of the PPP loans are determined, subject to limitations, on the use of loan proceeds over the 8-to-24-weeks after the loan proceeds are disbursed for payment of payroll costs and other eligible expenses. Management believes it has used the proceeds from its PPP loan for purposes consistent with the PPP terms and has submitted applications for forgiveness under this program. During the year ended December 31, 2021, $3.4 million of the outstanding PPP loans were forgiven. The gain recognized on the forgiveness of these loans is recorded in Consolidated fund expenses on the consolidated statements of operations.

During the year ended December 31, 2021, the consolidated funds were granted a second round of PPP loans totaling $3.6 million. The loans are unsecured and have a fixed interest rate of 1.0 % and mature through April 2026. Management intends to use the proceeds consistent with the terms required to qualify for forgiveness, similar to the terms in the April 2020 PPP loan program, and believes the Company will also qualify for forgiveness of the entire loan amounts under this program. In January 2022, $0.1 million of outstanding PPP loans were forgiven.

***Economic Injury Disaster Loans***

In June 2020, the consolidated funds were granted Economic Injury Disaster Loans ("EIDL") loans totaling $0.6 million. The loans are secured by the assets of the respective funds and have a fixed interest rate of 3.75 % and mature in June 2050. Principal and interest payments are deferred for the first 12 months of the loans. The loans allow for prepayment of principal plus accrued interest prior to maturity. The loan agreements contain certain usual and customary restrictions and covenants relating to, among other things, insurance, and other indebtedness. In addition, the terms of the loans include a cross-default provision whereby the Small Business Administration ("SBA") may, in its discretion, without notice or demand require immediate payment of all amounts outstanding under the loans.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Revolving Line of Credit***

In August 2019, a consolidated fund entered into a revolving line of credit ("LOC") with a maximum borrowing amount of $4.5 million. The LOC is secured by the partnership's assets and is guaranteed by the Company. The LOC has a variable interest rate equal to the greater of (i) Wall Street Journal Prime Rate plus 0.25% per annum or (ii) 4.75%, resulting in a rate of 4.75% as of December 31, 2021. The Company is required to pay a fee of 0.20% of the unused revolving balance. The LOC matured in August 2021. In November 2021, the agreement was amended extending the maturity date of the LOC to August 2022. The terms of the amended agreement include a waiver of certain covenants included in the line of credit agreement that were not satisfied by the consolidated fund as of the date of the amendment. At December 31, 2021, the consolidated fund was in compliance with the financial covenants outlined in the agreement. In August 2022, the agreement was amended extending the maturity date of the LOC to August 2023 and removing certain restrictive covenants.

***Future Debt Maturities***

As of December 31, 2021, the future aggregate principal repayments due on the Company's notes payable for each of the years ending December 31, are as follows (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $102844 |
| 2023 | 697 |
| 2024 | 1013 |
| 2025 | 6456 |
| 2026 | 4405 |
| Thereafter | 32830 |
| Total | $148245 |

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***Deferred Financing Costs***

During the years ended December 31, 2021 and 2020, amortization and write-offs of deferred financing costs were $1.0 million and $1.2 million, respectively.

**Note 7 – Related Party Transactions**

***Notes Receivable – Related Parties***

**Notes Receivable – Related Parties of consolidated funds**

The Company, through its consolidated VIEs, entered into unsecured promissory notes with related parties. The notes mature in May 2022 and have interest rates of 12.0% per annum. No payments are required prior to the maturity of the notes. The notes may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2021 and 2020, the Company earned $2.1 million and $1.3 million, respectively, of interest in connection with the notes, which is included in Consolidated fund revenues on the accompanying consolidated statements of operations. No interest was due to the Company as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, the outstanding principal balance on the notes were $20.1 million and $14.6 million, respectively, which is included in Notes receivable — related parties on the accompanying consolidated balance sheets.

***Fund Management***

The Company manages multiple private equity real estate funds. See Note 2 – Summary of Significant Accounting Policies for detail on our revenues related to Fund Management. In general, the Company generates the following Fund Management revenues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Asset Management Fees – We receive an annual asset management fee equal to 1.0% - 1.5% of all
 the non-affiliate capital contributions related to the assets owned by the particular fund to compensate us for the overall administration
 of that fund. We are also entitled to receive reimbursement for certain expenses incurred or paid on behalf of the fund, which may
 include an allocation of certain administrative and overhead costs. During the year ended December 31, 2021 and 2020, the Company
 earned $3.5 million and $3.1 million, respectively, of asset management fees from related parties, which are included in Asset Management
 Fees on the accompanying consolidated statements of operations.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Performance allocations
 – We are entitled to an allocation of the income otherwise allocable to the limited partners/members of the funds we manage,
 commonly referred to as carried interest. Generally we receive 20% – 35% of all cash distributions
 from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority
 preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or
 refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid
 priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns typically
 range from 6% for common equity to 10-12% for preferred equity, which does not participate in profits. For the year ended December 31,
 2021, the Company earned $0.7 million of performance allocations from related parties, which are included in Performance Allocations
 on the accompanying consolidated statements of operations. For the year ended December 31, 2020, the Company did not earn performance
 allocations from related parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Transaction and Advisory Fees – We receive fees
 for services primarily relating to the marketing, offering, registering, and selling of equity and debt instruments of the affiliates
 (collectively, "Fund Formation Fees"), loan placement and guarantee fees. For the years ended December 31, 2021
 and 2020, the Company earned $2.4 million and $0.5 million, respectively, of transaction and advisory fees from related parties,
 which are included in Transaction and Advisory Fees on the accompanying consolidated statements of operations.

As of December 31, 2021 and 2020, amounts due to the Company from related parties for fund management services was $3.9 million and $0.9 million, respectively, which are included in Due from related parties on the accompanying consolidated balance sheets.

***Development***

The Company provides development related management services to affiliates and third parties, which include ground-up development and repositioning of real estate assets, the build-out of tenant space, the renovation of hospitality, residential, and commercial real estate, and general real estate repair and maintenance services.

For the years ended December 31, 2021 and 2020, the Company recognized $2.1 million and $2.2 million, respectively, of development revenue from related parties, which are included in Transaction and Advisory Fees on the accompanying consolidated statements of operations. As of December 31, 2021 and 2020, amounts due to the Company from related parties for development services were $1.4 million and $0.1 million, respectively, which are included in Due from related parties on the accompanying consolidated balance sheets.

***Brokerage***

The Company provides real estate brokerage services related to the purchase and sale of residential and commercial properties owned by the funds which we manage. For the years ended December 31, 2021 and 2020, the Company recognized $0.04 million and $0.1 million, respectively, of brokerage commission revenue from related parties, which are included in Transaction and Advisory Fees on the accompanying consolidated statements of operations. There were no brokerage commissions due from related parties as of December 31, 2021 and 2020.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Notes Payable – Related Parties***

The Company, through various consolidated VIEs, entered into unsecured promissory notes with related parties. The notes may be repaid in whole, or in part, without penalty. In addition, the Company has a related party unsecured promissory note with a former member of the Company's executive management team.

The following table summarizes the notes payable – related parties as of December 31, 2021 and 2020, respectively (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | | |
| <br>**Notes Payable - Related Parties** | **2021** | **2020** |<br>**Interest Rate** | <br>**Maturity Date** |
| Former Management | $40 | $95 | N/A | December 2023 |
| Caliber Residential Advantage Fund, LP | 815 | - | 7.50% | May 2022 |
| **Total Notes Payable - Related Parties** | $855 | $95 |  |  |

---

During the year ended December 31, 2021, the Company incurred $0.1 million of interest expense in connection with the notes payable – related parties, which is included in Interest expense on the accompanying consolidated statements of operations. No interest expense was incurred for the year ended December 31, 2020. There was no interest payable due to related parties as of December 31, 2021 and 2020. Management expects to extend the Caliber Residential Advantage Fund, LP note at maturity.

**Notes Payable – Related Parties of consolidated funds**

The Company, through various consolidated VIEs, entered into unsecured promissory notes with related parties. The notes may be repaid in whole, or in part, without penalty. The notes payable – related parties consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | | |
| <br>**Notes Payable - Related Parties** | **2021** | **2020** |<br>**Interest Rate** | <br>**Maturity Date** |
| Roosevelt III HOLDCO, LLC | $2400 | $2216 | 12.00% | May 2022 |
| CDIF, LLC | 1415 |  | 12.00% | May 2022 |
| Caliber Tax Advantaged Opportunity Zone Fund, LP | 850 |  | 12.00% | May 2022 |
| Caliber Diversified Opportunity Fund II, LP | 500 | - | 10.00% | June 2022 |
| **Total Notes Payable - Related Parties** | $5165 | $2216 |  |  |

---

During the year ended December 31, 2021 and 2020, the consolidated funds incurred $0.6 million and $0.1 million of interest expense in connection with the notes payable – related parties, which is included in Consolidated fund expenses on the accompanying consolidated statements of operations. Interest payable at December 31, 2021 was $0.2 million, which is included in Due to related parties on the accompanying consolidated balance sheets. There was no interest payable due to related parties as of December 31, 2020. Management expects to extend these notes at maturity.

***Withdrawal Agreement***

In November 2014, the Company entered into an agreement with a former co-manager and member of one of the Company's consolidated subsidiaries which outlined the terms of his resignation as co-manager and assignment of his member interest. In consideration for his resignation as co-manager and assignment of his member interest, the Company agreed to issue 33,029 shares of its common stock to the individual or his designee, provide the individual with construction services at no cost to the individual, as outlined in the agreement, and pay the individual or his designee up to $0.5 million in cash, as outlined in the agreement. The Company issued the 33,029 shares of common stock in April 2015. As of December 31, 2021 and 2020, $0.1 million and $0.2 million, respectively, was due to the former co-manager and member of the Company, which are included in Other liabilities on the accompanying consolidated balance sheets.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Other***

In the normal course of business, the Company has various amounts due from related parties, including affiliate entities and individuals, for various expenses paid for by the Company on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of December 31, 2021 and 2020, other amounts due from related parties were $0.3 million and $0.5 million, respectively, which are included in Due from related parties on the accompanying consolidated balance sheets.

In the normal course of business, the Company has various amounts due to related parties, including affiliated entities and individuals, for various expenses paid for by the affiliates on the Company's behalf and other short-term payment advances. These amounts are generally unsecured, interest-free, and due on demand. As of December 31, 2021 and 2020, other amounts due to related parties were $0.7 million and $0, respectively, which are included in Due to related parties on the accompanying consolidated balance sheets.

***Other – consolidated funds***

In the normal course of business, the consolidated funds have various amounts due from and/or due to related parties, including affiliate entities and individuals, for various expenses paid by the funds on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. As of December 31, 2021 and 2020, other amounts due from related parties were $0.2 million and $0, respectively, which are included in Due from related parties on the accompanying consolidated balance sheets. As of December 31, 2021 and 2020, other amounts due to related parties were $0.2 million and $0, respectively, which are included in Due to related parties on the accompanying consolidated balance sheets.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 8 – Other Liabilities**

Other liabilities consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Sales tax payable | $- | $76 |
| Deferred rent liability | 341 | 371 |
| Billings in excess of costs | 423 | 423 |
| Other | 103 | 197 |
| &nbsp;&nbsp;&nbsp;Total other liabilities | $867 | $1067 |

---

Other liabilities of the consolidated funds consisted of the following as of December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Sales tax payable | $413 | $171 |
| Deposits | 319 | 114 |
| Tenant improvement allowance | 59 | 34 |
| Capital leases | 71 | 229 |
| Deferred rent liability | 287 | 247 |
| Advance key money, net | 975 | 1050 |
| Above market ground lease, net | 3511 | 3637 |
| Other | 328 | 102 |
| &nbsp;&nbsp;&nbsp;Total other liabilities | $5963 | $5584 |

---

**Note 9 – Income Taxes**

The following table shows the components of the income tax (provision) benefit from total operations for the years ended December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Current income tax provision/(benefit) |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $- | $- |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  |  |
| Deferred income tax provision/(benefit) |  |  |
| &nbsp;&nbsp;&nbsp;Federal | (204) | (978) |
| &nbsp;&nbsp;&nbsp;State | 26 | (154) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | (178) | (1132) |
| Adjustment to valuation allowance | 178 | 1132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total income tax provision/(benefit) | $- | $- |

---

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate for the years ended December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| U.S. federal statutory tax rate | 21.0% | 21.0% |
| State taxes, net of federal benefit | 9.3% | 5.0% |
| Income passed through to noncontrolling interest, federal tax | (20.4)% | (16.5)% |
| Income passed through to noncontrolling interest, state tax | (9.0)% | (3.9)% |
| Permanent differences, VIEs | (0.7)% | (1.9)% |
| Prior period return-to-provision adjustments | 0.6% | 0.9% |
| Nondeductible expenses | 0.0% | (0.1)% |
| Change in valuation allowance | (0.8)% | (4.5)% |
| &nbsp;&nbsp;&nbsp;Effective income tax rate | 0.0% | 0.0% |

---

The following table summarizes the components of the Company's deferred tax assets and liabilities as of December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Net Operating Loss Carryforwards | $12263 | $11091 |
| &nbsp;&nbsp;&nbsp;Sec 362 Basis Step-up | 441 | 441 |
| &nbsp;&nbsp;&nbsp;Deferred Compensation | 828 | 662 |
| &nbsp;&nbsp;&nbsp;Fixed Assets | 180 | 292 |
| &nbsp;&nbsp;&nbsp;Other | 408 | 356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 14120 | 12842 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Passthrough Income/Loss from Partnerships | (9943) | (8984) |
| &nbsp;&nbsp;&nbsp;Other | (409) | (267) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | (10352) | (9251) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Valuation Allowance | (3768) | (3590) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax assets | $- | $- |

---

As of December 31, 2021, the Company had approximately $49.6 million and $47.7 million of federal and state net operating losses ("NOL"), respectively, available to offset future taxable income. As of December 31, 2020, the Company had approximately $44.6 million and $44.4 million of federal and state net operating losses ("NOL"), respectively, available to offset future taxable income. The federal NOLs arising in 2017 and prior, if not utilized, begin expiring in the year 2035. Federal NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely but are subject to an 80% of taxable income limitation. The state NOLs arising in 2021 and prior, if not utilized, begin expiring in the year 2035. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company's federal NOL carryovers may be limited in the event of a change in control of ownership.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

In assessing the need for a valuation allowance against its net deferred tax assets, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, the Company considered cumulative tax losses as a significant piece of negative evidence and established a full valuation allowance of $3.8 million and $3.6 million against the Company's net deferred tax assets as of December 31, 2021 and 2020, respectively.

The changes to the Company's valuation allowance during the years ended December 31, 2021 and 2020 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Valuation allowance at the beginning of the year | $3590 | $2458 |
| Changes in valuation allowance recorded during the year | 178 | 1132 |
| Valuation allowance at the end of the year | $3768 | $3590 |

---

The Company and its subsidiaries are subject to the following significant taxing jurisdictions: U.S., Alaska, Arizona, California, Colorado, Illinois, Minnesota, Nevada, Oregon, and Utah. The Company is currently not under income tax examination in any tax jurisdiction.

Although we believe our tax returns are correct, the final determination of tax examinations and any related litigation could be different from what was reported on the tax returns. We are currently open to audit under the statute of limitations by the United States Internal Revenue Service as well as state taxing authorities for the past four years (three years in some states).

We apply U.S. GAAP related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We do not believe that there are any positions taken by the Company which would require recognition or disclosure in these financial statements for the years ended December 31, 2021 and 2020.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 10 – Supplemental Cash Flow Disclosures**

Supplemental cash flow information consisted of the following for the years ended December 31, 2021 and 2020 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest, net of capitalized interest of $66 and $82 for the years ended December 31, 2021 and 2020, respectively | $568 | $542 |
| **Supplemental Disclosure of Cash Flow Information of consolidated funds** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest, net of capitalized interest of $184 and $142 for the years ended December 31, 2021 and 2020, respectively | 8478 | 6915 |
| **Supplemental Disclosures of Non-cash Investing and Financing Activities** |  |  |
| Real estate investments moved to held for sale | (3082) |  |
| Increase in note payable due to Deconsolidation of VIEs | 2920 |  |
| Note receivable eliminated in consolidation | (3110) |  |
| Conversion of Series A preferred stock to Class A common stock |  | 3848 |
| **Supplemental Disclosures of Non-cash Investing and Financing Activities of Consolidated Funds** |  |  |
| Real estate investments moved to held for sale | (9142) |  |
| Cost of real estate investments included in accounts payable | 437 | 875 |
| Consolidation of VIEs |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate investments, net | 14936 | 48468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes Receivable - related parties |  | 12562 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net |  | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties |  | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | 16 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable | (8300) | (16274) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - related parties | (4400) | (7665) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses |  | (3626) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | (2) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities |  | (36) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interests | 824 | 48888 |
| Deconsolidation of VIEs |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate investments, net | (17173) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | (137) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable | (4015) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid and other assets | (305) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | (16) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 1926 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable | 11024 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - related parties | 4728 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 1037 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 143 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | 942 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interests | 132 |  |

---

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 11 – Commitments and Contingencies**

In August 2014, the Company entered into a consulting agreement with Mercadyne Advisors, LLC ("Mercadyne") and 6831614 Manitoba Ltd. ("Manitoba") (collectively, the "Consultants"). Per the agreement, the services to be provided by the Consultants were business consulting related services primarily focused on assisting the Company in accessing capital markets and designing, implementing, and completing a public offering. In exchange for the services, the agreement outlined the Consultants' compensation to include a $25,000 monthly fee paid in cash and a contingently exercisable warrant to purchase a 15.0% equity interest in the Company for an aggregate exercise price of $1,000, exercisable upon the completion of a public offering. The agreement was amended in February 2015, for the purposes of amending the compensation to be a grant of equity rather than a warrant to purchase a 15.0% equity interest in the Company on a fully diluted basis as of the date of the amendment, for a price of $1,000, and to memorialize that all services required to be provided in connection with the agreement had been provided, although a public offering had not been completed. The agreement does not include a stated number of shares of common stock to be issued in exchange for the services provided. In March 2017, the Company and Mercadyne entered into a stock subscription agreement which finalized the number of shares of common stock to be issued to Mercadyne in connection with the consulting agreement and related amendment. The final number of shares issued to Mercadyne in connection with the agreement was 787,927. At the time of the settlement our liability was reduced by $1.1 million, with a corresponding increase to stockholders' equity.

On January 27, 2020, Manitoba, and its President, filed a complaint in Maricopa County Superior Court in the State of Arizona against the Company and each of the members of its Board of Directors claiming among other things, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment and fraud in the inducement, in connection with the above equity grant. The complaint sought damages in the amount of $10.9 million, but in no event less than $8.1 million, treble damages under the argument that the unissued shares are wages under Arizona law, or, alternatively, specific performance that the Company issue Manitoba 1,296,709 shares of Class A common stock, but in no event less than 966,282 shares. The complaint also sought fees, costs, interest and such other relief as the court deems just and proper. At the Company's urging, a stipulation to place the entire matter into private, binding arbitration before the American Arbitration Association ("AAA") in accord with the parties' prior agreement documentation was executed by counsel for the parties. On March 27, 2020, the Court ordered the parties to AAA arbitration, to be commenced within thirty days of said order. The arbitration commenced and, on May 29, 2020, the respondents submitted their answering statement and counterclaim to the AAA which included the Company's request to submit a dispositive motion on legal issues on which the Company believed it was likely to succeed as a matter of law. Following a March 29, 2021 initial preliminary hearing conference with the arbitration panel in which the panel approved the Company's request to submit the dispositive motion, the Company indeed successfully obtained dismissal of four (4) of the alleged claims brought by the prior consultant, including the claim against it for "treble damages", as well as dismissal of four (4) of the alleged respondent parties, and one of the claimant parties. None of the Company's counterclaims were dismissed. The Company had engaged in and continued to be engaged in ongoing confidential settlement negotiations with Manitoba for settlement of all claims and counterclaims arising from or relating to the facts and circumstances underlying their complaint. In April 2022, Company management determined it was necessary to increase the accrual related to this matter to $3.2 million, as of December 31, 2021. The arbitration hearing on the claims and counterclaims commenced on June 20, 2022.

On June 21, 2022, the Company and Manitoba entered into a confidential settlement agreement providing for dismissal with prejudice of both the AAA Arbitration (No. 01-20-0005-0734) and the underlying complaint filed in Maricopa County Superior Court in the State of Arizona (Case No. CV2020-001299), notification to the court of the settlement, and issuance of an order dismissing the complaint in its entirety, with prejudice, with each party to the complaint to bear their own attorneys' fees and costs. The agreement also provides for the arbitration to be completely dismissed, with prejudice, as well. The principal terms of the settlement are:

&nbsp;&nbsp;&nbsp;&nbsp;· Cash
 payments by Caliber to Manitoba aggregating to a total amount of $525,000

&nbsp;&nbsp;&nbsp;&nbsp;· The
 issuance of 475,613 shares of Caliber Class A common stock to Manitoba, subject to a Right
 of First Refusal in favor of Caliber as stipulated per the terms of the confidential settlement
 agreement

&nbsp;&nbsp;&nbsp;&nbsp;· Releases
 by both parties of all claims and discharge of the complaint.

By entering into the settlement, the Company and Manitoba have resolved the complaint to their mutual satisfaction. Caliber has not made any admissions as to the validity of the claims or allegations in the complaint and Manitoba has not made any admissions that any claims or allegations in the complaint lack merit or foundation.

***Environmental Matters***

In connection with the ownership and operation of real estate assets, the Company may potentially be liable for costs and damages related to environmental matters. The Company believes we are in material compliance with current laws and regulations and do not know of any existing environmental condition and has not been notified by any governmental authority of any non-compliance, liability or other claim, in each case, that could result in a material adverse effect on our financial condition or results of operations.

***Construction Contracts***

In connection with our development, redevelopment and capital improvement activities, we have entered into various construction related contracts and we have made commitments to complete certain projects, pursuant to financing or other arrangements. As of December 31, 2021 and 2020, our commitments related to these activities were $0.3 million and $1.0 million, respectively.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Franchise Agreements and Advance Key Money***

<u>Intercontinental Hotel Group</u>

In August 2013, the consolidated fund entered into a 20-year franchise agreement with Holiday Hospitality Franchising, LLC ("IHG"). Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· royalty fee of 5% of gross
 room revenue

· service contribution fee
 of 3% of gross room revenue

· technology fee of $12.75
 per room

· marketing fee of $3.00
 per room

As a part of the franchise agreement, Six Continents, Inc., an affiliate of IHG, advanced $1.5 million ("Advance Key Money") to the consolidated funds to retain IHG as the franchisor on the hotel property for 20 years. The consolidated funds are not required to repay any part of the Advance Key Money unless the franchise agreement is cancelled before the termination date of August 2033.

In June 2015, the consolidated funds entered into a 10-year franchise agreement with IHG, which expires in June 2025. Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· royalty fee of 5% of gross
 room revenue

· service contribution fee
 of 3% of gross room revenue

· technology fee of $13.26
 per room

· all fees due for marketing

In July 2018, the consolidated funds entered into a separate 15-year franchise agreement with IHG, which expires in July 2033. Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· royalty fee of 5% of gross
 room revenue

· service contribution fee
 of 3% of gross room revenue

· technology fee of $14.08
 per room

· all fees due for marketing

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Hampton Inn</u>

In October 2014, the consolidated funds entered into a franchise agreement with Hampton Inns Franchise, LLC, which expires in November 2030. Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· program fee of 4% of gross
 room revenue

· royalty fee of 6% of gross
 room revenue

<u>Hilton Worldwide</u>

In November 2016, the consolidated funds entered into a 10-year franchise agreement with Hilton Franchise Holdings, LLC, an affiliate of Hilton Worldwide. Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· program fee of 4% of gross
 room revenue

· royalty fee of 5% of gross
 room revenue

· food and beverage fee of
 3% of gross food and beverage revenue

<u>Marriott International, Inc.</u>

In June 2018, the consolidated funds entered into a 15-year franchise agreement with Marriott International, Inc. Pursuant to the terms of the franchise agreement, the consolidated funds pay the following fees on a monthly basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· program fee of 5.5% of
 gross room revenue

· marketing fund fee of 1%
 of gross room revenue

The consolidated funds recognized total aggregate franchise fees of $2.8 million and $2.0 million for the years ended December 31, 2021 and 2020, respectively.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Contractual Lease Obligations***

<u>Office Lease</u>

In July 2018, the Company entered into a new corporate office lease agreement, which has been accounted for as an operating lease. The lease is for a term of 7.6 years and includes a rent abatement period and tenant improvement allowance. The lease includes options for two 5-year extension periods.

As of December 31, 2021, the future required payments, for each of the years ending December 31, were as follows (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $444 |
| 2023 | 493 |
| 2024 | 502 |
| 2025 | 511 |
| 2026 | 86 |
| Total | $2036 |

---

Rent expense was $0.5 million for the years ended December 31, 2021 and 2020, respectively, which includes rent expense related to operating leases for office space. In addition to the arrangement outlined above, the Company regularly enters into short-term equipment and other rentals. Rent expense is included within Operating costs or General and administrative expense in the accompanying consolidated statements of operations, depending on the nature of the individual rental arrangement.

***Contractual Lease Obligations of the consolidated funds***

<u>Equipment Lease</u>

The consolidated funds have entered into multiple lease agreements for equipment, all of which have been accounted for as capital leases. The leases have a 36-month to 48-month term, require monthly lease payments, and have a bargain purchase option at maturity. The recorded lease liability as of December 31, 2021 and 2020 was $0.1 million and $0.2 million, respectively, which is included in Other liabilities on the accompanying consolidated balance sheets. As of December 31, 2021, the future required minimum lease payments under the lease agreements due in 2022 was $0.1 million.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Ground Leases</u>

In November 2012, we acquired a hotel property in Phoenix, Arizona, which is subject to a ground lease and requires monthly lease payments of approximately $0.1 million, subject to annual adjustments through December 2049, at which time the ground lease expires. The ground lease, accounted for as an operating lease, required a deposit of $0.3 million, which is included in Other assets on the accompanying consolidated balance sheets as of December 31, 2021 and 2020, respectively. At the time of acquisition, it was determined that the lease rate of the ground lease was at a rate which management estimated was above the fair market lease rate. Accordingly, the consolidated funds recorded a liability in the amount of the estimated fair value (Level 3) of the above market lease. The above market lease is amortized as a reduction to lease expense over the term of the lease. Accumulated amortization of the above-market lease intangible as of December 31, 2021 and 2020, was $1.1 million and $1.0 million, respectively.

In October 2014, we acquired a hotel property residing on land which is subject to a ground lease and is subleased to the consolidated funds. The sublease requires monthly lease payments which consist of base rent, taxes, and other charges, and are subject to annual adjustments. The amount of the base rent increases over time. The original sublease expires in May 2056; however, the sublease includes two 5-year extension options and a third extension option for an additional 27 months.

As of December 31, 2021, the estimated future minimum lease payments on the ground leases and the future amortization of the related above market lease intangible for each of the years ending December 31, are as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| **Year** | **Lease Payments** | **Intangible<br> Amortization** | **Net Lease Expense** |
| 2022 | $1236 | $(125) | $1111 |
| 2023 | 1236 | (125) | 1111 |
| 2024 | 1236 | (125) | 1111 |
| 2025 | 1236 | (125) | 1111 |
| 2026 | 1236 | (125) | 1111 |
| Thereafter | 30584 | (2886) | 27698 |
| Total | $36764 | $(3511) | $33253 |

---

Rent expense was $1.1 million for the years ended December 31, 2021 and 2020, respectively, which includes rent expense related to operating leases for equipment and ground leases. In addition to the arrangements outlined above, the consolidated funds regularly enter into short-term equipment and other rentals. Rent expense is included within Consolidated fund expenses in the accompanying consolidated statements of operations.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Buyback Program***

In September 2018, the Company agreed to repurchase all 3,709,693 shares ("Buyback Program") owned by one of its non-participating founders for $4.54 per share of common stock in exchange for an amendment to such non-participating founder's shareholder voting rights and other Company protections. Among other things, the Company's obligation to reacquire the non-participating founder's shares terminates when the Company's common stock is listed on a national exchange. The shares are being reacquired at various amounts ranging from 3,500 to 6,000 units on a monthly basis until such time as the Company has satisfied the termination conditions or until all of the shares have been reacquired, which could be in 2075. Due to the length of time of the liability, the Company recorded a liability of $13.6 million and a corresponding reduction to equity in treasury stock at the inception of the Buyback Program using a present value discount rate of 10.00%. During the years ended December 31, 2021 and 2020, the Company repurchased 71,342 and 64,802 shares of Class A common stock, respectively. As of December 31, 2021 and 2020, the balance of the liability was $12.7 million and $13.0 million, respectively, which is included in Buyback obligation on the accompanying consolidated balance sheets. The remaining number of shares to be repurchased as of December 31, 2021 and 2020 was 3,503,693 and 3,575,035, respectively.

As of December 31, 2021, the future aggregate principal payments related to the Buyback Program for each of the years ending December 31, are as follows (in thousands):

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2022 | $324 |
| 2023 | 324 |
| 2024 | 324 |
| 2025 | 324 |
| 2026 | 324 |
| Thereafter | 14292 |
| Aggregate payments | 15912 |
| Less interest | (3208) |
| Total | $12704 |

---

**Note 12 – Stockholders' Equity and Share-Based Payments**

In June 2019, the Company amended and restated its certificate of incorporation which increased the number of shares to 125,000,000 consisting of: (i) 100,000,000 shares of Class A Common Stock at a par value of $0.001 per share, (ii) 15,000,000 shares of Class B Common Stock (founder shares owned by our President and Chief Operating Officer and our Chief Executive Officer) at a par value of $0.001 per share, and (iii) 10,000,000 shares of Preferred Stock at a par value of $0.001 per share, including 2,564,103 shares designated as Series A preferred stock ("Series A"). Any shares issued and outstanding and that are owned by a holder other than a founder were reclassified into one share of Class A Common Stock. All founders stock were automatically reclassified into shares of Class B Common Stock.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

In December 2019, the Company entered into a second amended and restated certificate of incorporation which authorized the Company to increase the number of shares to 137,500,000 shares of capital stock consisting of: (a) 115,000,000 shares of Common Stock with a par value of $0.001 per share consisting of (i) 100,000,000 shares of Class A Common Stock with a par value of $0.001 per share; (ii) 15,000,000 shares of Class B Common Stock with a par value of $0.001 per share; and (b) 22,500,000 shares of preferred stock with a par value of $0.001 per share including (i) 2,564,103 shares designated as Series A and (ii) 12,500,000 shares designated as Series B with (iii) 7,435,897 shares remaining undesignated. See Note 13 – Preferred Stock for more detail.

The Class B Common Stock is identical in all respects to Class A Common Stock, except it is entitled to 10 votes per share and is convertible at any time on a one-for-one basis into shares of Class A Common Stock. All other rights, privileges, and rank will be shared equally and be identical in all respects as to all matters.

***Common Stock***

Subject to the rights of holders of any Series A preferred stock having preference as to dividends, the holders of common stock shall be entitled to receive dividends when, as, and if declared by the board of directors. The holders of common stock shall at all times vote together as one class on all matters. Class A Common Stock shall be entitled to one vote for each share of common stock and Class B Common Stock shall be entitled to 10 votes for each share of common stock. No holder of shares of common stock shall have the right to cumulate votes. In the event of liquidation, subject to the prior rights of holders of preferred stock to share ratably in the Company's assets, the holders of common stock and holders of any shares of preferred stock which are not entitled to any preference in liquidation shall share equally and ratably in the Company's assets available for distribution after giving effect to any liquidation preference of shares of preferred stock. The holders of Class A Common Stock shall not have any conversion, redemption, or other preemptive rights. The holders of Class B Common Stock are entitled to a conversion upon notice or an automatic conversion upon transfer at which time the Class B Common stockholder will be entitled to one fully paid and nonassessable share of Class A Common Stock. In addition, Class B Common Stock shall not have any redemption or other preemptive rights.

From inception through December 31, 2021, the Company has issued shares of common stock that were sold in units through various tranches equivalent to ranges from less than one share to 3,497 shares of common stock per unit. Within a few of the tranches, shares of common stock included a warrant to purchase additional shares of common stock within certain timeframes. The warrants had an exercise price ranging from $2.86 to $3.36 per share.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

<u>Warrants</u>

The table below summarizes the warrant activity for the years ended December 31, 2021 and 2020, and the number of potential shares of common stock to be issued in connection with outstanding warrants as of December 31, 2021 and 2020 (in thousands):

---

| | |
|:---|:---|
|  | Shares |
| December 31, 2019 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants Issued |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants exercised |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants expired | - |
| December 31, 2020 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants Issued |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants exercised | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrants expired | - |
| December 31, 2021 | - |

---

As of December 31, 2021 and 2020, the weighted average remaining term, in months, and the weighted average exercise price of the outstanding warrants was as follows:

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Weighted-average remaining term (in months) | – | 4.13 |
| Weighted-average exercise price | $– $| 3.03 |

---

***2017 Incentive Stock Plan***

The Company may award stock options to employees under the 2017 Incentive Stock Plan ("2017 Plan"). The 2017 Plan allows the Company to: (i) grant stock awards, (ii) grant stock options, and (iii) offer restricted stock purchases to directors, executives and selected employees, consultants, and advisors. Options will vest if the recipient maintains constant employment through the end of the requisite service period. The following inputs and assumptions were used to calculate the weighted average fair values of the options granted for the years ended December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Expected term (in years) | 6.46 | 6.46 |
| Volatility | 30.00% | 30.00% |
| Dividend Yield | 0.00% | 0.00% |
| Risk-free rate | 0.97% | 0.97% |
| Grant date fair value | $2.148 | $2.148 |

---

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

Compensation expense is recognized on a straight-line basis over the service period. During the year ended December 31, 2021, the Company recognized $0.02 million in compensation expense, related to the 2017 Plan. During the year ended December 31, 2020, the Company reversed $0.1 million of previously recognized expense, related to the 2017 Plan, due to forfeitures. As of December 31, 2021 and 2020, there was $1.4 million and $0.9 million, respectively, of unrecognized compensation expense related to the 2017 Plan stock options with a weighted-average remaining term of 3.43 years.

The following tables detail the activity of the 2017 Plan during the years ended December 31, 2021 and 2020:

***Stock Options***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Stock Options** | **Weighted Average<br> Exercise Price** | **Weighted Average<br> Remaining<br> Contractual Term<br> (in Years)** | **Aggregate Intrinsic<br> Value <br> (in thousands)** |
| Outstanding January 1, 2020 | 2217615 | $3.67 | 6.46 | $2410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Employee | 227403 | 6.73 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | (273724) | 4.61 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expired | (118368) | 3.53 | - | - |
| Outstanding December 31, 2020 | 2052926 | 3.89 | 6.43 | 2617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Employee | 499804 | 6.73 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | (254558) | 4.56 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expired | (244241) | 3.78 | - | - |
| Outstanding December 31, 2021 | 2053931 | $4.51 | 3.43 | $3166 |

---

***Restricted Stock Units***

---

| | | |
|:---|:---|:---|
|  | **Restricted <br> Stock Units** | **Weighted Average<br> Fair Value** |
| Unvested restricted stock units at December 31, 2020 |  | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted - Employee | 405874 | 6.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | (118903) | 6.73 |
| Unvested restricted stock units at December 31, 2021 | 286971 | $6.73 |

---

The restricted stock units are subject to forfeiture if the participant does not meet certain conditions such as continued employment and/or the attainment of the specified performance target over the specified service period. The performance target related to the outstanding restricted stock units is the completion of an initial public offering and exchange listing. As of December 31, 2021, there was $2.7 million of unrecognized compensation expense related to the restricted stock units with a weighted-average remaining term of 4 years.

***Non-employee Grants***

In May 2019, the Company issued 14,863 incentive stock options to three members of Caliber's Advisory Board under the terms of the 2017 Plan. See Note 11 – Commitments and Contingences - Legal Matters for information on other non-employee grants not related to the 2017 Plan.

**Note 13 – Preferred Stock**

***Series A Preferred Stock***

In January 2016, the Company began selling shares of Series A in units equivalent to two shares of common stock and one share of Series A, at a cost of $5.85 per unit ($1.80 per share of common stock and $2.25 per share of Series A). During the year ended December 31, 2020, the Company paid dividends to Series A preferred stockholders in the amounts of $0.2 million, or $0.25 per share.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

On April 17, 2020, the board of directors and Series A preferred stockholders approved and adopted a second certificate of amendment to the second amended and restated certificate of incorporation of the Company (the "Second Amendment"). The amendments to the Second Amendment included, but not limited to the following:

"Upon the determination of the board of directors of the Company that the value of the Class A common stock of the Company on a fully converted basis is at least $100 million, which determination must be supported by the valuation conducted by an independent audit firm, the Series A will automatically be converted into the number of shares of Class A common stock into which such shares of Series A would be converted on the date of such occurrence, in accordance with Section 4 of the Second Amendment."

As such, due to the determination by the board of directors that the value of the Class A common stock of the Company is at least $100.0 million, based on a valuation conducted by an independent audit firm, the Company simultaneously converted 985,350 shares of Series A preferred stock to 1,231,697 shares of Class A common stock at a conversion rate of one and one-quarter shares of Class A common stock for every one share of Series A preferred stock. As such, as of December 31, 2020, no shares of Series A remain outstanding.

***Series B***

The powers, preferences, rights, and limitations of Series B preferred stock are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Series B shall, with
 respect to rights on liquidation, winding up and dissolution, rank senior to the holders of common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· In the event of liquidation
 of the Company, the holders of Series B shall be entitled to receive, after payment is made to the holders of Series A
 of the full preferential amount to which they shall be entitled and before any payment or distribution shall be made in respect to
 any junior securities, cash in an amount equal to $6.73 for each share of Series B plus an amount equal to all declared and
 accrued but unpaid dividends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Shares of Series B
 are convertible into shares of Class A common stock on the option conversion date at a conversion ratio of one share of Class A
 common stock, subject to adjustments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Upon (i) the closing
 of the sale of shares of Class A common stock to the public in a firm-commitment underwritten public offering, (ii) a direct
 listing of Class A common stock on a national stock exchange or the OTC, (iii) the date the Company becomes subject to
 the reporting requirements of the Securities Exchange Act of 1934, (iv) the date of the sale of all or substantially all of
 the stock or assets of the Company, or (v) the date of the written consent or affirmative vote of a majority of the Series B
 then outstanding, the Series B will automatically be converted into the number of shares of common stock into which such shares
 of Series B would be converted on the date of such occurrence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Holders of Series B
 and holders of common stock shall vote together and not as separate classes and shall be entitled to vote with common stockholders
 as if their shares were converted into shares of common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· At any time when at least
 25% of the initially issued shares of Series B remain outstanding, the Company shall not, either directly or indirectly by amendment,
 merger, consolidation or otherwise, do any of the following without the written consent or affirmative vote of a majority of the
 Series B then outstanding voting separately as a single class: (i) alter the rights, powers or privileges of the Series B
 or bylaws in a way that adversely affects the Series B; or (ii) authorize or create any new class or series of capital
 stock having rights, powers, or privileges that are senior to the Series B in terms of the liquidation preference of the Series B.

The Company is authorized to issue up to 12,500,000 shares of Series B preferred stock pursuant to its Reg A+ Offering and second amended and restated certificate of incorporation. In the offering, which closed in February 2021, the Company raised approximately $11.0 million in proceeds. As of December 31, 2021 and 2020, 1,650,215 and 506,204 shares of Series B preferred stock were issued and outstanding, respectively. See Note 1 – Organization, Liquidity and Impact of COVID-19 for more detail relating to the Series B in our Reg A+ Offering.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 14 – Net Income (Loss) Per Share**

Basic earnings per common share for the years ended December 31, 2021 and 2020 are calculated by dividing net income (loss) attributable to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to common shareholders by the weighted-average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting of stock options and warrants using the treasury stock method, and convertible debt and preferred stock using the if-converted method.

The Company considered the two-class method in calculating the basic and diluted earnings per share for the years ended December 31, 2021 and 2020, however, it was determined that there was no impact to the calculation of basic and diluted net income (loss) per share attributable to common stockholders as Class A and Class B Common Stock share in the same earnings and profits, thus, having no impact on the calculation.

The Company has calculated the basic and diluted earnings per share during the years ended December 31, 2021 and 2020 as follows (in thousands, except per share data):

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| **Numerator:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to CaliberCos Inc. | $(698) | $(5446) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred stock dividends |  | (245) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Convertible debt interest | 97 | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (loss) attributable to common shareholders of CaliberCos Inc. | $(601) | $(5576) |
| **Denominator:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average shares outstanding - basic | 17824 | 17474 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dilutive shares - options, net |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dilutive shares - convertible debt, net | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average shares outstanding - diluted | 17824 | 17474 |
| Basic net income (loss) per share attributable to common shareholders | $(0.03) | $(0.32) |
| Diluted net income (loss) per share attributable to common shareholders | $(0.03) | $(0.32) |

---

For the years ended December 31, 2021 and 2022, the number of antidilutive shares consisting of exercised warrants, stock options, and conversion of convertible debt, which have been excluded from the computation of diluted loss per share were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2021** | **2020** |
| Additional common shares, if stock options were exercised | 1706 | 1534 |
| Additional common shares, if warrants were exercised |  | 15 |
| Additional common shares, if convertible debt were converted | 197 | 232 |
|  | 1903 | 1781 |

---

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 15 – Fair Value of Financial Instruments**

Fair values of financial instruments held by consolidated funds are estimated using available market information and established valuation methodologies. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

Financial instruments that approximate fair value due to the short-term nature of the instruments consist of cash, restricted cash, accounts receivable, and accounts payable. The fair values of long-term debt, advance key money, and interest rate caps have been estimated based on current rates available for similar instruments with similar terms, maturities, and collateral. The carrying values of the Company's long-term debt, advance key money, and interest rate caps as of December 31, 2021 and 2020, approximated fair value, except for the long-term debt instruments listed below, all of which were measured with Level 2 inputs. The estimated fair values for the instruments below were determined by management based on a discounted future cash-flow model (in thousands).

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2021** | **December 31, 2021** | **December 31, 2020** | **December 31, 2020** |
| <br>**Note Payable** | **Carrying<br> Value** | **Fair Value** | **Carrying<br> Value** | **Fair Value** |
| Hampton Inn & Suites Hotel | $6345 | $4408 | $6556 | $4107 |
| Hilton Tucson East Hotel (1) |  |  | 14000 | 13189 |
| GC Square Apartments | 11581 | 7946 | 11600 | 7521 |
| Ironwood Fundco, LLC | 2500 | 2400 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) As of December 2021,
 the Company determined it was no longer the primary beneficiary of the Tucson East, LLC fund, as the Company is no longer the guarantor
 of its refinanced debt and therefore the fund was deconsolidated. Refer to Note 2 – Summary of Significant Accounting Policies
 – *Basis of Presentation and Consolidation* for additional information on the Company's accounting for VIEs and
 Note 6 – Notes Payable for additional information.

**Note 16 – Segment Reporting**

During 2021, we realigned our operating segments to better reflect the internal management of our business. This realignment demonstrates a strategic shift in the growth and maturation of the Caliber model into an alternative asset manager generating fees from managed capital and growing a portfolio of high value diversified assets. Management has concluded that based on the strategic shift in our operating strategies the consolidated investment funds which previously comprised the Hospitality, Residential, Commercial and Diversified segments, no longer meet the requirements in ASC 280, *Segment Reporting*, as operating segments. The consolidated investment funds are consolidated based on the requirement in ASC 810, *Consolidation*, as the Company was determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds. Outside of our interests as the manager or general partner of these funds, our benefits in these entities are limited to Caliber's direct membership or partnership interests, if any. The Company's chief operating decision maker no longer regularly reviews the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances be made to these funds. The operating activities, financial results, forecasts or plans for our investment funds are regularly reviewed by our hospitality and real estate asset management managers. The Company's chief operating decision maker reviews the operating results of our Fund Management, Development and Brokerage operating segments on a monthly basis for the purposes of allocating resources and assessing performance. This review does not include the operating activity of the consolidated funds.

The Company's operations are organized into three operating segments which constitute three reportable segments for management and financial reporting purposes: Fund Management, Development and Brokerage. Each segment is described below:

***Fund Management***

The Fund Management segment represents our fund management activities along with back office and corporate support functions including accounting and human resources. It includes the activities of Caliber Services, LLC and its subsidiaries, ("Caliber Services"), which acts as an external manager of our funds, which have diversified investment objectives. It also includes the activities associated with Caliber Securities, LLC ("Caliber Securities"), a wholly-owned Arizona registered issuer-dealer, which generates fees from fund formation. Revenues generated by this segment include asset management fees, performance allocations and transaction and advisory fees.

***Development***

The Development segment represents our activities associated with providing real estate development services as their principal developer. These services include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by our funds. Revenues generated by this segment are generally based on 4% of the total expected costs of the development or 4% of the total expected costs of the construction project. Caliber Development, LLC ("Caliber Development"), a wholly-owned subsidiary of Caliber Services and an Arizona licensed general contractor, acts as either the developer, development manager, and/or construction manager on our funds' projects.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Brokerage***

This segment includes our real estate brokerage operations. The Company generates commission revenue by acting as a broker for residential and commercial real estate owners and investors seeking to buy, sell and/or lease properties, including investment properties, as well as primary residences. The Company provides brokerage services to affiliated entities as well as third parties.

The information below includes the operating results and measures of profitability for all operating entities which the Company and our chief executive officer, who is our chief operating decision maker ("CODM"), analyze on a regular basis, for the purposes of allocating resources and assessing performance. The results of each segment are presented on a gross basis, prior to any necessary adjustments to (i) eliminate inter-segment transactions, if any, (ii) eliminate the results of entities that are not included in our accompanying consolidated financial statements, (iii) eliminate revenue activity presented gross when U.S. GAAP requires net, and (iv) reclassify items to reflect U.S. GAAP consolidated presentation.

The following tables present the revenues and net income (loss) of each of our reportable segments for the years ended December 31, 2021 and 2020. Consolidated fund revenues and consolidated fund net income (loss) are presented in order to meet the GAAP requirement to reconcile the total segment revenues to total revenues on the consolidated statement of operations which includes consolidated fund revenues. Interest income, interest expense, depreciation and amortization expense, and other expenses (income) are excluded from our segment presentation as these amounts are immaterial.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Amounts in thousands)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
|  | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Non-Controlling<br> Interests** | **Eliminations** | |
|  | **Fund <br> Management** | **Development** | **Brokerage** | **Segment <br> Total** | **Consolidated<br> Funds** | **Intercompany<br> Eliminations** |<br>**CaliberCos Inc. <br> & Subsidiaries** |
| **Revenues<sup>1</sup>** | | | | | | | |
| &nbsp;&nbsp;&nbsp;Asset management fees | $7610 | $- | $- | $7610 | $- | $(4134) | $3476 |
| &nbsp;&nbsp;&nbsp;Performance allocations | 733 |  |  | 733 |  |  | 733 |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 3240 | 3211 | 1198 | 7649 |  | (1983) | 5666 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality revenue |  |  |  |  | 40837 |  | 40837 |
| &nbsp;&nbsp;&nbsp;Consolidated funds – Other revenue | - | - | - | - | 5321 | - | 5321 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 11583 | 3211 | 1198 | 15992 | 46158 | (6117) | 56033 |
| **Net Income (Loss)** | $(2244) | $440 | $1228 | $(576) | $(15373) | $(5218)**<sup>2</sup>** | $(21167) |

---

1 For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP basis because these fees are eliminated in consolidation when they are derived from a consolidated fund.

2 This amount eliminates the intercompany fees and expenses of CaliberCos Inc. and its wholly-owned subsidiaries and our consolidated funds.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Amounts in thousands)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** | **Year Ended December 31, 2020** |
|  | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Real Estate Services** | **Non-Controlling<br> Interests** | **Eliminations** | |
|  | **Fund<br> Management** | **Development** | **Brokerage** | **Segment<br> Total** | **Consolidated<br> Funds** | **Intercompany<br> Eliminations** |<br>**CaliberCos Inc. <br> & Subsidiaries** |
| **Revenues<sup>1</sup>** | | | | | | | |
| &nbsp;&nbsp;&nbsp;Asset management fees | $5316 | $- | $- | $5316 | $- | $(2562) | $2754 |
| &nbsp;&nbsp;&nbsp;Performance allocations | 422 |  |  | 422 |  | (123) | 299 |
| &nbsp;&nbsp;&nbsp;Transaction and advisory fees | 1278 | 4434 | 747 | 6459 |  | (3044) | 3415 |
| &nbsp;&nbsp;&nbsp;Consolidated funds - Hospitality revenue |  |  |  |  | 27676 |  | 27676 |
| &nbsp;&nbsp;&nbsp;Consolidated funds – Other revenue | - | - | - | - | 3733 | - | 3733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 7016 | 4434 | 747 | 12197 | 31409 | (5729) | 37877 |
| **Net (Loss)** | $(3266) | $(228) | $(222) | $(3716) | $(17818) | $(4011)**<sup>2</sup>** | $(25545) |

---

1 For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our consolidated funds. As a result, segment revenues are different than those presented on a consolidated basis in accordance with U.S. GAAP basis because these fees are eliminated in consolidation when they are derived from a consolidated fund.

2 This amount eliminates the intercompany fees and expenses of CaliberCos Inc. and its wholly-owned subsidiaries and our consolidated funds.

**CALIBERCOS INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 17 – Subsequent Events**

Management has evaluated events and transactions that occurred after December 31, 2021 through September 29, 2022, the date these consolidated financial statement were available to be issued. In addition to the matters discussed in Note 6 – Notes Payable and Note 11 – Commitments and Contingencies, the following is a summary of the significant events and transactions that took place during this period:

&nbsp;&nbsp;&nbsp;&nbsp;· In March 2022,
 our consolidated investment fund GC Square, LLC sold its investment in a 164-unit apartment
 complex located in Phoenix, Arizona for $31.0 million.

**1,600,000 Shares**

![](tm2230806d1_s1aimg008.jpg)

**CALIBERCOS INC.**

**Class A common stock**

**PRELIMINARY PROSPECTUS**

---

| | |
|:---|:---|
| **Revere Securities LLC** | **Spartan Capital Securities, LLC** |

---

**, 2023**

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these securities.

Until , 2023 (25 days after the commencement of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this prospectus, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscription.

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION**

The following table sets forth the costs and expenses payable by us (the Registrant), other than underwriting discounts and commissions, in connection with the issuance and distribution of the securities being registered hereunder. All of the amounts shown are estimates, except for the SEC Registration Fee and FINRA filing fee.

---

| | |
|:---|:---|
|  | **Amounts to<br> be Paid** |
| SEC registration fee | $1014 |
| FINRA filing fee | 8000 |
| Nasdaq filing fee | 50000 |
| Printing fees and expenses | 50000 |
| Legal fees and expenses | 600000 |
| Accounting fees and expenses | 200000 |
| Transfer agent and registrar fees | 6200 |
| Miscellaneous fees and expenses | 299786 |
| Total | $1215000 |

---

**ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS**

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act. Our amended and restated certificate of incorporation that will be in effect on the completion of this offering permits indemnification of our directors, officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law, and our amended and restated bylaws that will be in effect on the completion of this offering provide that we will indemnify our directors and officers and permit us to indemnify our employees and other agents, in each case to the maximum extent permitted by the Delaware General Corporation Law.

We have entered into indemnification agreements with our directors and officers, whereby we have agreed to indemnify our directors and officers to the fullest extent permitted by law, including indemnification against expenses and liabilities incurred in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason of the fact that such director or officer is or was a director, officer, employee or agent of CaliberCos Inc., provided that such director or officer acted in good faith and in a manner that the director or officer reasonably believed to be in, or not opposed to, the best interest of CaliberCos Inc. At present, there is no pending litigation or proceeding involving a director or officer of CaliberCos Inc. regarding which indemnification is sought, nor is the registrant aware of any threatened litigation that may result in claims for indemnification.

We maintain insurance policies that indemnify our directors and officers against various liabilities arising under the Securities Act and the Securities Exchange Act of 1934, as amended, that might be incurred by any director or officer in his capacity as such.

The underwriters are obligated, under certain circumstances, under the underwriting agreement to be filed as Exhibit 1.1 hereto, to indemnify us and our officers and directors against liabilities under the Securities Act.

**ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES**

The following sets forth information regarding all unregistered securities sold since January 1, 2019:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) *Issuances of Options to Purchase Common Stock* —From January 1, 2019 through the date of this registration statement, we granted under our 2017 Plan options to purchase
 an aggregate of 1,357,430 shares of our common stock to a total of 145 employees, consultants and directors, having exercise prices
 ranging from $3.35 to $6.73 per share.

(2) From January 1, 2019 through the date of this
 registration statement, we issued 1,650,215 shares of Series B preferred stock at a per share price of $6.73 pursuant to Regulation
 A+.

(3) From January 1, 2019 through the date of this
 registration statement, we issued 515,860 restricted stock units to employees of our company.

(4) On June 24, 2022, we issued 475,613 shares
 of Class A common stock to a former consultant in connection with the settlement of a dispute.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise specified above, we believe these transactions were exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act (and Regulation D or Regulation S promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.

**Item 16. Exhibits and Financial Statement Schedules.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits.

See the Exhibit Index on the page immediately preceding the signature page for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Financial Statement Schedules.

All financial statement schedules are omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or the notes thereto.

**Item 17. Undertakings.**

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant under the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;(1) For
 purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part
 of this registration statement in reliance on Rule 430A and contained in a form of prospectus filed by the registrant under
 Rule 424(b)(1) or (4) or 497(h) under the Securities Act will be deemed to be part of this registration statement
 as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;(2) For
 the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
 prospectus will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
 securities at that time will be deemed to be the initial bona fide offering thereof.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit<br> Number** | **Description** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[1.1](tm2230806d6_ex1-1.htm) | [Form of Underwriting Agreement](tm2230806d6_ex1-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.1](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex2-1.htm) | [Second Amended and Restated Certificate of Incorporation of CaliberCos Inc. (incorporated by reference to Exhibit 2.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on January 3, 2020)](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex2-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.1.1](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex2-1d1.htm) | [First Amendment to Second Amended and Restated Certificate of Incorporation of CaliberCos Inc. (incorporated by reference to Exhibit 2.1.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on January 3, 2020)](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex2-1d1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.1.2](https://www.sec.gov/Archives/edgar/data/1627282/000110465920049802/tm2016658d1_ex2-1d2.htm) | [Second Amendment to Second Amended and Restated Certificate of Incorporation of CaliberCos Inc. (incorporated by reference to Exhibit 2.1.2 of CaliberCos Inc.'s statement on Form 1-U (File No.24R-00272), filed with the SEC on April 23, 2020)](https://www.sec.gov/Archives/edgar/data/1627282/000110465920049802/tm2016658d1_ex2-1d2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.1.3](tm2230806d6_ex3-1x3.htm) | [Third Amendment to Second Amended and Restated Certificate of Incorporation of CaliberCos Inc.](tm2230806d6_ex3-1x3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.1.4\*\*](http://www.sec.gov/Archives/edgar/data/1627282/000110465922121830/tm2230806d1_ex3-1d3.htm) | [Form of Third Amended and Restated Certificate of Incorporation of CaliberCos Inc.](http://www.sec.gov/Archives/edgar/data/1627282/000110465922121830/tm2230806d1_ex3-1d3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.2](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex2-2.htm) | [Bylaws of CaliberCos Inc. (incorporated by reference to Exhibit 2.2 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019).](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex2-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.2.1](https://www.sec.gov/Archives/edgar/data/1627282/000114420419045512/tv529154_ex2-3.htm) | [Amendment No.1 to Bylaws of CaliberCos Inc. (incorporated by reference to Exhibit 2.3 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419045512/tv529154_ex2-3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3.3\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922126990/tm2230806d2_ex3-3.htm) | [Form of Amended and Restated Bylaws of CaliberCos Inc.](https://www.sec.gov/Archives/edgar/data/1627282/000110465922126990/tm2230806d2_ex3-3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.1\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex4-1.htm) | [Form of Class A common stock Certificate](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex4-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.2](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-1.htm) | [Stockholders' Agreement dated September 21, 2018, by and among the Company, John C. Loeffler, Jennifer Schrader and Donnie Schrader (incorporated by reference to Exhibit 3.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.2.1](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-2.htm) | [Stock Purchase Agreement dated September 21, 2018, by and among the Company and Donnie Schrader (incorporated by reference to Exhibit 3.2 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.3](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-3.htm) | [Form of Warrant, exercise price of $1.70 (Tranche 1) (incorporated by reference to Exhibit 3.3 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.4](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-4.htm) | [Form of Warrant, exercise price of $1.70 (Tranche 2) (incorporated by reference to Exhibit 3.4 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex3-4.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4.5](https://www.sec.gov/Archives/edgar/data/1627282/000110465920006799/tv535798_ex4-1.htm) | [Form of Subscription Agreement for CaliberCos Inc.'s Series B Preferred Stock (incorporated by reference to Exhibit 4.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on January 24, 2020)](https://www.sec.gov/Archives/edgar/data/1627282/000110465920006799/tv535798_ex4-1.htm) |

---

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[5.1\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex5-1.htm) | [Opinion of Manatt, Phelps & Phillips LLP](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex5-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.1+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-1.htm) | [CaliberCos Inc. Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 6.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on December 5, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.2+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-2.htm) | [Mortgage Note ($14000000) dated June 19, 2018, payable to Cerco Capital Inc. (incorporated by reference to Exhibit 6.2 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.2.1+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-2x1.htm) | [Guaranty of Recourse Obligations dated June 29, 2018, by Chris Loeffler and Jennifer Schrader, in favor of Cerco Capital Inc. (incorporated by reference to Exhibit 6.2.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-2x1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.3+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-3.htm) | [Promissory Note ($62245000) dated September 2018, payable to RCC Real Estate, Inc. (incorporated by reference to Exhibit 6.3 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.4.1+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-3x1.htm) | [Guaranty of Recourse Obligations dated September 2018, by CaliberCos Inc., Jennifer Schrader, John C. Loeffler II, and Frank Heavlin, for the benefit of RCC Real Estate Inc. (incorporated by reference to Exhibit 6.3.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-3x1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.5](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-4.htm) | [Office Lease Agreement by and among Pollock Gateway II LLC and CaliberCos Inc. dated July 13, 2018 (incorporated by reference to Exhibit 6.4 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-4.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.6](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-4x1.htm) | [First Amendment to Office Lease Agreement, by and among Pollock Gateway II LLC and CaliberCos Inc. dated November 14, 2018 (incorporated by reference to Exhibit 6.4.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on June 13, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419030743/tv515450_ex6-4x1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.7+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-5.htm) | [Executive Employment Agreement dated January 1, 2019 by and among CaliberCos Inc. and Jennifer Schrader (incorporated by reference to Exhibit 6.5 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on August 19, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-5.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.8+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-6.htm) | [Executive Employment Agreement dated January 1, 2019 by and among CaliberCos Inc. and John C. Loeffler II (incorporated by reference to Exhibit 6.6 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on August 19, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-6.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.9+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-7.htm) | [Executive Employment Agreement dated January 1, 2019 by and among CaliberCos Inc. and Roy Bade (incorporated by reference to Exhibit 6.7 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on August 19, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-7.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.10+](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-8.htm) | [Executive Employment Agreement dated January 1, 2019 by and among CaliberCos Inc. and Jade Leung (incorporated by reference to Exhibit 6.8 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on August 19, 2019)](https://www.sec.gov/Archives/edgar/data/1627282/000114420419040467/tv523526_ex6-8.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.11\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922121830/tm2230806d1_ex10-11.htm) | [Form of Indemnification Agreement between CaliberCos Inc. and its directors and officers](https://www.sec.gov/Archives/edgar/data/1627282/000110465922121830/tm2230806d1_ex10-11.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.12](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex8-1.htm) | [Form of Escrow Agreement by and among CaliberCos Inc., SI Securities, LLC and The Bryn Mawr Trust Company of Delaware (incorporated by reference to Exhibit 8.1 of CaliberCos Inc.'s offering statement on Form 1-A (File No.024-11016), filed with the SEC on January 3, 2020)](https://www.sec.gov/Archives/edgar/data/1627282/000110465920000830/tv534320_ex8-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[21.1\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex21-1.htm) | [List of Subsidiaries of CaliberCos Inc.](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex21-1.htm) |

---

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[23.1\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex5-1.htm) | [Consent of Manatt, Phelps & Phillips LLP (included in Exhibit 5.1)](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex5-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[23.2](tm2230806d6_ex23-2.htm) | [Consent of Deloitte & Touche LLP, independent registered public accounting firm](tm2230806d6_ex23-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[24.1\*\*](http://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_s1a.htm#kkk001) | [Power of Attorney](http://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_s1a.htm#kkk001) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[99.1\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-1.htm) | [Consent of William J. Gerber, director nominee](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[99.2\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-2.htm) | [Consent of Michael Trzupek, director nominee](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[99.3\*\*](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-3.htm) | [Consent of Daniel P. Hansen, director nominee](https://www.sec.gov/Archives/edgar/data/1627282/000110465922112555/tm2228946d1_ex99-3.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[107](tm2230806d6_ex107.htm) | [SEC Filing Fee Table](tm2230806d6_ex107.htm) |

---

\*\* Previously filed. <br> + Indicates management contract or compensatory plan.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Scottsdale, Arizona, on January 19, 2023.

---

| | |
|:---|:---|
| **CALIBERCOS INC.** | **CALIBERCOS INC.** |
| By: | /s/ John C. Loeffler, II |
| Name: | John C. Loeffler |
| Title: | Chairman and Chief Executive Officer |

---

As required under the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated:

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ John C. Loeffler, II | Chairman and Chief Executive Officer (*Principal Executive Officer*) | January 19, 2023 |
| John C. Loeffler, II |  |  |
| /s/ Jade Leung | Chief Financial Officer (*Principal Accounting Officer*) | January 19, 2023 |
| Jade Leung |  |  |
| /s/ Jennifer Schrader | President, Chief Operating Officer and Vice-Chairperson | January 19, 2023 |
| Jennifer Schrader |  |  |

---

## Exhibit 1.1

**Exhibit 1.1**

**UNDERWRITING AGREEMENT**

[\*], 2023

Revere Securities, LLC

650 Fifth Avenue, 35th Floor

New York, NY 10019

Spartan Capital Securities LLC

45 Broadway

New York, NY 10006

*As Representatives of the several Underwriters named on Schedule 1 attached hereto*

Ladies and Gentlemen:

The undersigned, CaliberCos Inc., a Delaware corporation (the "**Company**"), hereby confirms its agreement (this "**Agreement**") with Revere Securities, LLC and Spartan Capital Securities LLC (hereinafter referred to collectively as "you" (including its correlatives) or the "**Representatives**") and with the other underwriters named on <u>Schedule 1</u> hereto for which the Representatives are acting as representatives (the Representatives and such other underwriters being collectively called the "**Underwriters**" or, individually, an "**Underwriter**") as follows:

1. <u>Purchase and Sale of Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 *<u>Firm Shares</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.1. <u>Nature and Purchase of Firm Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell in the aggregate [\*] shares of Class A common stock of the Company, par value $0.001 per share (the "**Common Stock**"), and each Underwriter agrees to purchase, severally and not jointly, at the Closing, an aggregate of [\*] shares ("**Firm Shares**") of the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Firm Shares are to be offered together to the public at the offering price per one Firm Share as set forth on <u>Schedule 2-A</u> hereto (the "**Purchase Price**"). The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm Shares set forth opposite their respective names on <u>Schedule 1</u> attached hereto and made a part hereof at the purchase price for one Firm Share of $[\*] (or 92% of the Purchase Price).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.2. <u>Firm Shares Payment and Delivery</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Delivery and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on the second (2<sup>nd</sup>) Business Day following the effective date (the "**Effective Date**") of the Registration Statement (as defined in <u>Section 2.1.1</u> below) (or the third (3<sup>rd</sup>) Business Day following the Effective Date if the Registration Statement is declared effective after 4:01 p.m., Eastern time) or at such earlier time as shall be agreed upon by the Representatives and the Company, at the offices of Bevilacqua PLLC ("**Representatives' Counsel**"), or at such other place (or remotely by facsimile or other electronic transmission) as shall be agreed upon by the Representatives and the Company. The hour and date of delivery and payment for the Firm Shares is called the "**Closing Date**."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery of the certificates (in form and substance satisfactory to the Underwriters) representing the Firm Shares (or through the facilities of the Depository Trust Company ("**DTC**")) for the account of the Underwriters. The Firm Shares shall be registered in such name or names and in such authorized denominations as the Representatives may request in writing prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representatives for all of the Firm Shares. The term "**Business Day**" means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2. *<u>Over-allotment Option</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.1. <u>Option Shares</u>. For the purposes of covering any over-allotments in connection with the distribution and sale of the Firm Shares, the Company hereby grants to the Underwriters an option (the "**Over-allotment Option**") to purchase, in the aggregate, up to [\*] additional shares of the Common Stock (the "**Option Shares**", and along with the Firm Shares, the "**Shares**"), representing fifteen percent (15%) of the Firm Shares sold in the Offering (as defined below), from the Company. The purchase price to be paid per Option Share shall be equal to the price per Option Share set forth in <u>Schedule 2-A</u>. The Shares shall be issued directly by the Company and shall have the rights and privileges described in the Registration Statement, the Pricing Disclosure Package and the Prospectus referred to below. The offering and sale of the Shares is herein referred to as the "**Offering**."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.2. <u>Exercise of Option</u>. The Over-allotment Option granted pursuant to <u>Section 1.2.1</u> hereof may be exercised by the Representatives as to all (at any time) or any part (from time to time) of the Option Shares within forty-five (45) days after the Closing Date. The Underwriters shall not be under any obligation to purchase any of the Option Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of written notice to the Company from the Representatives, setting forth the number of the Option Shares to be purchased and the date and time for delivery of and payment for the Option Shares (the "**Option Closing Date**"), which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representatives, at the offices of Representatives' Counsel or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representatives. If such delivery and payment for the Option Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Option Shares subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the number of the Option Shares specified in such notice and (ii) each of the Underwriters, acting severally and not jointly, shall purchase that portion of the total number of the Option Shares then being purchased as set forth in <u>Schedule 1</u> opposite the name of such Underwriter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.3. <u>Payment and Delivery</u>. Payment for the Option Shares shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery to you of certificates (in form and substance satisfactory to the Underwriters) representing the Option Shares (or through the facilities of DTC or via DWAC transfer) for the account of the Underwriters. The Option Shares shall be registered in such name or names and in such authorized denominations as the Representatives may request in writing prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of payment by the Representatives for applicable Option Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 *<u>Directed Share Program</u>*. At the request of the Company, the Underwriters have reserved for sale, at the public offering price, up to an aggregate of 10% of the Firm Shares offered in this Offering (the "**Directed Shares**") to certain of our directors, officers, employees and certain friends and family members of these persons, and certain clients and prospective clients (each, a "**Participant**"). The sales will be made by the Underwriters, through a directed share program (the "**Directed Share Program**"). Any Firm Shares purchased through the Directed Share Program shall reduce the number of Firm Shares available for sale to the general public. Any Firm Shares reserved through the Directed Share Program that are not so purchased will be offered by Underwriter to the general public on the same terms as the Firm Shares offered by this prospectus. Any Firm Shares sold in the Directed Share Program to a director or officer of the Company, each of whom has entered into a lock-up agreement, shall be subject to the provisions of such lock-up agreement. The Underwriter shall be entitled to same compensation for any Firm Shares sold through the Directed Share Program as it would be otherwise be entitled to from the sale of Firm Shares through this Offering.

2. <u>Representations and Warranties of the Company</u>. The Company represents and warrants to the Underwriters as of the Applicable Time (as defined below), as of the Closing Date and as of the Option Closing Date, if any, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. *<u>Filing of Registration Statement</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.1. <u>Pursuant to the Securities Act</u>. The Company has filed with the U.S. Securities and Exchange Commission (the "**Commission**") a registration statement, and an amendment or amendments thereto, on Form S-1 (File No. <u>333-267657</u>), including any related prospectus or prospectuses, for the registration of the Shares under the Securities Act of 1933, as amended (the "**Securities Act**"). Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the rules and regulations of the Commission under the Securities Act (the "**Securities Act Regulations**") (the "**Rule 430A Information**")), is referred to herein as the "**Registration Statement**." If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term "**Registration Statement**" shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on the date hereof.

Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a "**Preliminary Prospectus**." The Preliminary Prospectus, subject to completion, dated [\*], that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the "**Pricing Prospectus**." The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called the "**Prospectus**." Any reference to the "**most recent Preliminary Prospectus**" shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.

"**Applicable Time**" means 4:00 p.m., Eastern time, on the date of this Agreement.

"**Issuer Free Writing Prospectus**" means any "issuer free writing prospectus," as defined in Rule 433 of the Securities Act Regulations ("**Rule 433**"), including without limitation any "free writing prospectus" (as defined in Rule 405 of the Securities Act Regulations) relating to the Shares that is (i) required to be filed with the Commission by the Company, (ii) a "road show that is a written communication" within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Shares or of the Offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company's records pursuant to Rule 433(g).

"**Issuer General Use Free Writing Prospectus**" means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a "*bona fide* electronic road show," as defined in Rule 433 (the "**Bona Fide Electronic Road Show**")), as evidenced by its being specified in <u>Schedule 2-B</u> hereto.

"**Issuer Limited Use Free Writing Prospectus**" means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

"**Pricing Disclosure Package**" means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and the information included on <u>Schedule 2-A</u> hereto, all considered together.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.2. <u>Pursuant to the Exchange Act</u>. The Company has filed with the Commission a Form 8-A (File Number [\*]) providing for the registration pursuant to Section 12(b) under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), of the Common Stock. The registration of the Common Stock under the Exchange Act has become effective on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any written notification that the Commission is contemplating terminating such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.2. <u>Share Exchange Listing</u>.* The Shares have been approved for listing on the Nasdaq Capital Market (the "**Exchange**"), and the Company has taken no action designed to, or likely to have the effect of, delisting of the Shares from the Exchange, nor has the Company received any written notification that the Exchange is contemplating terminating such listing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.3. <u>No Stop Orders, etc</u>.* Neither the Commission nor, to the Company's knowledge, any state regulatory authority has issued any written order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company's knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied in all material respects with each request (if any) from the Commission for additional information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.4. <u>Disclosures in Registration Statement</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.1. <u>Compliance with Securities Act and 10b-5 Representation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Neither the Registration Statement nor any amendment thereto, at its effective time, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Limited Use Free Writing Prospectus hereto does not conflict with the information contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; *provided*, *however*, that this representation and warranty shall not apply to statements made in reliance upon and in conformity with information furnished to the Company in writing with respect to the Underwriters by the Representatives expressly for use in the Registration Statement, the Pricing Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of the disclosure contained in the last paragraph on the cover page of the Prospectus, marketing and legal names of each Underwriter, in the "Underwriting" subsection "- Discounts and Commissions; Expenses," and the third and seventh paragraphs of the subsection "- Lock-Up Agreement" of the Prospectus (the "**Underwriters' Information**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date or at any Option Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; *provided*, *however*, that this representation and warranty shall not apply to the Underwriters' Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.2. <u>Disclosure of Agreements</u>. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company's business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company's knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company's knowledge, any other party is in default thereunder and, to the Company's knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder, except for any default or event which would not reasonably be expected to result in a Material Adverse Change (as defined below). To the Company's knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a "**Governmental Entity**"), including, without limitation, those relating to environmental laws and regulations, except for any violation which would not reasonably be expected to result in a Material Adverse Change (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.3. <u>Prior Securities Transactions</u>. During the past three (3) years from the date of this Agreement, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and any Preliminary Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.4. <u>Regulations</u>. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and all foreign regulation on the Offering and the Company's business as currently contemplated are correct in all material respects and no other such regulations are required by the Securities Act or the Securities Act Regulations to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.5. <u>Changes after Dates in Registration Statement</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.1. <u>No Material Adverse Change</u>. Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company or its Subsidiaries (as defined in Section 2.7 below) taken as a whole, nor any change or development that, singularly or in the aggregate, would involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business, or assets of the Company or its Subsidiaries taken as a whole (a "**Material Adverse Change**"); (ii) there have been no material transactions entered into by the Company or its Subsidiaries, other than as contemplated pursuant to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.2. <u>Recent Securities Transactions, etc</u>. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.6. <u>Independent Accountants</u>*. To the knowledge of the Company Deloitte & Touche LLP ("**Auditor**"), whose report is filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. The Auditor has not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.7. <u>Financial Statements, etc</u>.* The financial statements, including the notes thereto and supporting schedules, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present in all material respects the financial position and the results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("**GAAP**"), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes required by GAAP); and any supporting schedules included in the Registration Statement present fairly in all material respects the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding "non-GAAP financial measures" (as such term is defined by the rules and regulations of the Commission), if any, comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect on the Company's financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) neither the Company nor any of its subsidiaries listed in Exhibit 21.1 to the Registration Statement (each, a "**Subsidiary**" and, collectively, the "**Subsidiaries**"), has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its Common Stock or preferred stock (c) there has not been any change in the capital of the Company or any of its Subsidiaries, or, other than in the course of business, any grants under any stock compensation plan, and (d) there has not been any Material Adverse Change in the Company's long-term or short-term debt. The Company represents that it has no direct or indirect subsidiaries other than (a) those listed in Exhibit 21.1 to the Registration Statement and (b) certain other subsidiaries which, considered in the aggregate as a single subsidiary, do not constitute a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.8. <u>Authorized Capital; Options, etc</u>*. The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing Date the adjusted capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time and on the Closing Date and any Option Closing Date, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Stock or any security convertible or exercisable into Common Stock, or any contracts or commitments to issue or sell Common Stock or any such options, warrants, rights or convertible securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.9. <u>Valid Issuance of Securities, etc.</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9.1. <u>Outstanding Securities</u>. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The Common Stock, preferred stock, and any other securities outstanding or to be outstanding upon consummation of the Offering conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding Common Stock were at all relevant times either registered under the Securities Act and the applicable state securities or "blue sky" laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9.2. <u>Securities Sold Pursuant to this Agreement</u>. The Shares have been duly authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; the Shares are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Shares has been duly and validly taken. The Shares conform in all material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.10. <u>Registration Rights of Third Parties</u>*. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.11. <u>Validity and Binding Effect of Agreements</u>.* This Agreement has been duly and validly authorized by the Company, and, when executed and delivered, will constitute, the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.12. <u>No Conflicts, etc</u>.* The execution, delivery and performance by the Company of this Agreement and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any material violation of the provisions of the Company's Certificate of Incorporation (as the same may be amended or restated from time to time, the "**Charter**") or the by-laws of the Company; or (iii) material violate any existing applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof.

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.13. <u>No Defaults; Violations</u>.* No material default exists in the due performance and observance of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not (i) in violation of any term or provision of its Charter or by-laws, or (ii) in violation of any franchise, license, permit, applicable law, rule, regulation, judgment or decree of any Governmental Entity, except in the cases of clause (ii) for such violations which would not reasonably be expected to cause a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.14. <u>Corporate Power; Licenses; Consents</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14.1. <u>Conduct of Business</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except for the absence of which would not reasonably be expected to have a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14.2. <u>Transactions Contemplated Herein</u>. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency, the Exchange or other body is required for the valid issuance, sale and delivery of the Shares and the consummation of the transactions and agreements contemplated by this Agreement and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except with respect to applicable Securities Act Regulations, state securities laws and the rules and regulations of the Financial Industry Regulatory Authority, Inc. ("**FINRA**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.15. <u>D&O Questionnaires</u>.* To the Company's knowledge, all information contained in the questionnaires (the "**Questionnaires**") completed by each of the Company's directors and officers immediately prior to the Offering (the "**Insiders**") as supplemented by all information concerning the Company's directors, officers and principal shareholders as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, as well as in the Lock-Up Agreement (as defined in <u>Section 2.24</u> below), provided to the Underwriters, is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate and incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.16. <u>Litigation; Governmental Proceedings</u>.* There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company's knowledge, threatened against, or involving the Company or, to the Company's knowledge, any executive officer or director which has not been disclosed as required by the Securities Act or the Securities Regulations in the Registration Statement, the Pricing Disclosure Package and the Prospectus*.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.17. <u>Good Standing</u>.* The Company has been duly organized and is validly existing as a corporation and is in good standing under the laws of the State of Delaware as of the date hereof, and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.18. <u>Insurance</u>.* The Company carries or is entitled to the benefits of insurance, (including, without limitation, as to directors and officers insurance coverage), with, to the Company's knowledge, reputable insurers, in the amount of directors and officers insurance coverage at least equal to $5,000,000 and the Company has included each Underwriter as an additional insured party to the directors and officers insurance coverage and all such insurance is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.19. <u>Transactions Affecting Disclosure to FINRA</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.1. <u>Finder's Fees</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder's, consulting or origination fee by the Company or any Insider with respect to the sale of the Shares hereunder or any other arrangements, agreements or understandings of the Company or, to the Company's knowledge, any of its shareholders that may affect the Underwriters' compensation, as determined by FINRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.2. <u>Payments within Twelve (12) Months</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder's fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve (12) months immediately prior to the original filing of the Registration Statement, other than the payment to the Underwriters as provided hereunder in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.3. <u>Use of Proceeds</u>. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.4. <u>FINRA Affiliation</u>. To the Company's knowledge, and except as may otherwise be disclosed in FINRA questionnaires provided to the Representatives' Counsel, there is no (i) officer or director of the Company, (ii) beneficial owner of 5% or more of any class of the Company's securities or (iii) beneficial owner of the Company's unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.5. <u>Information</u>. All information provided by the Company in its FINRA questionnaire to Representatives' Counsel specifically for use by Representatives' Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.20. <u>Foreign Corrupt Practices Act</u>.* None of the Company and its Subsidiaries or, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.21. <u>Compliance with OFAC</u>.* None of the Company and its Subsidiaries or, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("**OFAC**"), and the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.22. <u>Money Laundering Laws</u>.* The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the "**Money Laundering Laws**"); and no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.23. <u>Officers' Certificate</u>.* Any certificate signed by any duly authorized officer of the Company and delivered to you or to Representatives' Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.24. <u>Lock-Up Agreements</u>*<u>. Schedule 3</u> hereto contains a complete and accurate list of the Company's officers and directors, [as well as Donnie Schrader] (collectively, the "**Lock-Up Parties**"). The Company has caused each of the Lock-Up Parties to deliver to the Representatives an executed Lock-Up Agreement, in a form substantially similar to that attached hereto as <u>Exhibit A</u> (the "**Lock-Up Agreement**"), prior to the execution of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.25. <u>Subsidiaries</u>*. All Subsidiaries of the Company are duly organized and in good standing under the laws of the place of organization or incorporation, and each Subsidiary is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify would not have a Material Adverse Change. The Company's ownership and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.26. <u>Related Party Transactions</u>.* There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have not been described as required by the Securities Act Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.27. <u>Board of Directors</u>.* The Board of Directors of the Company is comprised of the persons set forth under the heading of the Pricing Prospectus and the Prospectus captioned "Management." The qualifications of the persons serving as board members and the overall composition of the board comply with the Exchange Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the "**Sarbanes-Oxley Act**") applicable to the Company and the listing rules of the Exchange. At least one member of the Audit Committee of the Board of Directors of the Company qualifies as an "audit committee financial expert," as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons serving on the Board of Directors qualify as "independent," as defined under the listing rules of the Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.28. <u>Sarbanes-Oxley Compliance</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28.1. <u>Disclosure Controls</u>. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company has developed and currently maintains disclosure controls and procedures that will comply in all material respects with Rule 13a-15 or 15d-15 under the Exchange Act Regulations, and such controls and procedures are effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the Company's Exchange Act filings and other public disclosure documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28.2. <u>Compliance</u>. The Company is, or at the Applicable Time and on the Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken reasonable steps to ensure the Company's future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.29.* <u>Accounting Controls</u>. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company maintains systems of "internal control over financial reporting" (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, its respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware of any material weaknesses in its internal control over financial reporting, and, if applicable, with respect to such remedial actions disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company represents that it has taken all remedial actions set forth in such disclosure. The Company's Auditor and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company's management and that have adversely affected or are reasonably likely to adversely affect the Company' ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company's management, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.30. <u>No Investment Company Status</u>*. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to register as an "investment company," as defined in the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.31. <u>No Labor Disputes</u>.* No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.32. <u>Intellectual Property Rights</u>*. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights ("**Intellectual Property Rights**") necessary for the conduct of the business of the Company and its Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company and except as may be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others. Neither the Company nor any of its Subsidiaries has received any written notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this <u>Section 2.32</u>, reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company's knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this <u>Section 2.32</u>, reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company's knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others, the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this <u>Section 2.32</u>, reasonably be expected to result in a Material Adverse Change; and (E) to the Company's knowledge, no employee of the Company is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee's employment with the Company, or actions undertaken by the employee while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company's knowledge, all material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge, any of its officers, directors or employees, or otherwise in violation of the rights of any persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.33. <u>Taxes</u>*. Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof, except in any case in which the failure so to file would not reasonably be expected to cause a Material Adverse Change. Each of the Company and its Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or such respective Subsidiary, except for any such taxes that are currently being contested in good faith or as would not reasonably be expected to cause a Material Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Except as disclosed in writing to the Underwriters, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its Subsidiaries. The term "taxes" means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term "returns" means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.34. <u>ERISA Compliance</u>.* The Company is not subject to the Employee Retirement Income Security Act of 1974, as amended, or the regulations and published interpretations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.35. <u>Compliance with Laws</u>*. Except as otherwise disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus and as could not, individually or in the aggregate, be expected to result in a Material Adverse Change, each of the Company and each Subsidiary, the Company: (A) is and at all times has been in compliance with all statutes, rules, or regulations applicable to the services provided by the Company ("**Applicable Laws**"), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any warning letter, untitled letter or other correspondence or written notice from any other governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws ("**Authorizations**"); (C) possesses all material Authorizations and such material Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding that if brought would result in a Material Adverse Change; (E) has not received written notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such Governmental Authority is considering such action; (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission); and (G) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, or other notice or action relating to the alleged lack of safety of any product or any alleged product defect or violation and, to the Company's knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.36. <u>Ineligible Issuer</u>.* At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Shares and at the date hereof, the Company was not and is not an "ineligible issuer," as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.37. <u>Real Property</u>.* Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company and its Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in the aggregate, materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any Subsidiary has received any written notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.38. <u>Contracts Affecting Capital</u>*. There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act Regulations) and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company's or its Subsidiaries' liquidity or the availability of or requirements for their capital resources required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus which have not been described as required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.39. <u>Loans to Directors or Officers</u>.* There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or its Subsidiaries to or for the benefit of any of the officers or directors of the Company, its Subsidiaries or any of their respective family members, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.40. <u>Industry Data; Forward-looking statements</u>.* The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company's good faith estimates that are made on the basis of data derived from such sources. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.41. <u>Electronic Road Show</u>.* The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) of the Securities Act Regulations such that no filing of any "road show" (as defined in Rule 433(h) of the Securities Act Regulations) is required in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.42. <u>Margin Securities</u>.* The Company owns no "margin securities" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "**Federal Reserve Board**"), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Stock to be considered a "purpose credit" within the meanings of Regulation T, U or X of the Federal Reserve Board*.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.43. <u>Dividends and Distributions</u>*. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, no Subsidiary of the Company is currently prohibited or restricted, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary's capital stock from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary's property or assets to the Company or any other Subsidiary of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.44. <u>Lending Relationships</u>*. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of the Underwriters and (ii) does not intend to use any of the proceeds from the sale of the Shares hereunder to repay any outstanding debt owed to any affiliate of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.45. <u>Smaller Reporting Company</u>*. As of the time of filing of the Registration Statement, the Company was a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.46. <u>Emerging Growth Company</u>*. From the time of the initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly in or through any Person authorized to act on its behalf in any Testing-the Waters Communication) through the date hereof, the Company has been and is an "emerging growth company," as defined in Section 2(a) of the Securities Act (an "**Emerging Growth Company**"). "Testing-the-Waters Communication" means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.47. <u>Testing-the-Waters Communications</u>*. The Company has not (i) alone engaged in any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the written consent of the Representatives and with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act and (ii) authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. The Company confirms that each of the Representatives has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications other than those listed on <u>Schedule 2-C</u> hereto. "Written Testing-the-Waters Communication" means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.48. *<u>Directed Share Program</u>*. The Company represents and warrants that (i) the Registration Statement, the Pricing Disclosure Package and the Prospectus, any Preliminary Prospectus and any Issuer Free Writing Prospectuses comply in all material respects, and any further amendments or supplements thereto will comply in all material respects, with any applicable laws or regulations of foreign jurisdictions in which the Pricing Disclosure Package, the Prospectus, any Preliminary Prospectus and any Issuer Free Writing Prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program, and that (ii) no authorization, approval, consent, license, order, registration or qualification of or with any government, governmental instrumentality or court, other than such as have been obtained, is necessary under the securities laws and regulations of foreign jurisdictions in which the Directed Shares are offered outside the United States. The Company has not offered, or caused the Underwriters to offer, Shares to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence (i) a client or prospective client of the Company to alter the client's or prospective client's level or type of business with the Company, or (ii) a trade journalist or publication to write or publish favorable information about the Company or its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.48. *<u>Reverse Stock Split</u>*. The Company has taken all necessary corporate action to effectuate a reverse stock split of its shares of Common Stock on the basis of one (1) such share for each 1.6820384 issued and outstanding shares thereof (the "Reverse Stock Split"), such Reverse Stock Split to be effective no later than the first trading day of the Firm Shares following the date hereof.

3. <u>Covenants of the Company</u>. The Company covenants and agrees as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.1. <u>Amendments to Registration Statement</u>.* The Company shall deliver to the Representatives, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representatives shall reasonably object in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.2. <u>Federal Securities Laws</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.1. <u>Compliance</u>. The Company, subject to <u>Section 3.2.2</u>, shall comply in all material respects with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Representatives promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Offering of the Shares. The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its reasonable best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.2. <u>Continued Compliance</u>. The Company shall comply in all material respects with the Securities Act, the Securities Act Regulations, the Exchange Act and the Exchange Act Regulations so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations ("**Rule 172**"), would be) required by the Securities Act to be delivered in connection with sales of the Shares, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly (A) give the Representatives notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representatives with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement; *provided* that the Company shall not file or use any such amendment or supplement to which the Representatives or Representatives' Counsel shall reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representatives notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within 48 hours prior to the Applicable Time. The Company shall give the Representatives notice of its intention to make any such filing from the Applicable Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in <u>Section 1.2</u> hereof and will furnish the Representatives with copies of the related document(s) a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.3. <u>Exchange Act Registration</u>. Until three (3) years after the date of this Agreement, the Company shall use its commercially reasonable efforts to maintain the registration of the Common Stock under the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.4. <u>Free Writing Prospectuses</u>. The Company agrees that, unless it obtains the prior consent of the Representatives, it shall not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a "free writing prospectus," or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; *provided* that the Representatives shall be deemed to have consented to each Issuer General Use Free Writing Prospectus set forth in <u>Schedule 2-B</u>. The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Underwriters as an "issuer free writing prospectus," as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.5. <u>Testing-the-Waters Communications</u>. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company shall promptly notify the Representatives and shall promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.3. <u>Delivery to the Underwriters of Registration Statements</u>*. The Company has delivered or made available or shall deliver or make available to the Representatives and Representatives' Counsel, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and upon request will also deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.4. <u>Delivery to the Underwriters of Prospectuses</u>.* The Company has delivered or made available or will deliver or make available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.5 <u>Effectiveness and Events Requiring Notice to the Representatives</u>*. The Company shall use its best efforts to cause the Registration Statement to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify the Representatives immediately and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments or request for any additional information from the Commission; and (vi) of the happening of any event during the period described in this **Section 3.5** that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement, the Pricing Disclosure Package or the Prospectus untrue or that requires the making of any changes in (a) the Registration Statement in order to make the statements therein not misleading, or (b) in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company shall make every reasonable effort to obtain promptly the lifting of such order.

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.6. <u>Review of Financial Statements.</u>* For a period of three (3) years after the date of this Agreement, the Company, at its expense, shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company's financial statements for each of the three fiscal quarters immediately preceding the announcement of any quarterly financial information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.7. <u>Listing</u>.* The Company shall use its commercially reasonable efforts to maintain the listing of the Shares on the Exchange for at least three (3) years from the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.8. <u>Financial Public Relations Firm</u>*. As of the Effective Date, the Company shall have retained a financial public relations firm reasonably acceptable to the Representatives and the Company, which shall initially be [PUBLIC RELATIONS FIRM], which firm shall be experienced in assisting issuers in initial public offerings of securities and in their relations with their security holders, and shall retain such firm or another firm reasonably acceptable to the Representatives for a period of not less than one (1) year after the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.9. <u>Reports to the Representatives</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.1. <u>Periodic Reports, etc</u>. For a period of three (3) years after the date of this Agreement, the Company shall furnish or make available to the Representatives copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class of its securities and also furnish or make available to the Representatives: (i) a copy of each periodic report the Company shall be required to file with the Commission under the Exchange Act and the Exchange Act Regulations; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs which was released by the Company; (iii) a copy of each Form 8-K prepared and filed by the Company; (iv) a copy of each registration statement filed by the Company under the Securities Act; and (v) such additional documents and information with respect to the Company and the affairs of any future subsidiaries of the Company as the Representatives may from time to time reasonably request; *provided* the Representatives shall sign, if requested by the Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Representatives and Representatives' Counsel in connection with the Representatives' receipt of such information. Documents filed with the Commission pursuant to its EDGAR system shall be deemed to have been delivered to the Representatives pursuant to this <u>Section 3.9.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.2. <u>Transfer Agent; Transfer Sheets</u>. For a period of three (3) years after the date of this Agreement, the Company shall retain a transfer agent and registrar acceptable to the Representatives (the "**Transfer Agent**") and shall furnish to the Representatives at the Company's sole cost and expense such transfer sheets of the Company's securities as the Representatives may reasonably request, including the daily and monthly consolidated transfer sheets of the Transfer Agent and DTC. [\*] is acceptable to the Representatives to act as Transfer Agent for the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.3. <u>Trading Reports</u>. For a period of six (6) months after the date hereof, during such time as the Shares are listed on the Exchange, the Company shall provide to the Representatives, at the Company's expense, such reports published by the Exchange relating to price trading of the Shares, as the Representatives shall reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.10. <u>Payment of Expenses</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10.1. <u>General Expenses Related to the Offering</u>. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Shares to be sold in the Offering (including the Over-allotment Option) with the Commission; (b) all Public Filing System filing fees associated with the review of the Offering by FINRA; (c) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Shares under the securities laws of such foreign jurisdictions as the Representatives may reasonably designate; (d) the costs associated with receiving commemorative mementos and lucite tombstones; (e) fees and expenses of the Representatives' Counsel; and (f) the Underwriters' "road show" expenses for the Offering, with all of the Underwriters' actual out-of-pocket expenses under sub-sections 3.10.1(d)-(f) not to exceed $162,900. The Representatives may deduct from the net proceeds of the Offering payable to the Company on the Closing Date, or the Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters; *provided*, *however*, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriters pursuant to <u>Section 6.3</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.11. <u>Application of Net Proceeds</u>.* The Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under the caption "Use of Proceeds" in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.12. <u>Delivery of Earnings Statements to Security Holders</u>*. The Company shall make generally available to its security holders as soon as practicable, but not later than the first day of the fifteenth (15<sup>th</sup>) full calendar month following the date of this Agreement, an earnings statement (which need not be certified by an independent registered public accounting firm unless required by the Securities Act or the Securities Act Regulations, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve (12) consecutive months beginning after the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.13. <u>Stabilization</u>.* Neither the Company nor, to its knowledge, any of its employees, directors or shareholders has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.14. <u>Internal Controls</u>*. Except to the extent disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.15. <u>Accountants</u>*. As of the date of this Agreement, the Company has retained an independent registered public accounting firm reasonably acceptable to the Representatives, and the Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least three (3) years after the date of this Agreement. The Representatives acknowledges that the Auditor is acceptable to the Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.16. <u>FINRA</u>*. For a period of ninety (90) days from the later of the Closing Date or the Option Closing Date, the Company shall advise the Representatives (who shall make an appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of the Company, (ii) any beneficial owner of 5% or more of any class of the Company's securities or (iii) any beneficial owner of the Company's unregistered equity securities which were acquired during the 180 days immediately preceding the filing of the original Registration Statement is or becomes an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.17. <u>No Fiduciary Duties</u>*. The Company acknowledges and agrees that the Underwriters' responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.18. <u>Company Lock-Up</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.18.1. <u>Restriction on Sales of Capital Stock</u>. The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representatives, it will not, for a period of six months (6) months after the date of this Agreement (the "<u>Lock-Up Period</u>"), (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or modify the terms of any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company or modify the terms of any existing securities, in each case, whether in conjunction with another broker-dealer or on the Company's own volition; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company (other than pursuant to a registration statement on Form S-8 for employee benefit plans); or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise. The restrictions contained in this section shall not apply to (i) the Shares to be sold hereunder; and (ii) the issuance by the Company of Common Stock upon the exercise of an outstanding option or warrant or the conversion of a security outstanding on the date hereof or disclosed in the Registration Statement and the Pricing Disclosure Package.

Notwithstanding the foregoing, if (i) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this <u>Section 3.18</u> shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of such material news or material event, as applicable, unless the Representatives waive, in writing, such extension; provided, however, that this extension of the Lock-Up Period shall not apply to the extent that FINRA has amended or repealed NASD Rule 2711(f)(4), or has otherwise provided written interpretive guidance regarding such rule, in each case, so as to eliminate the prohibition of any broker, dealer, or member of a national securities association from publishing or distributing any research report, with respect to the securities of an Emerging Growth Company prior to or after the expiration of any agreement between the broker, dealer, or member of a national securities association and the Emerging Growth Company or its shareholders that restricts or prohibits the sale of securities held by the Emerging Growth Company or its shareholders after the initial public offering date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.18.2. <u>Restriction on Continuous Offerings</u>. Notwithstanding the restrictions contained in Section 3.18.1, the Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representatives, it will not, for a period of 12 months after the date of this Agreement, directly or indirectly in any "at-the-market" or continuous equity transaction, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.19. <u>Release of D&O Lock-up Period</u>*. If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in the Lock-Up Agreements described in <u>Section 2.24</u> hereof for an officer or director of the Company and provides the Company with notice of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of <u>Exhibit B</u> hereto through a major news service at least two (2) Business Days before the effective date of the release or waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.20. <u>Blue Sky Qualifications</u>.* The Company shall use its commercially reasonable efforts, in cooperation with the Underwriters, if necessary, to qualify the Shares for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Shares; *provided*, *however*, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.21. <u>Reporting Requirements</u>.* The Company, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and Exchange Act Regulations. Additionally, the Company shall report the use of proceeds from the issuance of the Shares as may be required under Rule 463 under the Securities Act Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3.22*. *<u>Emerging Growth Company Status</u>*. The Company shall promptly notify the Representatives if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Public Securities within the meaning of the Securities Act and (ii) fifteen (15) days following the completion of the Lock-Up Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.23. *<u>Directed Share Program</u>*. The Company will comply with all applicable securities and other laws, rules and regulations in each jurisdiction in which the Directed Shares are offered in connection with the Directed Share Program.

4. <u>Conditions of Underwriters' Obligations</u>. The obligations of the Underwriters to purchase and pay for the Shares, as provided herein, shall be subject to (i) the continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date and the Option Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.1. <u>Regulatory Matters</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1. <u>Effectiveness of Registration Statement; Rule 430A Information</u>. The Registration Statement has become effective not later than 5:00 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by you, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company's knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2. <u>FINRA Clearance</u>. On or before the date of this Agreement, the Representatives shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3. <u>Exchange Share Market Clearance</u>. On the Closing Date, the Firm Shares shall have been approved for listing on the Exchange, subject only to official notice of issuance. On the first Option Closing Date (if any), the Option Shares shall have been approved for listing on the Exchange, subject only to official notice of issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.2. <u>Company Counsel Matters</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.1. <u>Closing Date Opinion of Counsel for the Company</u>. On the Closing Date, the Representatives shall have received the favorable opinion and negative assurances statement of Manatt, Phelps & Phillips LLP, counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to Representatives' Counsel addressed to the Representatives and stating that such opinions may be relied upon by Representatives' Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.3. <u>Option Closing Date Opinion of Counsel for the Company</u>. On the Option Closing Date, if any, the Representatives shall have received the favorable opinion and negative assurances statement of Manatt, Phelps & Phillips LLP, counsel for the Company, dated the Option Closing Date, addressed to the Representatives and in form and substance reasonably satisfactory to the Representatives' Counsel, confirming as of the Option Closing Date, the statements made by such counsel in their opinions delivered on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.5. <u>Reliance</u>. In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representatives) of other counsel reasonably acceptable to the Representatives, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, *provided* that copies of any such statements or certificates shall be delivered to Representatives' Counsel if requested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.3. <u>Comfort Letters</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.1. <u>Cold Comfort Letter</u>. At the time this Agreement is executed you shall have received a cold comfort letter containing statements and information of the type customarily included in accountants' comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Representatives and in form and substance satisfactory in all material respects to you and to the Auditor, dated as of the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.2. <u>Bring-down Comfort Letter</u>. At each of the Closing Date and the Option Closing Date, if any, the Representatives shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter furnished pursuant to <u>Section 4.3.1</u>, except that the specified date referred to shall be a date not more than three (3) Business Days prior to the Closing Date or the Option Closing Date, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.4. <u>Officers' Certificates</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.1. <u>Officers' Certificate</u>. The Company shall have furnished to the Representatives a certificate, dated the Closing Date and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer, its President and its Chief Financial Officer stating on behalf of the Company and not in an individual capacity that (i) such officers have carefully examined the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer Free Writing Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the Effective Date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus, (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the representations and warranties of the Company in this Agreement are true and correct in all material respects (except for those representations and warranties qualified as to materiality, which shall be true and correct in all respects and except for those representations and warranties which refer to facts existing at a specific date, which shall be true and correct as of such date) and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than the Closing Date), and (iv) there has not been, subsequent to the date of the most recent audited financial statements included in the Pricing Disclosure Package, a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.2. <u>Secretary's Certificate</u>. At each of the Closing Date and the Option Closing Date, if any, the Representatives shall have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Date, as the case may be, respectively, certifying on behalf of the Company and not in an individual capacity: (i) that each of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company's Board of Directors (and any pricing committee thereof) relating to the Offering are in full force and effect and have not been modified; (iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.5. <u>No Material Changes</u>*. Prior to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have been no Material Adverse Change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or, to the knowledge of the Company, threatened against the Company or any Insider before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding may reasonably be expected to cause a Material Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued by the Commission under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.6. <u>Delivery of Agreements</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6.1. <u>Lock-Up Agreements</u>. On or before the date of this Agreement, the Company shall have delivered to the Representatives executed copies of the Lock-Up Agreements from each of the persons listed in <u>Schedule 3</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6.2 <u>Reverse Stock Split</u>. Not later than the first trading day of the Firm Shares following the date hereof, the Reverse Stock Split shall be effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4.7. <u>Additional Documents</u>*. At the Closing Date and at each Option Closing Date (if any) Representatives' Counsel shall have been furnished with such documents and opinions as they may require for the purpose of enabling Representatives' Counsel to deliver an opinion to the Underwriters, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Shares as herein contemplated shall be satisfactory in form and substance to the Representatives and Representatives' Counsel.

5. <u>Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5.1. <u>Indemnification of the Underwriters</u>.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1. <u>General</u>. Subject to the conditions set forth below, the Company agrees to indemnify, defend and hold harmless each Underwriter, its affiliates and each of its and their respective directors, officers, members, employees, representatives, partners, shareholders, affiliates, counsel, and agents and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the "**Underwriter Indemnified Parties**," and each an "**Underwriter Indemnified Party**"), from and against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries (a "**Claim**"), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in (A) the Registration Statement, the Pricing Disclosure Package, any Preliminary Prospectus, the Prospectus, or in any Issuer Free Writing Prospectus or in any Written Testing-the-Waters Communication (as from time to time each may be amended and supplemented); (B) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any "road show" or investor presentations made to investors by the Company (whether in person or electronically); or (C) any application or other document or written communication (in this <u>Section 5</u>, collectively called "application") executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Shares under the securities laws thereof or filed with the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; *unless*, with respect to each subsection (A) through (C), such statement or omission was made in reliance upon, and in conformity with, the Underwriters' Information. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement, Pricing Disclosure Package or Prospectus, the indemnity agreement contained in this <u>Section 5.1.1</u> shall not inure to the benefit of any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage or expense of such Underwriter Indemnified Party results from the fact that a copy of the Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Shares to such person as required by the Securities Act and the Securities Act Regulations, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under <u>Section 3.3</u> hereof. The Company also agrees that it will reimburse each Underwriter Indemnified Party for all reasonable fees and expenses for which documentation of such is provided to the Company (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) (collectively, the "**Expenses**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2. <u>Procedure</u>. If any action is brought against an Underwriter Indemnified Party in respect of which indemnity may be sought against the Company pursuant to <u>Section 5.1.1</u>, such Underwriter Indemnified Party shall promptly notify the Company in writing of the institution of such action and the Company shall assume the defense of such action, including the employment and fees of counsel (subject to the approval of such Underwriter Indemnified Party (which approval shall not be unreasonably withheld)) and payment of actual expenses if an Underwriter Indemnified Party requests that the Company do so. Such Underwriter Indemnified Party shall have the right to employ its or their own counsel in any such case, and upon the written authorization of the Company (which authorization shall not be unreasonably withheld),the fees and expenses of such counsel shall be at the expense of the Company and shall be advanced by the Company, *provided*, *however*, that the Company shall not be obligated to bear the reasonable fees and expenses of more than one firm of attorneys selected by the Underwriter Indemnified Party (in addition to local counsel). Notwithstanding anything to the contrary contained herein, and provided that the Company has timely honored its obligations under <u>Section 5</u>, the Underwriter Indemnified Party shall not enter into any settlement without the prior written consent (which shall not be unreasonably withheld) of the terms of any settlement by the Company. The Company shall not be liable for any settlement of any action effected without its prior written consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Underwriter Indemnified Party (which consent shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which reimbursement, indemnification or contribution may be sought hereunder (whether or not such Underwriter Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Underwriter Indemnified Party, reasonably acceptable to such Underwriter Indemnified Party, from all liabilities, expenses and claims arising out of such action for which indemnification or contribution may be sought and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Underwriter Indemnified Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5.2. <u>Indemnification of the Company</u>*. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to such losses, liabilities, claims, damages and expenses (or actions in respect thereof) which arise out of or are based upon untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in conformity with, the Underwriters' Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of <u>Section 5.1.2</u>. The Company agrees promptly to notify the Representatives of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Shares or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5.3. <u>Contribution</u>.* If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 5.1 or 5.2 in respect of any liabilities and Expenses referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such liabilities and Expenses, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and each of the Underwriters, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the matters as to which such liabilities or Expenses relate, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, with respect to such Offering shall be deemed to be in the same proportion as the total net proceeds actually received by the Company from the Offering of the Shares purchased under this Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions actually received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, on the one hand, and the Underwriters, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; *provided* that the parties hereto agree that the written information furnished to the Company through the Representatives by or on behalf of any Underwriter for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters' Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5.4. <u>Limitation</u>*. The Company also agrees that no Underwriter Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any Underwriter Indemnified Party pursuant to this Agreement, the transactions contemplated thereby or any Underwriter Indemnified Party's actions or inactions in connection with any such advice, services or transactions, except to the extent that a court of competent jurisdiction has made a finding that liabilities (and related Expenses) of the Company have resulted from such Underwriter Indemnified Party's fraud, bad faith, gross negligence or willful misconduct in connection with any such advice, actions, inactions or services or such Underwriter Indemnified Party's breach of this Agreement or any obligations of confidentiality owed to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5.5. <u>Survival & Third-Party Beneficiaries</u>*. The advancement, reimbursement, indemnity and contribution obligations set forth in this Section 5 shall remain in full force and effect regardless of any termination of, or the completion of any Underwriter Indemnified Party's services under or in connection with, this Agreement. Each Underwriter Indemnified Party's is an intended third-party beneficiary of this Section 5, and has the right to enforce the provisions of Section 5 as if he/she/it was a party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6. *<u>Directed Share Program Indemnification</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6.1. <u>Indemnification</u>. The Company agrees to indemnify and hold harmless the Underwriters, their affiliates, directors and officers and each person, if any, who controls an Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each a "**Directed Share Underwriter Entity**") from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal fees and other expenses incurred in connection with defending or investigating any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred) (i) caused by any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company for distribution to Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) caused by the failure of any Participant to pay for and accept delivery of Directed Shares that the Participant agreed to purchase; or (iii) related to, arising out of, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith or gross negligence of the Directed Share Underwriter Entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6.2 <u>Procedure</u>. In case any proceeding (including any governmental investigation) shall be instituted involving any Directed Share Underwriter Entity in respect of which indemnity may be sought pursuant to paragraph 5.6.1 above, the Directed Share Underwriter Entity seeking indemnity shall promptly notify the Company in writing and the Company, upon request of the Directed Share Underwriter Entity, shall retain counsel reasonably satisfactory to the Directed Share Underwriter Entity to represent the Directed Share Underwriter Entity and any others the Company may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Directed Share Underwriter Entity shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Directed Share Underwriter Entity unless (i) the Company and such Directed Share Underwriter Entity shall have mutually agreed to the retention of such counsel, (ii) the Company has failed within a reasonable time to retain counsel reasonably satisfactory to such Directed Share Underwriter Entity, (iii) the Directed Share Underwriter Entity shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Company or (iv) the named parties to any such proceeding (including any impleaded parties) include both the Company and the Directed Share Underwriter Entity and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not, in respect of the legal expenses of the Directed Share Underwriter Entities in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Directed Share Underwriter Entities. The Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, the Company agrees to indemnify the Directed Share Underwriter Entities from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time any Directed Share Underwriter Entity shall have requested the Company to reimburse such Directed Share Underwriter Entity for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Company agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Company of the aforesaid request and (ii) the Company shall not have reimbursed such Directed Share Underwriter Entity in accordance with such request prior to the date of such settlement. The Company shall not, without the prior written consent of the Directed Share Underwriter Entities, effect any settlement of any pending or threatened proceeding in respect of which any Directed Share Underwriter Entity is or could have been a party and indemnity could have been sought hereunder by such Directed Share Underwriter Entity, unless (x) such settlement includes an unconditional release of the Directed Share Underwriter Entities from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of the Directed Share Underwriter Entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6.3 <u>Contribution</u>. To the extent the indemnification provided for in paragraph 5.6.1 above is unavailable to a Directed Share Underwriter Entity or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the Company in lieu of indemnifying the Directed Share Underwriter Entity thereunder, shall contribute to the amount paid or payable by the Directed Share Underwriter Entity as a result of such losses, claims, damages or liabilities (1) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Directed Share Underwriter Entities on the other hand from the offering of the Directed Shares or (2) if the allocation provided by clause 5.6.3(1) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 5.6.3(1) above but also the relative fault of the Company on the one hand and of the Directed Share Underwriter Entities on the other hand in connection with any statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Directed Share Underwriter Entities on the other hand in connection with the offering of the Directed Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Directed Shares (before deducting expenses) and the total underwriting discounts and commissions received by the Directed Share Underwriter Entities for the Directed Shares, bear to the aggregate public offering price of the Directed Shares. If the loss, claim, damage or liability is caused by an untrue or alleged untrue statement of material fact or the omission or alleged omission to state a material fact, the relative fault of the Company on the one hand and the Directed Share Underwriter Entities on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the Company or by the Directed Share Underwriter Entities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Directed Share Underwriter Entities agree that it would be not just or equitable if contribution pursuant to the paragraph above were determined by pro rata allocation (even if the Directed Share Underwriter Entities were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the paragraph above. The amount paid or payable by the Directed Share Underwriter Entities as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by the Directed Share Underwriter Entities in connection with investigating or defending such any action or claim. Notwithstanding the provisions of the paragraph above, no Directed Share Underwriter Entity shall be required to contribute any amount in excess of the amount by which the total price at which the Directed Shares distributed to the public were offered to the public exceeds the amount of any damages that such Directed Share Underwriter Entity has otherwise been required to pay. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in paragraphs 5.6.1 through 5.6.3 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6.4. <u>Survival</u>. The indemnity and contribution provisions contained in paragraphs 5.6.1 through 5.6.4 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Directed Share Underwriter Entity or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Directed Shares.

6. <u>Default by an Underwriter</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1. *<u>Default Not Exceeding 10% of Firm Shares or Option Shares</u>*. If any Underwriter or Underwriters shall default in its or their obligations to purchase the Firm Shares or the Option Shares, if the Over-allotment Option is exercised hereunder, and if the number of the Firm Shares or Option Shares with respect to which such default relates does not exceed in the aggregate 10% of the number of Firm Shares or Option Shares that all Underwriters have agreed to purchase hereunder, then such Firm Shares or Option Shares to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2. *<u>Default Exceeding 10% of Firm Shares or Option Shares</u>*. In the event that the default addressed in Section 6.1 relates to more than 10% of the Firm Shares or Option Shares, each of the Representatives may in its discretion arrange for itself or for another party or parties to purchase such Firm Shares or Option Shares to which such default relates on the terms contained herein. If, within one (1) Business Day after such default relating to more than 10% of the Firm Shares or Option Shares, such Representative does not arrange for the purchase of such Firm Shares or Option Shares, then the Company shall be entitled to a further period of one (1) Business Day within which to procure another party or parties satisfactory to the Representatives to purchase said Firm Shares or Option Shares on such terms. In the event that neither the Representatives nor the Company arrange for the purchase of the Firm Shares or Option Shares to which a default relates as provided in this Section 6, this Agreement will automatically be terminated by the Representatives or the Company without liability on the part of the Company (except as provided in Sections 8.3 and 5 hereof) or the several Underwriters (except as provided in Section 5 hereof); provided, however, that if such default occurs with respect to the Option Shares, this Agreement will not terminate as to the Firm Shares; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its liability, if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3. *<u>Postponement of Closing Date</u>*. In the event that the Firm Shares or Option Shares to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, the Representatives or the Company shall have the right to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of counsel for the Underwriter may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any party substituted under this Section 6with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares or Option Shares.

7. <u>Effective Date of this Agreement and Termination Thereof</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*7.1. <u>Effective Date</u>*. This Agreement shall become effective when both the Company and the Representatives have executed the same and delivered counterparts of such signatures to the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*7.2. <u>Termination</u>.* The Representatives shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Stock Exchange or the Nasdaq Stock Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having jurisdiction; or (iii) if the United States shall have become involved in a new war or an increase in major hostilities; or (iv) if a banking moratorium has been declared by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in your opinion, make it inadvisable to proceed with the delivery of the Firm Shares or Option Shares; or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder; or (viii) if the Representatives shall have become aware after the date hereof of such a Material Adverse Change, or such adverse material change in general market conditions as in the Representatives' judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Shares or to enforce contracts made by the Underwriters for the sale of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*7.3. <u>Expenses</u>.* Notwithstanding anything to the contrary in this Agreement, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters their actual and accountable out-of-pocket expenses related to the transactions contemplated herein then due and payable up to the amounts set forth in <u>Section 3.10.1</u> and upon demand the Company shall pay such amount thereof to the Representatives on behalf of the Underwriters; *provided*, *however*, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement. Notwithstanding the foregoing, any advance received by the Representatives will be reimbursed to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*7.4. <u>Indemnification</u>*. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of <u>Section 5</u> shall remain in full force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*7.5. <u>Representations, Warranties, Agreements to Survive</u>*. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Shares.

8. <u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.1. <u>Notices</u>.* All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed (registered or certified mail, return receipt requested), personally delivered or sent by facsimile transmission and confirmed and shall be deemed given when so delivered or faxed and confirmed or if mailed, two (2) days after such mailing.

If to the Representatives:

Revere Securities, LLC

650 Fifth Avenue, 35<sup>th</sup> Floor

New York, New York 10019

Attn: [\*]

Fax No: [\*]

Spartan Capital Securities LLC

45 Broadway

New York, NY 10006

Attn: [\*]

Fax No. [\*]

*With a copy (which shall not constitute notice) to:*

Bevilacqua PLLC

1050 Connecticut Ave, NW, Suite 500

Washington, DC 20036

Attention: Louis A. Bevilacqua

Fax No: 202-869-0889

If to the Company:

Calibercos Inc.

8901 E. Mountain View Road, Ste., 150

Scottsdale, Arizona 85258

Attention: John C. Loeffler, II

Fax No: [\*]

*With a copy (which shall not constitute notice) to*:

Manatt, Phelps & Phillips LLP

695 Town Center Drive, 14th Floor

Costa Mesa, CA 92626

Attention: Thomas J. Poletti, Esq.

Attention: Veronica Lah, Esq.

Fax No: [\*]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.2. <u>Headings</u>.* The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.3. <u>Amendment</u>.* This Agreement may only be amended by a written instrument executed by each of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.4. <u>Entire Agreement</u>.* This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. Notwithstanding anything to the contrary set forth herein, it is understood and agreed by the parties hereto that all other terms and conditions of that certain engagement letter between the Company and Revere Securities, LLC, dated July 11, 2022, as such engagement letter may be amended from time to time, shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.5. <u>Binding Effect</u>.* This Agreement shall inure solely to the benefit of and shall be binding upon the Representatives, the Underwriters, the Company and the controlling persons, directors and officers referred to in <u>Section 5</u> hereof, and their respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.6. <u>Governing Law; Consent to Jurisdiction; Trial by Jury</u>.* This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in <u>Section 8.1</u> hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its Shareholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.7. <u>Execution in Counterparts</u>.* This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*8.8. <u>Waiver, etc</u>*. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

*[Signature Page Follows]*

If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.

---

| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **Calibercos Inc.** | **Calibercos Inc.** |
| By: |  |
|  | Name: John C. Loeffler, II |
|  | Title: Chief Executive Officer |

---

Confirmed as of the date first written above mentioned, on behalf of itself and as Representatives of the several Underwriters named on <u>Schedule 1</u> hereto:

---

| | |
|:---|:---|
| **Revere Securities, LLC** | **Revere Securities, LLC** |
| By: | |
|  | Name: |
|  | Title: |

---

---

| | |
|:---|:---|
| **Spartan Capital Securities LLC** | **Spartan Capital Securities LLC** |
| By: | |
|  | Name: |
|  | Title: |

---

**<u>SCHEDULE 1</u>**

---

| | | |
|:---|:---|:---|
| ***Underwriter*** | **Total<br> Number<br> of<br> Firm<br> Shares<br> to be<br> Purchased** | **Number of<br> Additional<br> Option Shares<br> to be<br> Purchased if the<br> Over-<br> Allotment<br> Option is<br> Fully Exercised** |
| **Revere Securities, LLC** | [\*] | [\*] |
| **Spartan Capital Securities LLC** | [\*] | [\*] |
| **TOTAL** | [\*] | [\*] |

---

**<u>SCHEDULE 2-A</u>**

**Pricing Information**

Number of Firm Shares: [\*]

Number of Option Shares: [\*]

Public Offering Price per Firm Share: $[\*]

Public Offering Price per Option Share: $[\*]

Underwriting Discount per Firm Share: $[\*]

Underwriting Discount per Option Share: $[\*]

Non-Accountable Expense Allowance per Firm Share: $[\*]

Non-Accountable Expense Allowance per Option Share: $[\*]

**<u>SCHEDULE 2-B</u>**

**Issuer General Use Free Writing Prospectuses**

**<u>SCHEDULE 2-C</u>**

**Written Testing-the-Waters Communications**

**<u>SCHEDULE 3</u>**

**List of Lock-Up Parties**

**<u>EXHIBIT A</u>**

**Form of Lock-Up Agreement**

**<u>EXHIBIT B</u>**

**Form of Press Release**

## Exhibit 3.1

**Exhibit 3.1.3**

 **CERTIFICATE OF AMENDMENT** 

**TO THE SECOND AMENDED AND RESTATED** 

**CERTIFICATE OF INCORPORATION** 

**OF**

**CALIBERCOS INC.**

(a Delaware corporation)

(Pursuant to Section 242 of the General Corporation Law of the State of Delaware)

CALIBERCOS INC., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows:

FIRST: The name of the Corporation is CaliberCos Inc. The original Certificate of Incorporation of the Corporation was filed on June 7, 2018. The Second Amended and Restated Certificate of Incorporation of the Corporation was filed on December 5, 2019, and amended on January 2, 2020 and April 17, 2020 (as amended, the "Current Certificate of Incorporation").

SECOND: Pursuant to Section 242(b) of the Delaware General Corporation Law (the "DGCL") the Board of Directors of the Corporation has duly adopted by unanimous written consent dated January 17, 2023, and a majority of the outstanding shares of Class A Common Stock and Class B Common Stock of the Corporation entitled to vote, voting together as a single class, has approved by written consent dated January 17, 2023, the amendment to the Certificate of Incorporation set forth in this certificate of amendment ("Certificate of Amendment").

THIRD: Pursuant to Section 242 of the DGCL, the Section A of Article Fourth of the Current Certificate of Incorporation is hereby amended and restated as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Upon this Amended and Restated Certificate becoming effective pursuant to the DGCL (the "Effective Time"), the total number of shares of capital stock which the Corporation has authority to issue is one hundred thirty seven million five hundred thousand (137,500,000) shares consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) One hundred fifteen million (115,000,000) shares of Common Stock, par value $0.001 per share (the "Common Stock"), consisting of one hundred million (100,000,000) shares designated Class A Common Stock, par value $0.001 per share (the "Class A Common Stock") and fifteen million (15,000,000) shares designated Class B Common Stock, par value $0.001 per share (the "Class B Common Stock");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Twenty two million five hundred thousand (22,500,000) shares of preferred stock ("Preferred Stock"), par value $0.001 per share, including two million five hundred sixty-four thousand one hundred three (2,564,103) shares designated "Series A Preferred Stock" and twelve million five hundred thousand (12,500,000) shares designated "Series B Preferred Stock"; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Effective at 4:30 p.m. Eastern Standard Time on the date of filing of this Certificate of Amendment with the Delaware Secretary of State, (a) every one point six eight two zero three eight four (1.6820384) issued and outstanding shares of Class A Common Stock of the Corporation will be combined into and automatically become one (1) validly issued, fully paid and non-assessable share of Class A Common Stock of the Corporation (the "Class A Reverse Stock Split"), (b) every one point six eight two zero three eight four (1.6820384) issued and outstanding shares of Class B Common Stock of the Corporation will be combined into and automatically become one (1) validly issued, fully paid and non-assessable share of Class B Common Stock of the Corporation (the "Class B Reverse Stock Split"), and (c) every one point six eight two zero three eight four (1.6820384) issued and outstanding shares of Series B Preferred Stock of the Corporation will be combined into and automatically become one (1) validly issued, fully paid and non-assessable share of Series B Preferred Stock of the Corporation (the "Series B Reverse Stock Split" and together with the Class A Reverse Stock Split and the Class B Reverse Stock Split, the "Reverse Stock Split"), and in each case, the authorized shares of the Corporation shall remain as set forth in the Certificate of Incorporation. No fractional share shall be issued in connection with the Reverse Stock Split; all shares of Class A Common Stock, Class B Common Stock and Series B Preferred Stock that are held by a stockholder will be aggregated subsequent to the Reverse Stock Split and each fractional share resulting from such aggregation held by a stockholder shall be rounded up to the nearest whole share.

 

*[Signature page follows]*

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed by its duly authorized officer this 17th day of January 2023, and the foregoing facts stated herein are true and correct.

---

| | |
|:---|:---|
| CALIBERCOS INC. | CALIBERCOS INC. |
| By: | /s/ John C. Loeffler, II |
| Name: | John C. Loeffler, II |
| Title: | Chairman and Chief Executive Officer |

---

## Exhibit 23.2

**Exhibit 23.2**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the use in this Registration Statement No. 333-267657 on Form S-1 of our report dated August 9, 2022 (September 29, 2022 as to Note 6 and January 19, 2023 as to the effects of the reverse stock split described in Note 2) relating to the financial statements of CaliberCos Inc. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ Deloitte & Touche LLP

Tempe, Arizona

January 19, 2023

## Ex-Filing

**Exhibit 107**

**Calculation of Filing Fee Tables**

Form S-1

(Form Type)

**CALIBERCOS INC.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered and Carry Forward Securities</u>

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security <br> Type** | **Security <br> Class<br> Title** | **Fee<br> Calculation<br> or Carry<br> Forward<br> Rule** | **Amount Registered** | **Amount Registered** | **Proposed<br> Maximum<br> Offering<br> Price Per<br> Unit** | **Maximum<br> Aggregate<br> Offering<br> Price** |  | **Fee Rate** |  | **Amount of<br> Registration<br> Fee** |  | **Carry<br> Forward<br> Form<br> Type** | **Carry<br> Forward<br> File<br> Number** | **Carry<br> Forward<br> Initial<br> effective<br> date** | **Filing Fee<br> Previously<br> Paid In<br> Connection<br> with<br> Unsold<br> Securities<br> to be<br> Carried<br> Forward** |
| **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** |  |
| Fees Previously Paid (3) | Equity | Class A Common Stock, par value $0.001 per share | 457(o) |  |  | $5.00 | $9200000 | (1) | $0.0001102 | (2) | $1013.84 | (2) |  |  |  |  |
| **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** | **Carry Forward Securities** |  |
| Carry Forward Securities | N/A | N/A | N/A |  | N/A |  | N/A |  |  |  |  |  | N/A | N/A | N/A | N/A |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** |  |  |  |  |  |  | $1013.84 |  |  |  |  |  |
|  | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  |  |  |  |  | $1023.408 |  |  |  |  |  |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  |  |  |  |  | $1013.84 |  |  |  |  |  |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  |  |  |  |  | $(9.568) |  |  |  |  |  |

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(1) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum
aggregate offering price, includes the number of shares of Class A Common Stock issuable upon exercise of a 45-day option granted to the
underwriters, to cover over-allotments, if any.

(2) Calculated pursuant to Rule 457(o) under the Securities Act at a rate equal to $110.20 per $1,000,000 of the proposed maximum
aggregate offering price, subject to offset pursuant to Rule 415(a)(6).

(3) The registrant previously paid $1,023.408 on November 7, 2022 in connection with the initial filing of this registration statement
for a proposed maximum aggregate offering price of $11,040,000 at a registration fee rate of $92.70 per million.