An Offering Statement pursuant to Regulation A relating to these securities has been filed with Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering Statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of such state. The company may elect to satisfy its obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of the company’s sale to you that contains the URL where the Final Offering Circular or the Offering Statement in which such Final Offering Circular was filed may be obtained.

PRELIMINARY OFFERING CIRCULAR DATED DECEMBER 10, 2020

LUX FLOORING INC.

101 Chase Avenue

Suite 304

Lakewood, NJ 08701

732-523-4911

www.luxflooring.com

UP TO 10,000,000 SHARES OF SERIES A PREFERRED STOCK

UP TO 10,000,000 SHARES OF COMMON STOCK INTO WHICH THE SERIES A PREFERRED STOCK MAY CONVERT

MINIMUM INVESTMENT: 50 SHARES ($250)

We are offering a maximum of 10,000,000 shares of Series A Preferred Stock. There is no minimum offering amount. The offering is being conducted on a best-efforts basis.

Investors in this offering will have no voting rights except those required by Delaware law.

The Series A Preferred Stock is convertible into voting Common Stock automatically and solely upon the closing of an initial public offering of voting Common Stock or the merger of the company into another entity. Each share of Series A Preferred Stock converts into voting Common Stock at a 1:1 ratio, which is subject to adjustment for certain events affecting the voting Common Stock. See “Securities Being Offered” at page 26 for additional details.

The company entered into an agreement with FundAthena, Inc., d/b/a Manhattan Street Capital (“Manhattan Street Capital”) in connection with the use of its online platform for this offering. Under that agreement, the company will pay Manhattan Street Capital fees of (1) $90,000 in cash as a project management retainer fee, plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share, or 18,000 shares of Series A Preferred Stock, (2) $5,000 per month while the offering is live for investment or reservations, including any “testing the waters,” plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share, and (3) a technology and administration fee of $25 per investor, in cash, paid by the company when each investor deposits funds into the escrow account plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share. See “Plan of Distribution and Selling Security Holders – Online Platform.” The total number of warrants and underlying shares of Series A Preferred Stock issuable pursuant to clauses (2) and (3) above will not be determined until the offering is terminated. None of the shares of Series A Preferred Stock issuable upon the exercise of warrants issued to Manhattan Street Capital are included in the 10,000,000 shares being offering by the company.

This offering will terminate at the earlier of the date at which the maximum offering amount has been sold, and the date at which the offering is earlier terminated by the company, in its sole discretion. At least every 12 months after this offering has been qualified by the United States Securities and Exchange Commission (the “Commission” or “SEC”), the company will file a post-qualification amendment to include the company’s recent financial statements. The company may undertake one or more closings on a rolling basis and, after each closing, funds tendered by investors will be available to the company. The company has engaged Prime Trust, LLC as an escrow agent (the “Escrow Agent”) to hold funds tendered by investors.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

This offering is inherently risky. See “Risk Factors” on page 8 .

Sales of these securities will commence on approximately ______________, 2020.

The company is following the “Offering Circular” format of disclosure under Regulation A.

In the event that we become a reporting company under the Securities Exchange Act of 1934, we intend to take advantage of the provisions that relate to “Emerging Growth Companies” under the JOBS Act of 2012. See “Implications of Being an Emerging Growth Company.

TABLE OF CONTENTS

In this Offering Circular, the term “Lux Flooring,” ”we,” “us” or “the company” refers to LUX FLOORING INC.

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

Implications of Being an Emerging Growth Company

We are not subject to the ongoing reporting requirements of the Exchange Act of 1934, as amended (the “Exchange Act”) because we are not registering our securities under the Exchange Act. Rather, we will be subject to the more limited reporting requirements under Regulation A, including the obligation to electronically file:

In addition, at any time after completing reporting for the fiscal year in which our offering statement was qualified, if the securities of each class to which this offering statement relates are held of record by fewer than 300 persons and offers or sales are not ongoing, we may immediately suspend our ongoing reporting obligations under Regulation A.

If and when we become subject to the ongoing reporting requirements of the Exchange Act, as an issuer with less than $1.07 billion in total annual gross revenues during our last fiscal year, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and this status will be significant. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we: 

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the “Securities Act”), or such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we may also qualify, once listed, as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

SUMMARY

Our Company

At Lux Flooring, our passion is resilient flooring. Focusing on a specific product category enables us to guarantee that our customers benefit from excellent products and customer service. Our mission is to offer high quality products at affordable pricing. We sell flooring for use in both residential and commercial applications to a variety of customer types including retail, wholesale and direct to consumer. Lux Flooring was incorporated in Delaware in July 2016.

Currently, all of our products are formulated with a top wear layer measuring 20/1000 of an inch. Products with this wear layer allows for long term use in both commercial and residential applications and gives us the ability to market our products to a broad spectrum of customers. We currently offer 20 styles of flooring in the following collections:

All of our product styles are available in two product lines LVT and SPC Rigid Core. LVT is installed by gluing down the product and SPC is installed by an interlocking mechanism. Our dual product lines allow for a customer to choose a preferred style and installation method without being limited to a specific range of styles that might only be available using one type of installation method.

We focus solely on product sales and do not offer installation services. This model allows us to sell to retail stores and others who might not purchase from us otherwise.

Currently, we rely on a warehouse storage contract with Humble Warehouse LLC to provide public warehousing facilities. Under this agreement, Humble charges us storage fees on a per pallet basis as well as handling and loading and unloading fees, subject to a minimum monthly amount of $5,000. Humble receives, unloads and stores our inventory of flooring products and packages and assists in delivering purchased products to our customers. This enables us to optimize our overhead costs to meet our level of sales and corresponding inventory needs. As our revenues continue to grow, we will need to significantly increase our inventory and we anticipate the need to lease or purchase our own warehouse facility in the future to accommodate this growth.

The Offering

Selected Risks Associated with Our Business

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, but are not limited to, the following:

RISK FACTORS

The Commission requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, relatively early-stage companies are inherently riskier than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

Risks Related to our Business

Economic conditions in the United States could have a material adverse impact on our financial condition, liquidity or results of operations. Our business is influenced by conditions in the U.S. economy, including inflation, deflation, interest rates, availability and cost of capital, consumer spending rates, energy availability and the effects of governmental initiatives to manage economic conditions. The COVID-19 pandemic in the United States has resulted in high levels of unemployment and fundamental shifts in commercial and consumer behavior, including sharp decreases in the use of public gathering spaces, such as restaurants, sports and entertainment venues, as well as sharp increases in remote, or at home, work. The impact of the pandemic on our future results is unknown; however, continued high rates of unemployment and declines in demand generally are likely to put significant pressure on business and expansion plans.

Volatility in financial markets and the continued softness or further deterioration of national and global economic conditions could have a material adverse effect on our financial condition, liquidity or results of operations, including as follows:

Continued or sustained deterioration of economic conditions would likely exacerbate and prolong these adverse effects. To the extent that we are not able to maintain pricing at a level to support our costs of goods and expenses, our business may not survive.

Our auditor has issued a “going concern” opinion. Our auditor has issued a “going concern” opinion on our financial statements in light of the low level of compensation paid to our President. This means that they are not sure that we will be able to succeed as a business without additional financing. The audit report states that our ability to continue as a going concern for the next twelve months is dependent upon additional capital resources. Failure to raise additional capital or generate sufficient cash flow from operations could have a negative impact on not only our financial condition but also our ability to remain in business.

We compete with numerous flooring manufacturers in highly competitive markets. Our markets are highly competitive. We sell only one type of flooring product – resilient vinyl flooring. We compete for sales of flooring products with many manufacturers and independent distributors of resilient flooring as well as with manufacturers who also produce other types of flooring products. Some of our competitors have greater financial resources than we do. We may have difficulty competing against companies that offer a broader line of flooring products than we do.

Competition can reduce demand for our products, negatively affect our product sales mix or cause us to lower prices. Our customers consider our products' performance and styling as well as customer service and price when deciding whether to purchase our products. Shifting consumer preference in our highly competitive markets or our inability to develop and offer new competitive performance features, could have an adverse effect on our sales. Regulatory action or new product standards could also steer consumers away from our products. In addition, excess industry capacity for certain products in several geographic markets could lead to industry consolidation and/or increased price competition. We are also subject to potential increased price competition from overseas competitors, which may have lower cost structures. Our failure to compete effectively could have a material adverse effect on our financial condition, liquidity or results of operations.

If the availability of direct materials (sourced products, packaging, energy) decreases, or these costs increase and we are unable to pass along increased costs, our financial condition, liquidity or results of operations could be adversely affected. The availability and cost of direct materials, including sourced products, packaging materials and energy are critical to our operations. We source our flooring products principally from one supplier, which, among other things, increases the risk of unavailability. Our supplier is located in China and, as a result, we could be subject to international trade costs, such as tariffs, transportation and foreign exchange rates, or international epidemics, including, without limitation, the recent Coronavirus outbreak. Decreased access to sourced product and energy or significant increased cost to purchase these items, as well as increased transportation and trade costs, delays due to government-mandated initiatives in response to the Coronavirus, and any corresponding inability to pass along such costs through price increases or meet demand requirements, as applicable, could have a material adverse effect on our financial condition, liquidity or results of operations.

We currently rely on our warehouse storage contract with Humble Warehouse LLC. We currently rely on Humble Warehouse LLC (“Humble”) to receive and store our flooring products and fulfill and deliver our products to customers. This arrangement allows us to operate our business with minimal internal staffing. Under our warehouse storage contract, Humble may terminate this arrangement upon 60 days written notice. We may not be able to enter into replacements arrangements to replicate the full scope of these services in that time frame or at all. If this occurs and we are not able to contract with another similar provider, we may need to lease warehouse space and increase our internal staffing, which we may not be able to do in this time frame. As a result, we could face significant disruption in our operations and increased expenses, which may negatively impact our profit margins, our financial condition and liquidity. Additionally, if Humble should damage our product, or fail to deliver the correct flooring product to the customer on a timely basis and in good condition, our brand and reputation could suffer and we may lose business.

Our business is dependent on construction activity. Downturns in construction activity could adversely affect our financial condition, liquidity or results of operations. Our business has greater sales opportunities when construction activity is strong and, conversely, has fewer opportunities when such activity declines. The cyclical nature of commercial and residential construction activity, including construction activity funded by the public sector, tends to be influenced by prevailing economic conditions, including the rate of growth in GDP, prevailing interest rates, government spending patterns, business, investor and consumer confidence and other factors beyond our control. Prolonged downturns in construction activity could have a material adverse effect on our financial condition, liquidity or results of operations.

We are currently in default under two of our credit facilities. As of December 7, 2020, we had approximately $200,000 outstanding in aggregate under a PayPal Loanbuilder loan and our line of credit with JP Morgan Chase Bank N.A. (“Chase”). We are currently in breach of a number of covenants under these facilities. While we hope to resolve this situation with the respective financial institutions or alternatively repay and terminate these facilities with proceeds from this offering, we may not be able to do so. In that case, these financial institutions may accelerate all amount payable under these facilities and terminate our borrowing capability in the case of our line of credit. They may also enforce of their respective security interests in our assets or enforce the guarantees provided by Mr. Weinstein. Such actions could not only deplete our cash but could also impact our ability to obtain credit, including with suppliers, and therefore materially adversely affect our ability to grow our business.

Our strategy to increase sales and marketing efforts and staffing and expand our geographic footprint may materially adversely affect our profitability. We intend to increase our sales and marketing expenditures, expand staffing, acquire additional warehouse facilities and increase our inventory and geographic footprint to drive growth in sales in the future. As a result, we expect to see significant increases in our expenses and costs of goods sold before we recognize a corresponding increase in revenue, which will have a material impact on our results of operations. Furthermore, we may not be able to achieve a sustained level of increased sales sufficient to realize improved profit margins in the future, or even sufficient to cover these expenditures, which may result in significant losses.

Any restrictions on trade with China may would cause a significant decline in our sales and profitability. To date, almost all of our flooring products have been manufactured in China and we expect to continue this level of sourcing from China. Any restrictions on trade with China, whether from disease outbreaks or other increased trade restrictions, could make it difficult for us to import enough flooring product to meet customer demand or could increase our costs to an extent that we are unable to compete with companies that manufacture their own products or are less reliant on imports from China.

We may not be able to effectively manage our growth, and any failure to do so may have an adverse effect on our business and operating results. We intend to use the proceeds of this offering to help us rapidly build our sales and marketing team, launch sales and marketing efforts nationwide and invest in warehouse facilities to support a national customer base. Our future operating results will depend on our ability to effectively manage our growth, which is dependent, in part, upon our ability to, among other things, on board and manage an increasing number staff and customer relationships across the regions that we are currently unfamiliar with, while maintaining our reputation for quality and customer satisfaction. Our ability to manage growth is made more difficult because we currently have only two employees. Our failure to effectively manage our growth could negatively affect our results and our reputation.

We depend on our President, a one person management team, who is engaged in other outside business activities and faces conflicts of interest. Our ability to grow successfully will be particularly dependent upon the efforts, experience, contacts, and skills of our President, Benjamin Weinstein. The loss of Mr. Weinstein is likely to have a material adverse effect on our business and growth prospects. Such a loss could occur at any time due to death, disability, resignation, or for other reasons. In addition, Mr. Weinstein has other active business interests owning and managing real estate that may divert his attention from our company, impairing our ability to execute on our strategy effectively or in a timely manner, which may adversely affect our results. In addition, we have entered into and may continue to enter into sales transactions with Mr. Weinstein or real estate businesses controlled by Mr. Weinstein. In 2019 and 2020 (through June 30, 2020), for example, approximately $117,000 of our revenues were derived from sales transactions with Mr. Weinstein or real estate limited partnerships of which Mr. Weinstein is the general partner. As Mr. Weinstein is the sole decision maker for both the buyer and the seller in these transactions, he faces an inherent conflict of interest. Although to date sales to these related parties have generally been on terms comparable with sales to unaffiliated third parties, we do have any policy governing these types of related party transactions nor is there a disinterested board member or other independent party that reviews or approves the terms of any sales to companies that Mr. Weinstein controls. As a result, we cannot assure you that the terms of these transaction will be arm’s length market terms in the future, which could negatively impact our profitability, if priced under market, or inflate our revenues, if priced over market.

The loss of any significant customer could materially impact our results and our ability to grow our business. Sales to ACF Distributors, a wholesale distributor of flooring products, comprised approximately 28% of our 2019 sales. If ACF or any other customer that represents a significant portion of our sales choses to discontinue carrying our flooring products, our results would be immediately negatively impacted. In addition, we may find ourselves holding excess inventory that will take significantly longer to sell or, to the extent flooring trends change or demand shifts away from vinyl flooring, we may not be able to sell a significant portion of this inventory, which may result in write-downs, further negatively impacting our results and financial condition. In addition, preserving our relationship with large customers, such as ACF, may limit our ability to sell to other large distributors or retail stores that they view as competitors, or to sell to those competitors at the same price points, which may limit our ability to increase revenues and expand out business.

Our failure to attract and retain highly qualified personnel in the future could harm our business. We believe that our future success will depend in large part on our ability to retain or attract highly qualified sales and marketing personnel as well as operational and finance personnel to support our growth. In particular, we do not have dedicated employees staffed in key finance and operational positions, relying instead on outsourcing arrangement to manage these functions. Third party service providers may resign or may not maintain consistent staffing, which could disrupt our operations. We may not be successful in employing and retaining key personnel or in attracting other highly qualified personnel. If we are unable to retain or attract significant numbers of qualified management and other personnel, we may not be able to grow and expand our business.

We will require a significant amount of liquidity to fund our operations. As our sales grow, we will be required to maintain increasing levels of inventory. We currently anticipate that we will need to enter into a line of credit facility for cash flow management and to enable and support our growth. We cannot assure you that we will be able to secure this facility. If we do secure a line of credit, it may contain covenants that prohibit or restrict our ability to paying dividends to stockholders, including with respect to the Preferred Stock being offered in this offering, incur debt (including capital leases and operating leases) or liens, make guarantees, engage in different business activities or fundamental transaction (such as mergers, acquisitions, consolidations or a liquidation), or make investments. These restriction may limit our ability to grow our business as planned.

If our business experiences materially negative unforeseen events, we may be unable to generate sufficient cash flow from operations or any future credit financing to maintain sufficient liquidity to operate or to remain in compliance with the covenants of any future credit facility, which could result in reduced or delayed planned expansion and adversely affect our financial condition or results of operations. Any debt incurred in the future could negatively affect the value of your investment in our company.

Disruptions to or failures of our various information systems could have an adverse effect on our business. We rely heavily on our information systems to operate our business activities, including, among other things, purchasing, distribution, inventory management, processing, shipping and receiving, billing and collection, financial reporting and record keeping. Any interruption, whether caused by human error, natural disasters, power loss, computer viruses, system conversion, intentional acts of vandalism, or various forms of cyber crimes including and not limited to hacking, intrusions, malware or otherwise, could disrupt our normal operations. There can be no assurance that we can effectively respond to the failure of our information systems, or that we will be able to restore our operational capacity within sufficient time to avoid material disruption to our business. The occurrence of any of these events could cause unanticipated disruptions in service, decreased customer service and customer satisfaction, harm to our reputation and loss or misappropriation of sensitive information, which could result in loss of customers, increased operating expenses and financial losses. Any such events could in turn have a material adverse effect on our business, financial condition, results of operations, and prospects.

We may not be able to protect our products or brands from trademark infringement, which could adversely impact our financial condition, liquidity or results of operations. We have applied for trademark protection for our logo. Nevertheless, others may attempt to sell flooring products using our brand, and dilute or otherwise harm our reputation. Engaging in Litigation to defend our brand may be lengthy and expensive and we may not have sufficient resources to do so. We may also find, as we expand geographically, that others are using a business name that is the same as or similar to ours, which may limit our ability to market our products under our brand in a particular region or subject us to legal action, which would impar our growth and could have a material adverse effect on our results results of operations.

We will require a significant amount of funds to grow our business as planned. We intend to expand our business significantly to establish a national sales and marketing presence for our products. This expansion will require a significant amount of funds. If we fail to raise those funds in this offering, we anticipate that we will need to secure additional funding to fully implement our strategy and business plan. If we cannot raise additional funds for whatever reason, including reasons relating to the company itself or to the broader economy, we may not be able to grow our business as planned, which may have a materially adverse impact on our profitability and prospects.

Risks Related to the Securities and the Offering

Any valuation at this stage is difficult to assess. The valuation for the offering was established by the company. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment.

Our Series A Preferred Stock is non-voting; our President will own all of our voting capital stock; and investors will have limited or no ability to influence company decisions. The shares of Series A Preferred Stock we are offering are non-voting, so you will not be able to influence our policies or any other corporate matter, including the election of directors, changes to our company’s governance documents, adoption and terms of any employee option plan, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval. Voting control of our company is and will remain in the hands of our President, who will make all major decisions regarding the company. As your stock is non-voting, you will not have a say in these decisions.

We may redeem shares of our Series A Preferred Stock, subject to Delaware law, from some holders and not others at redemption prices agreed with such holders. The terms of our Series A Preferred Stock provides that we may agree with one or more holders to redeem all or a part of such holders shares at prices agreed with such holders. We are not required to redeem shares of Series A Preferred Stock ratable among all holders of the Series A Preferred Stock or to redeem shares at the same redemptions price for all holders or with respect to all shares being redeemed. If you agree to our redeeming your shares, there is no assurance that you would receive as much on a per share basis as other investors. We could use available funds, subject to Delaware law, to redeem all or a part of one or more investors shares while leaving your shares outstanding.

We will generally retain cash to grow our business and, while we intend to declare dividends from time to time, as and when determine by our board of directors, we cannot assure that we will do so. Our Series A Preferred Stock does not provide for any accruing dividends or preferred return. Dividends would only be payable if declared by us and, to the extent that we have sufficient surplus or profits and can do so in compliance with any contractual restrictions in our debt facilities, we may use such amount to pay dividends on both our common stock and preferred stock, lessening the amount that would have been paid to holders of our Series A Preferred Stock if there were a preferred return.

There is no minimum amount set as a condition to closing this offering. Because this is a “best efforts” offering with no minimum, we will have access to any funds tendered. This might mean that any investment made could be the only investment in this offering, leaving the company without adequate capital to pursue its business plan or even to cover the expenses of this offering.

Using a credit card to purchase shares may impact the return on your investment as well as subject you to other risks inherent in this form of payment. Investors in this offering have the option of paying for their investment with a credit card, which is not usual in the traditional investment markets. Transaction fees charged by your credit card company (which can reach 5% of transaction value if considered a cash advance) and interest charged on unpaid card balances (which can reach almost 25% in some states) add to the effective purchase price of the shares you buy. See “Plan of Distribution and Selling Securityholders.” The cost of using a credit card may also increase if you do not make the minimum monthly card payments and incur late fees. Using a credit card is a relatively new form of payment for securities and will subject you to other risks inherent in this form of payment, including that, if you fail to make credit card payments (e.g. minimum monthly payments), you risk damaging your credit score and payment by credit card may be more susceptible to abuse than other forms of payment. Moreover, where a third-party payment processor is used, your recovery options in the case of disputes may be limited. The increased costs due to transaction fees and interest may reduce the return on your investment. 

The Commission’s Office of Investor Education and Advocacy issued an Investor Alert dated February 14, 2018 entitled: Credit Cards and Investments – A Risky Combination, which explains these and other risks you may want to consider before using a credit card to pay for your investment.

This offering involves "rolling closings," which may mean that earlier investors may not have the benefit of information that later investors have. We may conduct closings on funds tendered in the offering at any time. At that point, investors whose subscription agreements have been accepted will become our stockholders. We may file supplements to our Offering Circular reflecting material changes and investors whose subscriptions have not yet been accepted will have the benefit of that additional information. These investors may withdraw their subscriptions and get their money back. Investors whose subscriptions have already been accepted, however, will already be our stockholders and will have no such right.

This investment is illiquid. There is no currently established market for reselling these securities. If you decide that you want to resell these securities in the future, you may not be able to find a buyer.

The value of your investment may be diluted if the company issues options or additional shares at a lower price. The company currently does not have a stock based incentive plan but it may establish one to attract skilled personnel. The issuance of stock or options under any such plan may dilute the value of your holdings. The company views stock based incentive compensation as an important competitive tool, particularly in attracting both managerial and sales talent.

DILUTION

Dilution means a reduction in value, control or earnings of the shares the investor owns.

Immediate dilution

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because all the shares are worth the same amount, and you paid more than earlier investors for your shares. If you invest in our Series A Preferred Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Series A Preferred Stock and the pro forma net tangible book value per share of our Series Preferred Stock after this offering.

The following table demonstrates the price that new investors are paying for their shares of Series A Preferred Stock with the effective cash price paid by existing stockholders. In September 2020, we amended and restated our certificate of incorporation to effect a 2,000:1 forward stock split of our outstanding Common Stock. The below table is based upon the instruments issued and outstanding as of November 30, 2020, with all information being adjusted to give effect to the stock split. The dilution disclosures contained in this section.

Future dilution

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another Regulation A round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).

The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

 This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to the number of shares of Common Stock underlying convertible notes that the company may issue in the future, and the terms of those notes.

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

USE OF PROCEEDS

The net proceeds of a fully subscribed offering to the issuer will be approximately $41,500,000, after deducting the estimated offering expenses of approximately $8,500,000.

The following table sets forth the company’s planned use of the net proceeds under various funding scenarios:

If we only raise $1,000,000 in net proceeds or less, we intend to, in order of priority, repay all amounts due under our remaining Amex and PayPal loans and invest $450,000 on inventory, $265,000 on hiring sales staff and retain the balance for working capital needs. If we raise between $3,000,000 and $6,000,000 in net proceeds, in addition to the above, we intend invest $2,000,000 on warehouse facilities, $1,000,000 on marketing and advertising, $500,000 on additional inventory and $500,000 on additional sales and operational staff.

The above figures represent only estimated costs. This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering.

We reserve the right to change the above use of proceeds if management believes it is in the best interests of our company. 

THE COMPANY’S BUSINESS

Overview

At Lux Flooring, our passion is resilient flooring. Focusing on a specific product category enables us to guarantee that our customers benefit from excellent products and customer service. Our mission is to offer high quality products at affordable pricing. We sell flooring for use in both residential and commercial applications to a variety of customer types including retail, wholesale and direct to consumer. Lux Flooring was incorporated in Delaware in July 2016.

Products

All of our products are manufactured to meet our high standards for quality. We pride ourselves on delivering great products at affordable prices. Our commitment to complete customer satisfaction is why we offer a limited warranty on every one of our products covering defects relating to a manufacturing flaw such as a significant loss of pattern or color. We offer a warranty on all of our products and the warranty length is dependent on the installed location. We offer a lifetime warranty when products are installed in residential applications and a 15 year warranty when products are installed in a commercial applications.

Currently, all of our products are formulated with a top wear layer measuring 20/1000 of an inch. Products with this wear layer allows for long term use in both commercial and residential applications and gives us the ability to market our products to a broad spectrum of customers. We currently offer 20 styles of flooring in the following collections:

●        Urban – best-selling classic color styles

●        Vintage – warm colors combined with a stunning wood grain look

●        Grove – varieties of natural wood styles

●        Exotic – fresh, funky and distinct styles to give any room a unique look

All of our product styles are available in two product lines LVT and SPC Rigid Core. LVT is installed by gluing down the product and SPC is installed by a interlocking mechanism. Our dual product lines allow for a customer to choose a preferred style and installation method without being limited to a specific range of styles that might only be available using one type of installation method. Our competition usually does not provide that flexibility, rather they generally provide specific styles for each installation type. We focus solely on product sales and do not offer installation services. This model allows us to sell to retail stores and others who might not purchase from us otherwise.

We currently source our products from a manufacturing facility located in China. We have a strong working relationship with this supplier and attractive terms for product pricing and payment. We have also identified a backup manufacturer factory available to fulfill orders in the event that our main supplier is unable to do so.

Currently, we rely on a warehouse storage contract with Humble Warehouse LLC to provide public warehousing facilities. Under this agreement, Humble charges us storage fees on a per pallet basis as well as handling and loading and unloading fees, subject to a minimum monthly amount of $5,000. Humble receives, unloads and stores our inventory of flooring products and packages and assists in delivering purchased products to our customers. This enables us to optimize our overhead costs to meet our level of sales and corresponding inventory needs. As our revenues continue to grow, we will need to significantly increase our inventory and we anticipate the need to lease or purchase our own warehouse facility in the future to accommodate this growth.

Customers

Our customers generally consist of a variety of accounts that include distributors, retail stores, contractors, flooring installers and direct use customers. ACF Distributors, a wholesale distributor of flooring products, comprised approximately 28% of our 2019 sales.

Our current sales have been generated through a variety of methods. These methods include in person sales, specification by designers, resale accounts, word of mouth and website leads. A majority of our sales through 2019 have been generated through product specification by designers and from customer inquiries rather than active marketing on our part. We recently hired a sales representative who currently focuses on actively marketing our products primarily to resale customers and receives commissions ranging from 3% to 5% of the gross sales that he closes.

Strategy

We have seen strong sales growth in the past few years within our geographic market and believe that we can achieve extremely strong growth by building out our sales team and expanding our geographic footprint. We intend to build a sales team to include at least one representative in every state where we will actively seek new customers by setting up in person meetings with potential customers. We have found that in person meetings yield the best outcomes as it helps us gauge what we can offer to the potential customer in order to win the sale. We also intend to increase inventory capacity and operational support to cover an expanded sales region. We will look to hire additional employees as sales continue to increase. Currently we use public warehousing space but will look to acquire our own warehouse facilities, either through a purchase or a lease, to accommodate our growth.

Market

We currently sell and ship to all areas in the US and have the capability to ship overseas as well, though to date we have not had any international sales. Our revenue opportunities come from new construction as well as renovation of existing buildings. Since our inception, we have seen strong revenue growth year over year and we expect that growth to continue as customer demand continues to strongly move toward resilient products due to the low cost and easy long term maintenance.

According to a new report by Reports and Data published in July 2020 (https://www.reportsanddata.com/report-detail/resilient-flooring-market), the global resilient flooring market is forecasted to grow at a rate of 6.8% from $36.79 billion in 2019 to $59.43 billion in 2027. The increasing investments in infrastructure projects, rising environmental concerns and rapid urbanization are the key factors propelling the growth of the global resilient flooring market. The resilient flooring has seen an upswing in demand in the past few years due to the growth of residential, commercial and industrial construction projects. The investments in these sectors have facilitated the use of more creative floor covering technologies. Rapid urbanization has generated a wave of renovation and remodeling activities, increasing demand in the flooring industry. Along with growing investments in the construction industry, the rise in infrastructure to keep up with lifestyle changes contributes to increased demands. Product innovation and customization are one of the few parameters which drive market growth. Government regulations restrict any use of harmful flooring materials and mandate producers to abide by the Leadership in Energy, and Environmental Design (LEED) certification for the Volatile Organic Compound (VOC) emissions which has encouraged extensive technological developments and advancements in the resilient flooring market.

The resilient flooring products are economical and offer durability and flexibility. They offer lower maintenance benefits and are easy to install. The increasing incomes of people across the globe as well as improving standards of living have steered consumer preferences to the adoption of more aesthetically appealing floor design technologies.

During the past few years, the development of creative floor covering technologies and changing developments in building solutions and floor design has been crucial in industrial growth.

Competition

We face strong competition in our business. Our competitors include national and international flooring manufactures along with other smaller brands. Many of these competitors have far greater resources than we do and carry a broader line of flooring products that we do. Principal attributes of competition include product performance, product styling, service and price. Additionally, we compete with alternative products or finishing solutions such as carpet, stone, wood, ceramic products and stained concrete. There is excess industry capacity for certain products in our markets, which tends to increase price competition. The following companies are our primary competitors: Manning Mills, Inc., Shaw Industries, Inc. and Armstrong Flooring Inc.

Typically, each company has a distinct style in its product line. We believe that our range of product styles, competitive pricing and versatility of installation options set us apart from our competitors.

Employees

We currently have 1 full time employee, 1 part-time employee, and an independent sales representative.

Legal Proceedings

We are not subject to any legal proceedings.

THE COMPANY’S PROPERTY

 
We lease our corporate office space, located at 101 Chase Avenue, Suite 304, in Lakewood, New Jersey, under a monthly payment arrangement of $1,200 per month, but have not entered into a written lease for this office space. As discussed above, we do not own or rent specific warehouse facilities, instead relying on a public warehousing facility.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Unless otherwise indicated, the latest results discussed below are as of June 30, 2020. The financial statements included in this filing as of and for the six months ended June 30, 2020, are unaudited and may not include year-end adjustments necessary to make those financial statements comparable to audited results, although in the opinion of management all adjustments necessary to make interim statements of operations not misleading have been included.

Overview

We were incorporated in Delaware on July 6, 2016 and have generated revenues since 2016. We are engaged in the marketing and distribution of flooring materials to residential and commercial properties.  We derive revenues almost entirely from the sale of resilient flooring products. The remainder of our revenue relates to sales of flooring adhesive for glue down-based installation flooring as a convenience for our customers. Our cost of goods sold reflects the costs of sourced flooring products. Our other major expenses consist of payments to our public warehouse facility, which charges on a per pallet basis, and import related fees such as freight, port drayage and tariffs.

Results of operations

Six Months Ended June 30, 2020 and Six Month Ended June 30, 2019

Our revenue increased 158% for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 as a result of an increase in total flooring sold in the six months ended June 30, 2020; while cost of good sold increased 124% over the same period. Our gross margin was 48.9% for the six months ended June 30, 2020 compared to 41.4% for the prior comparable period. The increase in gross margins reflects reductions in trade tariffs on imported goods from China compared to the prior period as well as better pricing terms. The prior period reflects a temporary 25% increase in trade tariffs on imported goods from China which were lifted in 2020. In September 2020, we received a refund of the increased tariffs that we paid in 2019.

General and administrative expenses for the six months ended June 30, 2020 consist primarily of the cost of our public warehousing arrangements, office lease and employee salaries. As a percentage of revenue, general and administrative expenses comprised 13.0% in the 2019 six-month period compared to 17.9% in the 2018 six-month period, reflecting relatively flat fixed office lease and compensation expense, offset by increased warehouse facility costs due to increased inventory. Sales and marketing expenses in the six months ended June 30, 2020 represent website updates and optimization, product samples and displays and trade show expenses. In light of the cost effectiveness of our sales and marketing spend in generating additional revenue, we intend to use a portion of the proceeds from this offering to significantly increase our sales force, both in numbers and geographical coverage, and our warehousing facilities. Interest expense reflects interest payments made under our debt facilities described below.

Our profit margins increased to 32.9% in the six months ended June 30, 2020 from 22.8% in the prior period, primarily as a result of the higher revenue increases than the increases in costs of goods sold and operating expenses.

Year Ended December 31, 2019 and Year Ended December 31, 2018

Our revenue increased 85.7% from 2018 to 2019 as a result of an increase in total flooring sold in 2019; while cost of good sold increased 144.3% over the same period. Our gross margin was 27.5% in 2019 compared to 44.9% in 2018. The increase in cost of goods sold relative to revenues was due to a temporary 25% increase in trade tariffs on imported goods from China that was lifted in 2020.

General and administrative expenses for the year ended December 31, 2019 consist primarily of the cost of our public warehousing arrangements, office lease and employee salaries. As a percentage of revenue, general and administrative expenses comprised 15.0% in 2019 compared to 15.9% in 2018, reflective relatively flat fixed office lease and compensation expense, offset by increased warehouse facility costs due to increased inventory. Sales and marketing expenses represent website updates and optimization, product samples and displays and trade show expenses and increased 70.9% reflecting increased spending on trade show expenses. As a percentage of revenue, sales and marketing expenses declined to 3.9% in 2019 from 4.2% in 2018.

Our profit margins declined to 8.4% in 2019 from 24.7% in 2018, primarily as a result of the increased trade tariffs on imported goods from China.

Liquidity and Capital Resources

As a result of increased inventory levels and associated decreased accounts payable and increased accounts receivable, cash used in operations was $320,052 in 2019, compared to cash provided by operations of $98,052 in 2018. Cash provided by operations for the six months ended June 30, 2020 was $519,341, compared to cash used in operations of $1,017 in the prior comparable period, resulting largely from increased sales and profits. As of June 30, 2020, we had cash on hand of $270,342. In 2020, through November 30, 2020, we made equity distributions to our sole shareholder and President, Mr. Weinstein, aggregating approximately $300,000 and loaned Mr. Weinstein $280,000, which has subsequently been repaid.

In 2019, we entered into two working capital facilities to finance our increased purchases of inventory: a loan in the principal amount of $75,000 from American Express Small Business Loans, with interest payable at the fixed rate of 6.98%, compounded monthly, and maturing in October 2022; and a PayPal Loanbuilder loan in the principal amount of $100,000 with a weekly payment of $2,075. As of June 30, 2020, there was approximately $60,000 in principal outstanding on the American Express loan and approximately $62,000 outstanding on the PayPal loan including the remaining fee amount. We also entered into a line of credit with JP Morgan Chase Bank N.A. (“Chase”) in August 2019 providing for borrowings of up to $100,000 at an interest rate of 2.55% over Chase’s prime rate. In April 2020, we increased our line of credit facility with Chase to provide for up to $180,000 in borrowing capacity with interest payable at at the rate of 2.30% per annum above Chase’s prime rate, increasing to a rate of 5.30% per annum above prime, at Chase’s option, upon the occurrence of any default. As of June 30, 2020, approximately $174,000 was outstanding under this facility. In June 2020, we obtained a $150,000 loan from the US government’s Small Business Administration (“SBA”), with a term of 30 years, bearing 3.75 percent interest per annum and secured by all of our assets. In September 2020, we paid off all amounts outstanding under our Paypal loan, our SBA loan and repaid all amount outstanding under, and terminated, our Chase line of credit facility.

In November, 2020, we borrowed $100,000 from PayPal requiring a weekly payment of $2,075, for an effective interest rate of about 7.9% and a one year maturity. This loan is a secured loans, secured by all of our assets, and is guaranteed by our founder and President, Mr. Weinstein. Subsequently, in November 2020, we obtained a new line of credit facility with Chase providing for borrowings of up to $180,000 at an interest rate of 2.9% over the Chase’s prime rate, increasing to a rate of 5.90% per annum above prime, at Chase's option, upon the occurrence of any default. As of December 7, 2020, $100,000 was outstanding under this facility. This line of credit is also secured by all of our assets and guaranteed by Mr. Weinstein.

Our credit arrangements contain restrictive covenants that prevent or restrict our ability to make distribution or pay dividends to stockholders, including with respect to the Preferred Stock being offered in this offering, incur debt (including capital leases and operating leases), permit liens on any assets, make guarantees, engage in different business activities or engage in fundamental transaction (such as mergers, acquisitions, consolidations or a liquidation). As noted in “Risk Factors” we are in breach of both our PayPal loan and our line of credit and, while we hope to resolve this situation with the respective financial institutions, or alternatively repay and terminate these facilities with proceeds from this offering, we may not be able to. In that case, all amount payable under these facilities would be immediately due and payable, including potentially through enforcement of the respective security interests in our assets or enforcement of the guarantees by Mr. Weinstein.

Trend information

The COVID-19 pandemic in the United States has resulted in high levels of unemployment and fundamental shifts in commercial and consumer behavior, including sharp decreases in the use of public gathering spaces, such as restaurants, sports and entertainment venues, as well as sharp increases in remote, or at home, work. The impact of the pandemic on our future results is unknown; however, continued high rates of unemployment and declines in demand generally are likely to put significant pressure on business and expansion plans.

Volatility in financial markets and the continued softness or further deterioration of national and global economic conditions could have a material adverse effect on our financial condition, liquidity or results of operations, including as follows:

Continued or sustained deterioration of economic conditions would likely exacerbate and prolong these adverse effects. To the extent that we are not able to maintain pricing at a level to support our costs of goods and expenses, our business may not survive.

Fluctuations in tariffs on goods from China have had a significant impact on our margins and may continue to do so in the future. If we choose to source our products from a different country to avoid escalating tariffs, we may face higher product prices. We also face the inherent risks associated with a general economic downturn and resulting higher levels of unemployment and decreased demand for our products. We may purchase inventory in anticipation of the current level of demand, especially as we expand out business, and then subsequently face a decrease in that demand. We may need to lower prices to reduce our inventory levels, which could negatively impact our profitability.

If demand for our products increases, as we expand our business, we would need to increase our inventory. This will lead to an increased need for working capital, warehousing and employees. We may reach the point where it makes financial sense to lease or purchase our own warehouse facility. Each of these will require significant upfront costs prior to our recording corresponding revenue, which will result initially in significant losses.

See the section entitled “Implications of Being an Emerging Growth Company” at the beginning of this Offering Circular for a discussion of the modified reporting requirements for “emerging growth” companies that we may take advantage of should be become a public reporting company.

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The company’s executive officer and director is listed below:

Benjamin Weinstein

Benjamin Weinstein is currently the President of Lux Flooring. He founded the company in 2016 and continues to focus on its growth. Prior to starting Lux Flooring, Mr. Weinstein developed several luxury single-family homes in New Jersey from 2015-2017. From 2015 to present, Mr. Weinstein has been engaged in purchasing and managing real estate properties that he owns either solely or together with other real estate investors. Mr. Weinstein currently owns and manages multi-unit residential properties across several states. See “Interest of Management and Others in Certain Transactions.” Mr. Weinstein holds a First Talmudic Degree from Yeshiva Shaarei Torah of Rockland.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

For the fiscal year ended December 31, 2019, we compensated our executive officer and director on as follows:

We have no employment agreement setting out the terms of compensation that Mr. Weinstein may be paid. Mr. Weinstein, as our sole director and executive officer, determines his compensation each year based on the time he devotes to our business relative to his other business activities, as well as the performance of our business and available cashflow. The compensation paid to Mr. Weinstein in 2019 is not necessarily reflective of market rates nor representative of amounts that may be paid in the future. In 2020, through November 23, 2020, we made equity distributions to Mr. Weinstein of approximately $300,000. We anticipate that, following the offering and in light of the restrictions on distributions in our letter of credit with Chase, Mr. Weinstein’s cash compensation will increase significantly.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS

In September 2020, we amended and restated our certificate of incorporation to effect a 2,000:1 forward stock split of our outstanding Common Stock. The following table sets out, as of November 30, 2020, the voting securities of the company that are owned by our executive officer and director with all information being adjusted to give effect to the stock split. The company’s voting securities consist of its shares of Common Stock.

No other person holds more than 10% of any class of the company’s voting securities or has the right to acquire those securities. The address of the officer and director is the Company’s address as set forth on the cover page of this Offering Circular.

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

Mr. Weinstein is the managing member, and sole or part owner, of the following limited liability companies that invest in and manage real estate: Benetton Holdings Limited Liability Company, Berlin Line Apartments LLC, Kennedy Apartments LLC, Seaview Apartments LLC, Chateau Apartments LLC and Hedgerow Apartments LLC. Each of these entities other than Berlin Line Apartments LLC owns a singly multi-unit residential property. Berlin Line Apartments LLC owns 50% of a multi-unit residential property as tenant in common with an unaffiliated third party. We have entered into and may continue to enter into sales transactions with Mr. Weinstein or the limited liability companies controlled by Mr. Weinstein and the underlying real estate properties. In 2019 and 2020 (through June 30, 2020), approximately $117,000 of our revenues were derived from sales transactions with Mr. Weinstein or real estate entities of which Mr. Weinstein is the managing member.

Mr. Weinstein has provided a guarantee of our obligations under both our current and prior line of credit facility and our current and prior PayPal loan as discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

During 2020 through November 23, 2020, we made equity distributions to Mr. Weinstein in the aggregate amount of approximately $300,000. In addition, for the six months ended June 30, 2020, the Company made loans to Mr. Weinstein in the aggregate amount of $280,000. The loans are non-interest bearing, without maturity, and with principal payable in full or in part at anytime at the option of Mr. Weinstein, or upon demand by the Company. These loans were subsequently repaid in September 2020.

SECURITIES BEING OFFERED

The company is offering up to 10,000,000 shares of Series A Preferred Stock.

CAPITAL STOCK

General

The following description summarizes the most important terms of the company’s capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation (“Restated Certificate”), our bylaws and the Certificate of Designations for our Series A Preferred Stock. Copies of each of these documents have been filed as exhibits to the Offering Statement of which this Offering Circular is a part. For a complete description of our capital stock, you should refer to these documents and to the applicable provisions of Delaware law.

In September 2020, we amended and restated our certificate of incorporation to effect a 2,000:1 forward stock split of our outstanding Common Stock. The following table sets out, as of November 30, 2020, our authorized and outstanding capital stock with all information being adjusted to give effect to the stock split.

Common Stock

Voting Rights

Each holder of the company’s Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors.

Dividend Rights

Holders of voting Common Stock are entitled to receive dividends, as may be declared from time to time by the Board of Directors out of legally available funds, subject to the preferences of the Preferred Stock.

The company has never declared or paid cash dividends on any of its capital stock.

Liquidation Rights

In the event of a voluntary or involuntary liquidation, dissolution, or winding up of the company, the holders of voting Common Stock are entitled to share ratably in the net assets legally available for distribution to stockholders on a pari passu basis with the holders of the Preferred Stock (on an as converted basis) after the payment of all debts and other liabilities of the company and the satisfaction of any liquidation preference granted to the holders of shares of outstanding Preferred Stock.  

Blank Check Preferred Stock

The company’s Board of Directors is expressly authorized to provide, out of up to 20,000,000 shares of undesignated Preferred Stock, for one or more series of Preferred Stock and, without the consent or vote of the company’s stockholders, with respect to each such series, to fix the number of shares constituting such series. The Board of Directors, in connection with this offering, has authorized the issuance of the Series A Preferred Stock and has reserved 12,000,000 shares for issuance thereof, including shares that may be issued upon exercise of the warrants issued to Manhattan Street Capital in connection with this offering.

With respect to the remaining 8,000,000 shares of Preferred Stock available for issuance, the company’s Board of Directors may authorize the issuance of one or more series of Preferred Stock with such rights, privileges, preferences, qualifications, limitations or restrictions as the Board of Directors determines. Such additional series of Preferred Stock may be subordinated to, pari passu with, or senior to the Series A Preferred and/or Common Stock, including with respect to liquidation preferences, dividends and/or approval of matters by vote or written consent.

Series A Preferred Stock

Voting Rights

Except as otherwise required by law, shares of Series A Preferred Stock are not entitled to vote on any matters submitted to a vote of stockholders of the company. Under the Delaware General Corporation Law, holders of Series A Preferred Stock are entitled to vote on a limited number of other corporate actions, including:

Dividends

Dividends on the Series A Preferred Stock will be payable only when, as, and if declared by the company’s board of directors and the company is under no obligation to pay any dividends. The company has never declared dividends on its capital stock, instead retaining cash to grow its business.

While we do intend to declare dividends from time to time, as and when determine by our board of directors, we cannot assure that we will do so or that we will have sufficient surplus or profits to enable us to declare dividends under Delaware law.

The company will not declare, pay or set aside any dividends on shares of any other class or series of capital stock (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the holders of the Series A Preferred Stock then outstanding first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to (A) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, a dividend per share of Series A Preferred Stock as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (2) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock or (B) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (1) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to the Series A Original Issue Price ($5.00 per share); provided that if the company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of its capital stock, the dividend payable to the holders of Series A Preferred Stock will be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend.

Right to Receive Liquidation Distributions

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the company, the holders of shares of Series A Preferred Stock then outstanding are entitled to be paid out of the assets of the company available for distribution to its stockholders, before any payment is made to the holders of Common Stock, an amount per share equal to the Series A Original Issue Price, together with any dividends declared but unpaid thereon. If upon any such liquidation, dissolution or winding up of the company, the assets of the company available for distribution to its stockholders are insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they are entitled, the holders of shares of Series A Preferred Stock will share ratably in any distribution of the company’s assets available for distribution.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the company, after the payment in full of all amounts required to be paid to the holders of shares of Series A Preferred Stock, the remaining assets of the company available for distribution to its stockholders will be distributed among the holders of the shares of Series A Preferred Stock and Common Stock, pro rata and on an as converted basis.

Mandatory Conversion

All outstanding shares of Series A Preferred Stock will automatically convert into shares of Common Stock, at the then applicable Series A Conversion Ratio, which is initially equal to one (1) share of Common Stock to one (1) share of Series A Preferred Stock, upon:

The initial Series A Conversion Ratio is subject to adjustment for any stock split or combination of the Company’s Common Stock, the distributions to holders of Common stock in the form of additional shares of Common Stock or other securities of the company, recapitalization, reclassification, or other changes to the company’s Common Stock, and certain mergers or consolidations involving the company.

No fractional shares of Common Stock will be issued upon conversion of Series A Preferred Stock. The aggregate number of shares of Common Stock issued to a holder upon conversion of its shares of Series A Preferred Stock will be rounded down to the nearest whole share of Common Stock.

Redemption

Unless prohibited by Delaware law governing distributions to stockholders, the company may redeem some or all of the outstanding shares of Series A Preferred with the written consent of the holder or holders thereof at a price per share (in each case, “Redemption Price”) as agreed in writing between the Corporation and the relevant holder or holders of the Series A Preferred Stock. Redemption is not required to be ratable among all holders of the Series A Preferred Stock and the Redemption Price is not required to be the same for each holder of Series A Preferred Stock to be redeemed or for each such share of Series A Preferred Stock held by any holder. Upon redemption of any shares of Series A Preferred Stock, all rights with respect to such shares will terminate, except the right of the holders to receive the redemption price plus any declared and unpaid dividends.

PLAN OF DISTRIBUTION AND SELLING SECURITY HOLDERS

We are offering a maximum of 10,000,000 shares of Series A Preferred Stock at a price of $5.00 per share on a “best efforts” basis. There is no minimum offering amount. The minimum investment is $250, or 50 shares of Preferred Stock.

We plan to market the securities in this offering both through online and offline means. Online marketing may take the form of contacting potential investors through electronic media and posting our Offering Circular or “testing the waters” materials on an online investment platform.

Our Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the website www.manhattanstreetcapital.com/luxflooring, as well as on our own website www.luxflooring.com. Prospective investors may subscribe for our shares in this offering only through the Manhattan Street Capital website.

The offering will terminate at the earlier of the date at which the maximum offering amount has been sold and the date at which the offering is earlier terminated by the company, in its sole discretion. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us.

The Company is offering its securities in all states other than Texas, Florida, Arizona, and North Dakota. We are not engaging any broker-dealers at this time, and until we do, we do not expect to have any associated broker-dealer fees. In the event engage a broker-dealer, we will file a supplement to the Offering Statement of which this Offering Circular forms a part.

The Company has engaged an independent consultant to design and develop our offering page along with our advertising campaigns and investor communications, manage, test and optimize our ongoing paid advertising campaigns and ongoing investor marketing initiatives. We estimate that these services will cost approximately $400,000.

Investors’ Tender of Funds

After the Offering Statement has been qualified by the Commission, we will accept tenders of funds to purchase the securities. We may close on investments on a “rolling” basis (so not all investors will receive their securities on the same date). The funds tendered by potential investors will be held by Prime Trust, LLC, as escrow agent, and will be transferred to us upon closing. A closing will occur each time we accept funds. Upon closing, funds tendered by investors will be made available to us by our escrow agent for our use and such investors will receive their securities.

Online Platform

The company entered into an engagement agreement (the “Engagement Agreement”) with Manhattan Street Capital. In connection with this offering, the company will pay Manhattan Street Capital fees of $5,000 per month while the offering is live for investment or reservations, including any “testing the waters,” plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share. Further, the company will pay Manhattan Street Capital a technology and administration fee of $25 per investor, in cash, paid by the company when each investor deposits funds into the escrow account plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share. The above fees do not include fees for back-end services including, but not limited to: payment processing, digital currency conversion, escrow and technology fees, AML check, and accredited investor verification. These fees may include:

The company will also pay Manhattan Street Capital $90,000 in cash as a project management retainer fee, plus ten-year cashless exercise warrants to purchase the same value of Series A Preferred Stock at an exercise price of $5.00 per share.

All fees are due to Manhattan Street Capital regardless of the success of the offerings.

Manhattan Street Capital does not directly solicit or communicate with investors with respect to offerings posted on its site, although it does advertise the existence of its platform, which may include identifying issuers listed on the platform. Our Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the www.manhattanstreetcapital.com website.

Escrow Agent

The company has entered into an Escrow Services Agreement with Prime Trust, LLC (the “Escrow Agent”). Investor funds will be held by the Escrow Agent pending closing or termination of the offering. All subscribers will be instructed by the company or its agents to transfer funds by check, wire transfer, credit or debit card, virtual currency or ACH transfer directly to the escrow account established for this offering. The company may terminate the offering at any time for any reason at its sole discretion. Investors should understand that acceptance of their funds into escrow does not necessarily result in their receiving Units; escrowed funds may be returned.

For its services, Escrow Agent will receive fees of approximately $150,000, assuming the maximum amount of $50,000,000 is raised in this offering. The Escrow Agent has not investigated the desirability or advisability of an investment in the units nor approved, endorsed or passed upon the merits of purchasing the securities.

Process of Subscribing

You will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).

If you decide to subscribe for the Common Stock in this offering, you should complete the following steps:

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. The company will review all subscription agreements completed by the investor, after which the funds may be released by the Escrow Agent.

If the subscription agreement is not complete or there is other missing or incomplete information, the funds will not be released until the investor provides all required information.

All funds tendered (by check, wire, credit or debit card, or electronic funds transfer via ACH to the specified account or deliver evidence of cancellation of debt) by investors will be deposited into an escrow account at the Escrow Agent for the benefit of the company. All funds received in virtual currency will be made available immediately; funds received by wire transfer or credit or debit card will be made available 24 hours following receipt of funds; and funds transferred by ACH or paid by check will be restricted for a minimum of 10 days to clear the banking system prior to deposit into an account at the Escrow Agent. Prime Trust reserves the right to limit, suspend, restrict (including increasing clearing periods) or terminate the use of ACH, credit cards and/or debit cards at its sole discretion.

The company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason, including, but not limited to, in the event that an investor fails to provide all necessary information, even after further requests, in the event an investor fails to provide requested follow up information to complete background checks or fails background checks, and in the event the offering is oversubscribed in excess of the maximum offering amount.

In the interest of allowing interested investors as much time as possible to complete the paperwork associated with a subscription, there is no maximum period of time to decide whether to accept or reject a subscription. If a subscription is rejected, funds will not be accepted by wire transfer or ACH, and payments made by debit card or check will be returned to subscribers within 30 days of such rejection without deduction or interest. Upon acceptance of a subscription, the company will send a confirmation of such acceptance to the subscriber.

Upon confirmation that an investor’s funds have cleared, the company will instruct the Transfer Agent to issue shares to the investor. The Transfer Agent will notify an investor when shares are ready to be issued and the Transfer Agent has set up an account for the investor.

Transfer Agent

The company has also engaged Colonial Stock Transfer Company, Inc. (“Colonial”), a registered transfer agent with the SEC, who will serve as transfer agent to maintain shareholder information on a book-entry basis; there are no set up costs for this service, fees for this service will be limited to secondary market activity. The company estimates the aggregate fee due to Colonial for the above services to be $6,000 annually.

Incentives

The company intends to offer marketing promotions to encourage potential investors to invest, which may include offers such as branded promotional merchandise and discounts on the purchase of the Company’s products. Details on the company's current incentives can be found on the company's offering page found at www.manhattanstreetcapital.com/luxflooring.

TAX CONSEQUENCES FOR RECIPIENT (INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX CONSEQUENCES) WITH RESPECT TO THE INVESTMENT BENEFIT PACKAGES ARE THE SOLE RESPONSIBILITY OF THE INVESTOR. INVESTORS MUST CONSULT WITH THEIR OWN PERSONAL ACCOUNTANT(S) AND/OR TAX ADVISOR(S) REGARDING THESE MATTERS.

No Selling of Previously Outstanding Securities

No securities are being sold for the account of existing security holders; all net proceeds of this offering will go to the company.

ONGOING REPORTING AND SUPPLEMENTS TO THIS OFFERING CIRCULAR

We will be required to make annual and semi-annual filings with the Commission. We will make annual filings on Form 1-K, which will be due by the end of April each year and will include audited financial statements for the previous fiscal year. We will make semi-annual filings on Form 1-SA, which will be due by September 28 each year, which will include unaudited financial statements for the six months to June 30. We will also file a Form 1-U to announce important events such as the loss of a senior officer, a change in auditors or certain types of capital-raising. We will be required to keep making these reports unless we file a Form 1-Z to exit the reporting system, which we will only be able to do if we have less than 300 stockholders of record and have filed at least one Form 1-K.

We may supplement the information in this Offering Circular by filing a Supplement with the Commission. All these filings will be available on the Commission’s EDGAR filing system. You should read all the available information before investing.

LUX FLOORING INC.

(a Delaware corporation)

Financial Statements for the calendar years ended

December 31, 2019 and 2018

INDEPENDENT AUDITOR’S REPORT

September 24, 2020

We have audited the accompanying consolidated financial statements of LUX FLOORING INC. (a corporation organized in Delaware) (the “Company”), which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations, shareholder equity, and cash flows for the calendar year periods ended December 31, 2019 and 2018, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of the Company’s financial statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations, shareholder equity and its cash flows for the calendar year periods thus ended in accordance with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes to the financial statements, the Company has stated that substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described in the Notes to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Sincerely,

IndigoSpire CPA Group

IndigoSpire CPA Group, LLC

Aurora, Colorado

September 24, 2020

LUX FLOORING INC.

BALANCE SHEET

As of December 31, 2019 and 2018

See Independent Auditor’s Report and Notes to the Financial Statements

LUX FLOORING INC.

STATEMENT OF OPERATIONS

For Years Ending December 31, 2019 and 2018

See Independent Auditor’s Report and Notes to the Financial Statements

LUX FLOORING INC.

STATEMENT OF SHAREHOLDER EQUITY

For Years Ending December 31, 2019 and 2018

See Independent Auditor’s Report and Notes to the Financial Statements

LUX FLOORING INC.

STATEMENT OF CASH FLOWS

For Years Ending December 31, 2019 and 2018

See Independent Auditor’s Report and Notes to the Financial Statements

LUX FLOORING INC.

NOTES TO FINANCIAL STATEMENTS

See Independent Auditor’s Report

For Years Ending December 31, 2019 and 2018

NOTE 1 – NATURE OF OPERATIONS

LUX FLOORING INC. (which may be referred to as the “Company”, “we,” “us,” or “our”) was incorporated in Delaware on July 6, 2016. The Company is engaged in the marketing and distribution of flooring materials to residential and commercial properties.

Since Inception, the Company is a development stage and has relied on securing loans, funding from founders and proceeds from product sales. As of December 31, 2019, the Company has produced cash from the operations of the business, however the extent to which the owner has been compensated suggest that market rate compensation for the chief executive could cause the operating cash flow to be substantially reduced. These matters raise substantial concern about the Company’s ability to continue as a going concern (see Note 8). During the next twelve months, the Company intends to fund its operations with funding from a crowdfunding campaign (see Note 8) and the receipt of funds from revenue producing activities. If the Company cannot secure additional capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the years presented have been included.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

Significant estimates inherent in the preparation of the accompanying financial statements include valuation of provision for refunds and chargebacks, equity transactions and contingencies.

Risks and Uncertainties

The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. Additionally, in 2020, the Company faces economic uncertainty due to the COVID-19 pandemic.

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

Cash and Cash Equivalents

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of December 31, 2019 and 2018, the Company had $103,243 and $82,089 of cash on hand, respectively.

Fixed Assets

Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income.

Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to forty years.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. As of December 31, 2019, the Company did not have any fixed assets and there was no impairment.

Fair Value Measurements

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

Income Taxes

Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Any deferred tax items of the Company have been fully valued based on the determination of the Company that the utilization of any deferred tax assets is uncertain.

The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.

Revenue Recognition

Sales Income - During 2019, the company adapted the provision of ASU 214-09 Revenue from Contracts with Customers (“ASC 606”).

ASC 606 provides a five-step model for recognizing revenue from contracts:

The Company’s primary source of revenue is the sales of its flooring products. As a result, the Company transfers control of the product at the time of delivery, and therefore recognizes revenue and the associated products costs of the sale at the same point in time.

Accounts Receivable

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. As of December 31, 2019 and 2018, the Company had $107,131 and $58,740 balances of accounts receivable, respectively.

The Company estimates an allowance for doubtful accounts based upon an evaluation of the current status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change.

Inventories

The Company maintains inventory for sale to customers. The Company values inventory at cost (subject to any accruals obsolescence, spoilage, or other loss) on a first-in, first-out basis. As of December 31, 2019 and 2018, the Company had $576,998 and $276,702 of inventory, respectively.

Advertising

The Company expenses advertising costs as they are incurred.

Recent Accounting Pronouncements

In June 2019, FASB amended ASU No. 2019-07, Compensation – Stock Compensation, to expand the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

In August 2019, amendments to existing accounting guidance were issued through Accounting Standards Update 2019-15 to clarify the accounting for implementation costs for cloud computing arrangements. The amendments specify that existing guidance for capitalizing implementation costs incurred to develop or obtain internal-use software also applies to implementation costs incurred in a hosting arrangement that is a service contract. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

NOTE 3 – INCOME TAX PROVISION

The Company has made a valid S corporation election for US federal tax purposes. Thusly, the Company does not pay taxes on its own account, but rather allocates the Company’s net income, credits, gains and losses to its shareholder. The Company filed its corporate income tax return for the period ended December 31, 2019 and 2018. The income tax returns will remain subject to examination by the Internal Revenue Service under the statute of limitations for a period of three years from the date it is filed.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company compensates Mr. Ben Weinstein, its founder and chief executive for services rendered to the Company. In the years ended 2019 and 2018, the Company paid Mr. Weinstein $15,000 and $20,365, respectively. The Company has also made material sales to other entities for which Mr. Weinstein is a general partner.

Because the Company is wholly-owned by Mr. Weinstein, it cannot be guaranteed that this level of compensation or sales prices are commensurate with market rates for the goods and services rendered.

NOTE 5 – DEBT

The Company has obtained a line of credit in 2019 from Chase Bank for a maximum borrowing amount of $100,000. The interest rate on the line of credit was 2.55 percent above the prime borrowing rate (the “Chase LOC”). As discussed in Note 9 below, the Chase Bank extended additional credit under this line of credit in April 2020 and lowered the interest rate on the outstanding balance. Furthermore, in September 2020, the Company repaid the Chase LOC and closed the account.

Additionally, the Company borrowed $75,000 from American Express National Bank to be repaid over three years at 6.98 percent interest per year. The fully amortizing liability requires a monthly payment of $2,315.

Additionally, the Company borrowed $100,000 for one year from Paypal (the “Paypal Loan”) requiring a weekly payment of $2,075. As discussed below, the Company repaid the Paypal loan in full in September 2020. 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company is not currently involved with and does not know of any pending or threatening litigation against the Company. The Company leases corporate office space under a monthly payment arrangement but has not entered into a written lease for this office space. 

NOTE 7 – EQUITY

The Company has a single class of stock, 10,000 shares are authorized, issued and outstanding as of December 31, 2019 and 2018. All of the common stock is owned by the Company’s founder and chief executive, Mr. Weinstein. As discussed below in Note 9, the Company intends to affect a stock split where by one share becomes 2,000 shares and outstanding common stock is increased to 40,000,000 shares. The Company is also going to add 20,000,000 shares of authorized preferred stock.

NOTE 8 – GOING CONCERN

These financial statements are prepared on a going concern basis. The Company began operation in 2016 and may not be generating cash from operations if the Company’s owner and founder was paid a market-based rate of compensation. The Company’s ability to continue is dependent upon management’s plan to raise additional funds and achieve profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

NOTE 9 – SUBSEQUENT EVENTS

Share Recapitalization

As discussed above, the Company intends to recapitalize the shareholdings of the Company by affecting a 2,000:1 stock split, increasing authorized common shares from 10,000 to 40,000,000 and authorizing an additional 20,000,000 shares of preferred stock. After the stock split, the Company would have 20,000,000 common shares issued and outstanding.

Anticipated Crowdfunded Offering

The Company is offering (the “Crowdfunded Offering”) up to $50,000,000 of Series A preferred stock in a securities offering intending to be exempt from registration under Regulation A.

The Crowdfunded Offering is being made through Manhattan Street Capital (“MSC”). MSC is receiving compensation related to the Crowdfunded Offering in cash and ten-year cashless exercise warrants to purchase Series A Preferred Stock at an exercise price of $5.00 per share. As of August 24, 2020, the Company had paid MSC approximately $20,000.

Procurement of Economic Injury Disaster Loan

As a result of the on-going COVID-19 pandemic, the US government’s Small Business Administration (“SBA”) has underwritten loans made to small businesses suffering economic damages from the pandemic (“EIDL Loans”). The Company obtained $150,000 of EIDL Loans in June 2020. The EIDL Loans are secured by the Company’s assets and are for 30 years, bearing 3.75 percent interest per annum.

Owner Distributions

In 2020, the Company has made approximately $200,000 in cash distributions to its owner and issued non-interest bearing loans to the owner totaling $280,000. The owner repaid the loans in full in September 2020.

Repayment of Outstanding Credit

In September 2020, the Company fully repaid and closed the credit accounts associated with the Paypal Loan, the Chase LOC and the SBA’s EIDL Loans and no longer owes amounts under these credit instruments.

Management’s Evaluation

Management has evaluated subsequent events through September 24, 2020, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements.

LUX FLOORING INC.

(a Delaware corporation)

Unaudited Financial Statements for the six months ending

June 30^th, 2020

LUX FLOORING INC.

BALANCE SHEET

LUX FLOORING INC.

STATEMENT OF OPERATIONS

LUX FLOORING INC.

STATEMENT OF SHAREHOLDER EQUITY

LUX FLOORING INC.

STATEMENT OF CASH FLOWS

LUX FLOORING INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – NATURE OF OPERATIONS

LUX FLOORING INC. (which may be referred to as the “Company”, “we,” “us,” or “our”) was incorporated in Delaware on July 6, 2016. The Company is engaged in the marketing and distribution of flooring materials to residential and commercial properties.

Since Inception, the Company is a development stage and has relied on securing loans, funding from founders and proceeds from product sales. As of June 30^th 2020, the Company has produced cash from the operations of the business, however the extent to which the owner has been compensated suggest that market rate compensation for the chief executive could cause the operating cash flow to be substantially reduced. These matters raise substantial concern about the Company’s ability to continue as a going concern (see Note 8). During the next twelve months, the Company intends to fund its operations with funding from a crowdfunding campaign (see Note 8) and the receipt of funds from revenue producing activities. If the Company cannot secure additional capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the years presented have been included.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

Significant estimates inherent in the preparation of the accompanying financial statements include valuation of provision for refunds and chargebacks, equity transactions and contingencies.

Risks and Uncertainties

The Company's business and operations are sensitive to general business and economic conditions in the United States and other countries that the Company operates in. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. Additionally, in 2020, the Company faces economic uncertainty due to the COVID-19 pandemic.

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

Cash and Cash Equivalents

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of December 31, 2019 and 2018, the Company had $103,243 and $82,089 of cash on hand, respectively. The cash balance as of June 30^th, 2020 was $270,342.

Fixed Assets

Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in income.

Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to forty years.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. As of June 30, 2020, the Company did not have any fixed assets and there was no impairment.

Fair Value Measurements

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

Income Taxes

Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Any deferred tax items of the Company have been fully valued based on the determination of the Company that the utilization of any deferred tax assets is uncertain.

The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.

Revenue Recognition

Sales Income - During 2019, the company adapted the provision of ASU 214-09 Revenue from Contracts with Customers (“ASC 606”).

ASC 606 provides a five-step model for recognizing revenue from contracts:

The Company’s primary source of revenue is the sales of its flooring products. As a result, the Company transfers control of the product at the time of delivery, and therefore recognizes revenue and the associated products costs of the sale at the same point in time.

Accounts Receivable

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. As of December 31, 2019 and 2018, the Company had $107,131 and $58,740 balances of accounts receivable, respectively. The accounts receivable balance as of June 30^th 2020 was $315,018.

The Company estimates an allowance for doubtful accounts based upon an evaluation of the current status of receivables, historical experience, and other factors as necessary. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change.

Inventories

The Company maintains inventory for sale to customers. The Company values inventory at cost (subject to any accruals obsolescence, spoilage, or other loss) on a first-in, first-out basis. As of December 31, 2019 and 2018, the Company had $576,998 and $276,702 of inventory, respectively. As of June 30^th, 2020 the Company had inventory of $642,476.

Advertising

The Company expenses advertising costs as they are incurred.

Recent Accounting Pronouncements

In June 2019, FASB amended ASU No. 2019-07, Compensation – Stock Compensation, to expand the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

In August 2019, amendments to existing accounting guidance were issued through Accounting Standards Update 2019-15 to clarify the accounting for implementation costs for cloud computing arrangements. The amendments specify that existing guidance for capitalizing implementation costs incurred to develop or obtain internal-use software also applies to implementation costs incurred in a hosting arrangement that is a service contract. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

NOTE 3 – INCOME TAX PROVISION

The Company has made a valid S corporation election for US federal tax purposes. Thusly, the Company does not pay taxes on its own account, but rather allocates the Company’s net income, credits, gains and losses to its shareholder. The Company filed its corporate income tax return for the period ended December 31, 2019 and 2018. The income tax returns will remain subject to examination by the Internal Revenue Service under the statute of limitations for a period of three years from the date it is filed.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company compensates Mr. Ben Weinstein, its founder and chief executive for services rendered to the Company. In the years ended 2019 and 2018, the Company paid Mr. Weinstein $15,000 and $20,365, respectively. For the six months ended June 30^th, 2020, Mr. Weinstein was paid $13,536. The Company has also made material sales to other entities for which Mr. Weinstein is a general partner.

Because the Company is wholly-owned by Mr. Weinstein, it cannot be guaranteed that this level of compensation or sales prices are commensurate with market rates for the goods and services rendered.

In addition, for the six months ended June 30, 2020, the Company made loans to Mr. Weinstein in the aggregate amount of $280,000, reflected as loans receivable – related party on the balance sheet. The loans are non-interest bearing, without maturity, and with principal payable in full or in part at anytime at the option of Mr. Weinstein, or upon demand by the Company. As discussed below in Note 9, these loans were subsequently repaid in September 2020.

NOTE 5 – DEBT

The Company has obtained a line of credit in 2019 from Chase Bank for a maximum borrowing amount of $100,000. The interest rate on the line of credit was 2.55 percent above the prime borrowing rate (the “Chase LOC”). The Chase Bank extended additional credit under this line of credit in April 2020 and lowered the interest rate on the outstanding balance. Furthermore, in September 2020, the Company repaid the Chase LOC and closed the account.

Additionally, the Company borrowed $75,000 from American Express National Bank to be repaid over three years at 6.98 percent interest per year. The fully amortizing liability requires a monthly payment of $2,315.

Additionally, the Company borrowed $100,000 for one year from Paypal (the “Paypal Loan”) requiring a weekly payment of $2,075. As discussed below, the Company repaid the Paypal loan in full in September 2020.

Procurement of Economic Injury Disaster Loan

As a result of the on-going COVID-19 pandemic, the US government’s Small Business Administration (“SBA”) has underwritten loans made to small businesses suffering economic damages from the pandemic (“EIDL Loans”). The Company obtained $150,000 of EIDL Loans in June 2020. The EIDL Loans are secured by the Company’s assets and are for 30 years, bearing 3.75 percent interest per annum.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company is not currently involved with and does not know of any pending or threatening litigation against the Company. The Company leases corporate office space under a monthly payment arrangement but has not entered into a written lease for this office space.

NOTE 7 – EQUITY

The Company has a single class of stock, 10,000 shares are authorized, issued and outstanding as of June 30, 2020. All of the common stock is owned by the Company’s founder and chief executive, Mr. Weinstein. As discussed below in Note 9, on September 29, 2020, the Company affected a stock split where by one share became 2,000 shares and authorized common stock was increased to 40,000,000 shares. The Company also added 20,000,000 shares of authorized preferred stock.

NOTE 8 – GOING CONCERN

These financial statements are prepared on a going concern basis. The Company began operation in 2016 and may not be generating cash from operations if the Company’s owner and founder was paid a market-based rate of compensation. The Company’s ability to continue is dependent upon management’s plan to raise additional funds and achieve profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

NOTE 9 – SUBSEQUENT EVENTS

Share Recapitalization

As discussed above, on September 29, 2020, the Company recapitalized the shareholdings of the Company by affecting a 2,000:1 stock split, increasing authorized common shares from 10,000 to 40,000,000 and authorizing an additional 20,000,000 shares of preferred stock. After the stock split, the Company has 20,000,000 common shares issued and outstanding. On October 29, the Company created a new series of preferred stock, the Series A Preferred Stock, and designated 12,000,000 shares (of the previously authorized 20,000,000 shares of preferred stock) as shares of Series A Preferred Stock.

Repayment of Loans by Mr. Weinstein

In September 2020, Mr. Weinstein repaid in full $280,000 of loans made by the Company to Mr. Weinstein.

Repayment of Outstanding Credit

In September 2020, the Company fully repaid and closed the credit accounts associated with the Paypal Loan, the Chase LOC and the SBA’s EIDL Loans and no longer owes amounts under these credit instruments.

Anticipated Crowdfunded Offering

The Company intending to conduct an offering (the “Crowdfunded Offering”) up to $50,000,000 of Series A preferred stock in a securities offering intending to be exempt from registration under Regulation A.

The Crowdfunded Offering is being made through Manhattan Street Capital (“MSC”). MSC is receiving compensation related to the Crowdfunded Offering in cash and ten-year cashless exercise warrants to purchase Series A Preferred Stock at an exercise price of $5.00 per share. As of August 24, 2020, the Company had paid MSC approximately $20,000.

Owner Distributions

In 2020, the Company has made approximately $300,000 in cash distributions to its owner and issued loans to the owner totaling $280,000.

Repayment of Outstanding Credit

In September 2020, the Company fully repaid and closed the credit accounts associated with the Paypal Loan, the Chase LOC and the SBA’s EIDL Loans. The Company repaid these credit accounts and no longer owes amounts under these credit instruments.

New Debt

In November 2020, the company borrowed $100,000 for one year from Paypal requiring a weekly payment of $2,075 for an interest rate of about 7.9%.

In Addition, in November 2020, the Company has obtained a new line of credit from Chase Bank for a maximum borrowing amount of $180,000. The interest rate on the line of credit is 2.9 percent above the prime borrowing rate. No funds have been withdrawn as of November 23^rd, 2020.

Management’s Evaluation

Management has evaluated subsequent events through November 23, 2020, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements.

PART III

INDEX TO EXHIBITS

* To be filed by amendment.

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lakewood, New Jersey, on December 10, 2020.

The following persons in the capacities and on the dates indicated have signed this Offering Statement.

Exhibit 2.3

SERIES A PREFERRED STOCK

12,000,000 shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated "Series A Preferred Stock" with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations.

Dividends on the Series A Preferred Stock shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to (A) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (2) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (1) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to the Series A Original Issue Price (as defined below); provided that if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series A Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend. The "Series A Original Issue Price" shall mean $5.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock.

2.1          Preferential Payments to Holders of Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the Series A Original Issue Price, together with any dividends declared but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of such assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

2.2          Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment in full of all amounts required to be paid to the holders of shares of Series A Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of Series A Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock pursuant to the terms of this Certificate of Designations and the Amended and Restated Certificate of Incorporation immediately prior to such liquidation, dissolution or winding up of the Corporation.

3.            Voting, Except as otherwise required by law, shares of Series A Preferred Stock shall be non-voting and shall not be entitled to vote on any matters submitted to a vote of stockholders of the Corporation.

4.1          Upon (a) the closing of the sale of shares of Common Stock to the public in a firm- commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, (b) a merger or consolidation in which: (i) the Corporation is a constituent party or (ii) a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, except in each case any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; provided that, for the purpose of this Section 4.1, all shares of Common Stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation or upon conversion of any securities of the Corporation outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, deemed to be converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged, (c) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, (d) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation, or (e) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock (the "Requisite Holders'') at the time of such vote or consent, voting as a single class on an as-converted basis (each such date and/or time, the "Mandatory Conversion Time''): all outstanding shares of Series A Preferred Stock will automatically convert into shares of Common Stock, at the then applicable Series A Conversion Ratio (as defined below).

4.2          Conversion Ratio. The shares of Series A Preferred Stock of such holder shall convert into such number of fully paid and non-assessable shares of Common Stock as is determined by multiplying the aggregate shares of Series A Preferred Stock being converted by the Series A Conversion Ratio. The "Series A Conversion Ratio" shall initially be equal to one (1) share of Common Stock to one (1) share of Series A Preferred Stock. Such initial Series A Conversion Ratio shall be subject to adjustment as provided below.

4.3          No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Series A Preferred Stock pursuant to Section 4.1. The aggregate number of shares of Common Stock issued to a holder upon conversion of its shares of Series A Preferred Stock shall be rounded down to the nearest whole share of Common Stock.

4.4          Reservation of Shares. The Corporation shall at all times when the Series A Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series A Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendments to this Certificate of Designations and the Amended and Restated Certificate of Incorporation of the Corporation.

4.5          Adjustment for Stock Splits and Combinations. If the Corporation at any time or from time to time after the date on which the first share of Series A Preferred Stock is issued by the Corporation (such date referred to herein as the "Series A Original Issue Date") effects a subdivision of the outstanding Common Stock, the denominator of the Series A Conversion Ratio in effect immediately before that subdivision shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of Series A Preferred Stock will be increased in proportion to the increase in the aggregate number of shares of Common Stock outstanding as a result of such subdivision. If the Corporation at any time or from time to time after the Series A Original Issue Date combines the outstanding shares of Common Stock, the denominator of the Series A Conversion Ratio in effect immediately before the combination will be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of Series A Preferred Stock shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding as a result of such combination. Any adjustment under this Section 4.5 becomes effective at the close of business on the date the subdivision or combination becomes effective.

4.6          Adjustment for Certain Dividends and Distributions. If the Corporation at any time or from time to time after the Series A Original Issue Date makes or issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the denominator of the Series A Conversion Ratio in effect immediately before the event will be increased as of the time of such issuance or, in the event a record date has been fixed, as of the close of business on such record date, by multiplying Series A Conversion Ratio then in effect by a fraction: (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of the issuance or the close of business on the record date, and (ii) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately before the time of such issuance or the close of business on the record date.

Notwithstanding the foregoing, (i) if such record date has been fixed and the dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, such Series A Conversion Ratio shall be recomputed accordingly as of the close of business on such record date and thereafter such Series A Conversion Ratio shall be adjusted pursuant to this Section 4.6 as of the time of actual payment of such dividends or distributions; and (ii) no such adjustment shall be made if the holders of the Series A Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock that they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of the event.

4.7          Adjustments for Other Dividends and Distributions. If the Corporation at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock), then and in each such event the Corporation shall make, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution to the holders of the Series A Preferred Stock in an amount equal to the amount of securities as the holders of Series A Preferred Stock would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event.

4.8          Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Series A Original Issue Date the Common Stock issuable upon the conversion of the Series A Preferred Stock is changed into the same or a different number of shares of any class or classes of stock of the Corporation, whether by recapitalization, reclassification, or otherwise (other than by a stock split or combination, dividend, distribution, merger or consolidation covered by Sections 4.5, 4.6, 4.7 or 4.9), then, following any such recapitalization, reclassification, or other change, the Corporation shall provide that Series A Preferred Stock will thereafter be convertible, in lieu of the Common Stock into which it was convertible prior to the event, into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change based on the number of shares of Common Stock into which such shares of Series A Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change.

4.9          Adjustment for Merger or Consolidation. If any consolidation or merger occurs involving the Corporation in which the Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash, or other property (other than a transaction covered by Sections 4.6, 4.7 or 4.8 or a transaction in which all of the shares of Series A Preferred Stock are mandatorily converted into shares of Common Stock pursuant to Section 4.1), then, following any such consolidation or merger, the Corporation shall provide that Series A Preferred Stock will thereafter be convertible, in lieu of the Common Stock into which it was convertible prior to the event, into the kind and amount of securities, cash, or other property based on the number of shares of Common Stock of the Corporation issuable upon conversion of the Series A Preferred Stock immediately prior to the consolidation or merger; and, in such case, the Corporation shall make appropriate adjustment (as determined in good faith by the Board) in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of Series A Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Series A Conversion Ratio) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of Series A Preferred Stock.

4.10        Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series A Conversion Ratio pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than 15 days thereafter, compute such adjustment or readjustment in accordance with the terms of this Certificate of Designations and furnish to each holder of Series A Preferred Stock a certificate setting forth the adjustment or readjustment (including the kind and amount of securities, cash, or other property into which the Series A Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (a) the Series A Conversion Ratio then in effect and (b) the number of shares of Common Stock and the amount, if any, of other securities, cash, or property which then would be received upon the conversion of the Series A Preferred Stock.

4.11        Procedural Requirements for a Mandatory Conversion. The Corporation shall notify in writing all holders of record of shares of Series A Preferred Stock of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Series A Preferred Stock pursuant to Section 4.1. Unless otherwise provided in this Certificate of Designations or in the Amended and Restated Certificate of Incorporation of the Corporation, the notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of the notice, each holder of shares of Series A Preferred Stock shall, if such holder's shares are certificated, surrender the certificate or certificates for such shares of Series A Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series A Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form reasonably satisfactory to the Corporation, duly executed by the registered holder or such holder's attorney duly authorized in writing. The Corporation shall, as soon as practicable after the Mandatory Conversion Time, issue and deliver to each holder of Series A Preferred Stock, or to his, her or its nominees, a notice of issuance of uncertificated full shares of Common Stock and may, upon written request, issue and deliver a certificate for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof. All rights with respect to the Series A Preferred Stock converted pursuant to Section 4.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), shall immediately cease and terminate at the Mandatory Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and to receive payment of declared but unpaid dividends thereon. Such converted Series A Preferred Stock shall be retired and cancelled and may not be reissued, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary or desirable, in the discretion of the Board, to reduce the authorized number of shares of Preferred Stock and/or the Series A Preferred Stock accordingly.

5.            Redemption. Unless prohibited by Delaware law governing distributions to stockholders, the Corporation may redeem some or all of the outstanding shares of Series A Preferred Stock with the written consent of the holder or holders thereof at a price per share (in each case, "Redemption Price'') as agreed in writing between the Corporation and the relevant holder or holders of the Series A Preferred Stock (such written agreement, the "Redemption Agreement''). Redemption is not required to be ratable among all holders of the Series A Preferred Stock and the Redemption Price is not required to be the same for each holder of Series A Preferred Stock to be redeemed or for each such share of Series A Preferred Stock held by any holder. On or before any redemption date, each holder of shares of Series A Preferred Stock to be redeemed on such redemption date shall surrender the certificate or certificates, if any, representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, at the office of the transfer agent for the Series A Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on the share register of the Company as the owner thereof, together with payment of any declared but unpaid dividends thereon. If requested by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form reasonably satisfactory to the Corporation, duly executed by the registered holder or such holder's attorney duly authorized in writing. If the Redemption Price payable upon redemption of any shares of Series A Preferred Stock to be redeemed on the redemption date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing such shares of Series A Preferred Stock shall not have been surrendered, all rights with respect to all such redeemed shares shall forthwith after the redemption date terminate, except only the right of the holders to receive the relevant Redemption Price without interest upon surrender of their certificate or certificates therefor, if applicable, plus any declared and unpaid dividends thereon. In the event less than all of the shares of Series A Preferred Stock of any holder subject to redemption are redeemed, the Corporation shall, as soon as practicable after the redemption date, issue and deliver to each such holder of Series A Preferred Stock, or to his, her or its nominees, a notice setting forth the number of uncertificated shares of Series A Preferred Stock remaining after redemption and may, upon written request, issue and deliver a certificate for the number such shares of Series A Preferred Stock. Any shares of Series A Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries will be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Series A Preferred Stock following any such redemption.

6.            Waiver. Any of the rights, powers, preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the affirmative written consent or vote of the Requisite Holders.

7.            Notices. Any notice required or permitted by the provisions of this Certificate of Designations to be given to a holder of shares of Series A Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the Delaware General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

IN WITNESS WHEREOF, LUX FLOORING INC. has caused this Certificate of Designations to be signed by Benjamin Weinstein, a duly authorized officer of the Corporation, on October 28, 2020.

Exhibit 4.1

SUBSCRIPTION AGREEMENT

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO INVESTOR IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY FUNDATHENA, INC. (DBA MANHATTAN STREET CAPITAL, INC.) (THE “PLATFORM”) OR THROUGH ANY BROKER THAT MAY BE ENGAGED BY THE COMPANY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH INVESTOR IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY INVESTOR IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

Ladies and Gentlemen:

1.            Subscription.

(a)          The undersigned (“Investor”) hereby irrevocably subscribes for and agrees to purchase shares (the “Shares”) of Series A Preferred Stock (the “Preferred Stock”), without par value, of LUX FLOORING INC., a Delaware corporation (the “Company”). Such purchases shall be made at a purchase price of $5.00 per share of Preferred Stock (the “Per Security Price”), rounded down to the nearest whole share based on Investor’s subscription amount, upon the terms and conditions set forth herein. The minimum subscription is $500. The Preferred Stock being subscribed for under this Subscription Agreement and the Common Stock (“Common Stock”) of the Company issuable upon conversion of the Preferred Stock are sometimes referred to herein as the “Securities.” The rights and preferences of the Securities are as set forth in the Amended and Restated Certificate of Incorporation, the Certificate of Designations relation to the Preferred Stock and the Amended and Restated Bylaws of the Company available in the Exhibits to the Offering Statement of the Company filed with the SEC (the “Offering Statement”).

(b)          Investor understands that the Securities are being offered pursuant to an Offering Circular dated __________________, 2020 (the “Offering Circular”), filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Investor acknowledges that Investor has received and reviewed this Subscription Agreement, a copy of the Offering Circular and Offering Statement including exhibits thereto and any other information required by Investor to make an investment decision with respect to the Securities.

(c)          The Investor’s subscription hereunder may be accepted or rejected in whole or in part, at any time prior to the Termination Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Investor only a portion of the number of the Shares that Investor has subscribed to purchase hereunder. The Company will notify Investor whether this subscription is accepted (whether in whole or in part) or rejected. If Investor’s subscription is rejected, Investor’s payment (or portion thereof if partially rejected) will be returned to Investor without interest and all of Investor’s obligations hereunder shall terminate.

(d)         The aggregate number of shares of Common Stock that may be sold in this offering shall not exceed 10,000,000 shares (the “Maximum Shares”). The Company may accept subscriptions until the termination of the Offering in accordance with its terms (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).

(e)           In the event of rejection of this subscription in its entirety, or in the event the sale of the Shares (or any portion thereof) to Investor is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

2.           Purchase Procedure.

(a)          Payment. Subscriber shall deliver a signed copy of this Subscription Agreement, along with payment for the aggregate purchase price of the Securities by a check for available funds, by ACH electronic transfer, virtual currency transfer or wire transfer to an account designated by the Company, by credit or debit card or by any combination of such methods.

(b)          Escrow Arrangements. Payment for the Securities shall be received by Prime Trust, LLC (the “Escrow Agent”) from the undersigned by transfer of immediately available funds, check or other means approved by the Company at least two days prior to the applicable Closing Date in the amount of Investor’s subscription. Investors should note that prior to receipt by Escrow Agent, credit and debit card payments may incur transaction fees charged by the third-party card processing service. On each Closing Date, the Escrow Agent shall release Investor’s funds to the Company. The Investor shall receive notice and evidence of the digital entry of the number of the Securities owned by Investor reflected on the books and records of the Company and verified by Colonial Stock Transfer Company, Inc. (the “Transfer Agent”), which books and records shall bear a notation that the Securities were sold in reliance upon Regulation A of the Securities Act.  

3.           Representations and Warranties of the Company. The Company represents and warrants to Investor that the following representations and warranties are true and complete in all material respects as of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.

(a)          Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, the Securities and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

(b)          Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Securities, when issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable. The Company hereby agrees that there shall be reserved for issuance and delivery upon conversion of shares of Preferred Stock such number of shares of Common Stock into which such shares of Preferred Stock shall then be convertible.

(c)          Authority for Agreement. The acceptance by the Company of this Subscription Agreement, and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities), are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon the Company’s acceptance of this Subscription Agreement, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

(d)          No Filings. Assuming the accuracy of Investor’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the acceptance, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

(e)          Capitalization. The outstanding equity securities of the Company immediately prior to the initial Closing Date is as set forth in “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

(f)          Financial Statements. Complete copies of the Company’s audited financial statements, consisting of the balance sheet of the Company as of December 31, 2019 and December 31, 2018, and the related statements of income and cash flows for the years then ended (collectively, the “Financial Statements”), have been made available to Investor and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the respective periods indicated therein. IndigoSpire CPA Group, LLC, which has audited the Financial Statements, is an independent accounting firm within the rules and regulations adopted by the SEC.

(g)          Proceeds. The Company shall use the proceeds from the issuance and sale of the shares of Common Stock sold in the offering as set forth in “Use of Proceeds” in the Offering Circular.

(h)          Litigation. Except as disclosed in the Offering Circular, there is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) to the Company’s knowledge, against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

4.           Representations and Warranties of Investor. By executing this Subscription Agreement, Investor (and, if Investor is purchasing the Shares subscribed for hereby in a fiduciary capacity, the person or persons for whom Investor is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Investor’s Closing Date(s):

(a)          Requisite Power and Authority. Investor has all necessary power and authority under all applicable provisions of law to subscribe to the Offering, to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out the provisions thereof. All action on Investor’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

(b)          Investment Representations. Investor understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Investor also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Investor’s representations contained in this Subscription Agreement.

(c)          Illiquidity and Continued Economic Risk. Investor acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee that a market for their resale will ever exist. The Company has no obligation to list any of the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to facilitating trading or resale of the Securities. Investor must bear the economic risk of this investment indefinitely and Investor acknowledges that Investor is able to bear the economic risk of losing Investor’s entire investment in the Securities. Investor also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

(d)          Accredited Investor Status or Investment Limits. Investor represents that either:

(i)          Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act; or

(ii)         The purchase price, together with any other amounts previously used to purchase Shares in this offering, does not exceed 10% of the greater of Investor’s annual income or net worth (or in the case where Investor is a non-natural person, their revenue or net assets for such Investor's most recently completed fiscal year end).

Investor represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

(e)          Shareholder Information. Within five days after receipt of a request from the Company, Investor hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject, including, without limitation, the need to determine the accredited status of the Company’s stockholders. Investor further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.

(f)           Valuation. Investor acknowledges that the price of the shares of Securities to be sold in this offering was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. Investor further acknowledges that future offerings of securities of the Company may be made at lower valuations, with the result that Investor’s investment will bear a lower valuation.

(g)         Domicile. Investor maintains Investor’s domicile (and is not a transient or temporary resident) at the address provided with Investor’s subscription.

(h)          Foreign Investors. If Investor is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Investor’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of Investor’s jurisdiction.

5.           Survival of Representations and Indemnity. The representations, warranties and covenants made by Investor herein shall survive the closing of this Subscription Agreement. Investor agrees to indemnify and hold harmless the Company and its officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by Investor to comply with any covenant or agreement made by Investor herein or in any other document furnished by Investor to any of the foregoing in connection with this transaction.

6.           Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

7.           Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed on the date of such delivery to the address of the respective parties as follows:

If to Investor, at Investor’s address shown on the subscription page therefor, or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by email shall be confirmed by letter given in accordance with this Section.

8.           Miscellaneous.

(a)          All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

(b)         This Subscription Agreement is not transferable or assignable by Investor.

(c)          The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Investor and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

(d)          None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Investor.

(e)         In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

(f)          The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(g)         This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

(h)        The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

(i)          The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

(j)          This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

(k)          If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

(l)           No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Exhibit 11

CONSENT OF INDEPENDENT PUBLIC

ACCOUNTING FIRM

December 10, 2020

Board of Directors

LUX FLOORING INC.

We hereby consent to the inclusion in the Offering Circular filed under Regulation A tier 2 on Form 1-A of our reports dated September 24, 2020, with respect to the balance sheets of LUX FLOORING INC. as of December 31, 2019 and 2018 and the related consolidated statements of operations, shareholders’ equity/deficit and cash flows for the calendar years ended December 31, 2019 and 2018 and the related notes to the financial statements.

/s/ IndigoSpire CPA Group

IndigoSpire CPA Group, LLC

Aurora, Colorado

December 10, 2020

Exhibit 12

December 10, 2020

Board of Directors

LUX FLOORING INC.

To the Board of Directors:

We are acting as counsel to LUX FLOORING INC. (the “Company”) with respect to the preparation and filing of an offering statement on Form 1-A. The offering statement covers the contemplated sale of up to 10,000,000 shares of the Company’s Series A Preferred Stock as well as the Common Stock into which the Series A Preferred Stock may convert.

In connection with the opinion contained herein, we have examined the offering statement, the amended and restated certificate of incorporation, the certificate of designations related to the Series A Preferred Stock, the amended and restated bylaws, the minutes of meetings of the Company’s board of directors and stockholders, as well as all other documents necessary to render an opinion. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies.

Based upon the foregoing, we are of the opinion that the shares of Series A Preferred Stock, and the Common Stock into which the Series A Preferred Stock may convert, being sold pursuant to the offering statement are duly authorized and will be, when issued in the manner described in the offering statement, legally and validly issued, fully paid and non-assessable.

We are opining herein as to the effect on the subject transactions only of the laws of the State of Delaware, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction, including federal law.

No opinion is being rendered hereby with respect to the truth and accuracy, or completeness of the offering statement or any portion thereof.

We further consent to the use of this opinion as an exhibit to the offering statement.

Yours truly,

/s/ CrowdCheck Law LLP

CrowdCheck Law LLP (f/k/a KHLK LLP)