Drive Shack : Quarterly Report Q1 2023

Drive Shack Inc.

A Maryland Corporation

10670 N. Central Expressway

Suite 700

75231

Telephone: [phone]

Corporate Website: https://ir.driveshack.com/

SIC Code:

Quarterly Report

For the period ending March 31, 2023 (the "Reporting Period")

Securities:

		Name of each exchange on which
Title of each class	Trading Symbols(s)	registered
Common Stock, $0.01 par value per share	DSHK	Over the Counter Markets (OCTMKTS)
9.75% Series B Cumulative Redeemable Preferred Stock,
$0.01 par value per share	DSHKP	Over the Counter Markets (OCTMKTS)
8.05% Series C Cumulative Redeemable Preferred Stock,
$0.01 par value per share	DSHKN	Over the Counter Markets (OCTMKTS)
8.375% Series D Cumulative Redeemable Preferred
Stock, $0.01 par value per share	DSHKO	Over the Counter Markets (OCTMKTS)

Securities registered pursuant to Section 12(g) of the Act: None

The aggregate market value of the common stock held by non-affiliates as of December 31, 2022 (computed based on the closing price on the last business day of the registrant's most recently completed second quarter as reported) was: $15,705,453.

The number of shares outstanding of the registrant's common stock was 92,385,019 as of March 31, 2023.

DRIVE SHACK INC.

INDEX

PART I. FINANCIAL INFORMATION Item 1. Financial Statements

Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2023 and 2022

Consolidated Statements of Comprehensive Loss (unaudited) for the three months ended March 31, 2023 and 2022

Consolidated Statements of Changes in Equity (unaudited) for the three months ended March 31, 2023 and 2022

Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2023 and 2022 Notes to Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk

PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

SIGNATURES

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DRIVE SHACK INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		(unaudited)
		March 31, 2023			December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	18,758	$	12,345
Restricted cash		4,412			4,373
Accounts receivable, net		5,586			8,305
Real estate securities, available-for-sale		1,375			1,631
Other current assets		28,038			24,872
Total current assets		58,169			51,526
Restricted cash, noncurrent		216			216
Property and equipment, net of accumulated depreciation		204,020			198,442
Operating lease right-of-use assets		184,222			189,993
Intangibles, net of accumulated amortization		13,613			14,108
Other assets		3,486			3,696
Total assets	$	463,726	$	457,981
Liabilities and Deficit
Current liabilities
Obligations under finance leases	$	4,403	$	4,761
Membership deposit liabilities		22,479			22,479
Accounts payable and accrued expenses		43,064			41,477
Deferred revenue		25,749			29,490
Other current liabilities		28,452			28,904
Total current liabilities		124,147			127,111
Credit facilities and obligations under finance leases - noncurrent		5,012			5,849
Operating lease liabilities - noncurrent		177,017			177,867
Long-term debt		14,841			-
Junior subordinated notes payable		51,161			51,169
Membership deposit liabilities, noncurrent		110,470			109,762
Deferred revenue, noncurrent		10,926			11,303
Other liabilities		2,196			1,877
Total liabilities	$	495,770		$	484,938

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Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares of 9.75% Series B
Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05% Series C Cumulative Redeemable
Preferred Stock, and 620,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock,
liquidation preference $25.00 per share, issued and outstanding as of March 31, 2023 and December 31,
2022	$	61,583	$	61,583
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 92,385,019 and 92,385,019 shares
issued and outstanding at March 31, 2023 and December 31, 2022, respectively.		924			924
Additional paid-in capital		3,232,166			3,232,104
Accumulated deficit		(3,332,685)			(3,326,357)
Accumulated other comprehensive income (loss)		-			(281)
Total deficit of the company	$	(38,012)	$	(32,027)
Noncontrolling interest		5,968			5,070
Total deficit	$	(32,044)		$	(26,957)
Total liabilities and equity	$	463,726	$	457,981

See notes to Consolidated Financial Statements.

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DRIVE SHACK INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Dollars in thousands, except share data)

		Three Months Ended March 31,
		2023			2022
Revenues
Golf operations	$	60,189	$	55,284
Sales of food and beverages		17,270			13,698
Total revenues		77,459			68,982
Operating costs
Operating expenses		62,301			55,139
Cost of sales - food and beverages		4,758			3,361
General and administrative expense		7,399			9,063
Depreciation and amortization		6,675			6,193
Pre-opening costs		1,678			747
Loss on lease terminations and impairment		2			12,871
Total operating costs		82,813			87,374
Operating loss		(5,354)			(18,392)
Other income (expenses)
Interest and investment income		214			201
Interest expense, net		(2,092)			(2,646)
Other income		2,366			2,645
Total other income (expenses)		488			200
Loss before income tax		(4,866)			(18,192)
Income tax expense		49			721
Consolidated net loss		(4,915)			(18,913)
Less: net income attributable to noncontrolling interest		18			53
Net loss attributable to the Company		(4,933)			(18,966)
Preferred dividends		(1,395)			(1,395)
Loss applicable to common stockholders	$	(6,328)	$	(20,361)
Loss applicable to common stock, per share
Basic	$	(0.07)		$	(0.22)
Diluted	$	(0.07)	$	(0.22)
Weighted average number of shares of common stock outstanding
Basic		92,385,019			92,254,084
Diluted		92,385,019			92,254,084

See notes to Consolidated Financial Statements.

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