Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2016 | Sep. 14, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | INNSUITES HOSPITALITY TRUST | |
Entity Central Index Key | 82,473 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,358,444 | |
Trading Symbol | IHT | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jul. 31, 2016 | Jan. 31, 2016 | |
Current Assets: | |||
Cash and Cash Equivalents | $ 25,122 | [1] | $ 1,704,851 |
Accounts Receivable, including $34,401 and $20,683 from related parties, respectively | 415,715 | 15,699 | |
Advances to Affiliates - Related Party | 438,334 | 972,184 | |
Notes Receivable - Related Party | 5,761 | ||
Prepaid Expenses and Other Current Assets | 46,250 | 2,010 | |
Current Assets of Discontinued Operations and Assets Held for Sale | 892,922 | 625,417 | |
Total Current Assets | 1,818,343 | 3,325,922 | |
Property, Plant and Equipment, net | 353,843 | 286,734 | |
Intangible Assets, net | 466,615 | 500,000 | |
Goodwill | 500,000 | 500,000 | |
Noncurrent assets of Discontinued Operations and Assets Held for Sale | 20,352,564 | 19,328,033 | |
TOTAL ASSETS | 23,491,365 | 23,940,689 | |
Current Liabilities: | |||
Accounts Payable and Accrued Expenses | 518,348 | 427,630 | |
Current Portion of Notes Payable to Banks, net of Discount of $3,474 and $0 as of July 31, 2016 and January 31, 2016, respectively | 456,088 | 659,861 | |
Current Portion of Other Notes Payable | 11,283 | 40,801 | |
Current Liabilities of Discontinued Operations and Assets Held for Sale | 2,133,877 | 2,521,181 | |
Total Current Liabilities | 3,119,596 | 3,649,473 | |
Notes Payable to Banks, net of Discount of $2,318 and $0 as of July 31, 2016 and January 31, 2016, respectively | 670,861 | 272,428 | |
Other Notes Payable | 65,167 | 13,889 | |
Noncurrent Liabilities of Discontinued Operations and Assets Held for Sale | 13,057,180 | 13,034,170 | |
TOTAL LIABILITIES | 16,912,804 | 16,969,960 | |
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8) | |||
SHAREHOLDERS' EQUITY | |||
Shares of Beneficial Interest, without par value, unlimited authorization; 17,989,146 and 17,406,846 shares issued and 9,366,204 and 8,791,500 shares outstanding at July 31, 2016 and January 31, 2016, respectively | 18,307,410 | 18,769,849 | |
Treasury Stock, 8,622,942 and 8,615,346 shares held at cost at July 31, 2016 and January 31, 2016, respectively | (12,305,591) | (12,285,915) | |
TOTAL TRUST SHAREHOLDERS' EQUITY | 6,001,819 | 6,483,934 | |
NON-CONTROLLING INTEREST | 576,742 | 486,795 | |
TOTAL EQUITY | 6,578,561 | 6,970,729 | |
TOTAL LIABILITIES AND EQUITY | $ 23,491,365 | $ 23,940,689 | |
[1] | Including $237,766 and $222,011 of cash included in discontinued operations as of July 31, 2016 and 2015, respectively |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended |
Jul. 31, 2016 | Jan. 31, 2016 | |
Accounts Receivable from Related Parties | $ 34,401 | $ 20,683 |
Shares of Beneficial Interest, without par value | ||
Shares of Beneficial Interest, Authorized Shares | Unlimited | Unlimited |
Shares of Beneficial Interest, shares issued | 17,989,146 | 17,406,846 |
Shares of Beneficial Interest, shares outstanding | 9,366,204 | 8,791,500 |
Treasury Stock, shares held | 8,622,942 | 8,615,346 |
Current Portion of Notes Payable to Banks [Member] | ||
Note Payable, Discount | $ 3,474 | $ 0 |
Notes Payable to Banks [Member] | ||
Note Payable, Discount | $ 2,318 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
REVENUE | ||||
Management and Trademark Fees | $ 61,308 | $ 42,151 | $ 138,301 | $ 128,142 |
Reservation and Convention | 174,610 | 21,472 | 379,022 | 164,889 |
TOTAL REVENUE | 235,918 | 63,623 | 517,323 | 293,031 |
OPERATING EXPENSES | ||||
General and Administrative | 708,328 | 519,713 | 1,443,598 | 1,031,644 |
Sales and Marketing | 136,059 | 80,404 | 252,103 | 110,454 |
Depreciation | 27,766 | 10,008 | 50,672 | 20,627 |
Intangible Amortization | 16,750 | 33,500 | ||
TOTAL OPERATING EXPENSES | 888,903 | 610,125 | 1,779,873 | 1,162,725 |
OPERATING LOSS | (652,985) | (546,502) | (1,262,550) | (869,694) |
Interest Income | 357 | 134 | 1,263 | 319 |
Interest Income on Advances to Affiliates - Related Party | 14,365 | 35,197 | ||
TOTAL OTHER INCOME | 14,722 | 134 | 36,460 | 319 |
Interest on Mortgage Notes Payable | ||||
Interest on Notes Payable to Banks | 12,660 | 4,641 | 28,397 | 9,334 |
Interest on Other Notes Payable | 2,949 | 1,764 | 3,811 | 6,411 |
Interest on Line of Credit - Related Party | 6,597 | 8,090 | ||
TOTAL INTEREST EXPENSE | 15,609 | 13,002 | 32,208 | 23,835 |
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION, DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE | (653,872) | (559,370) | (1,258,298) | (893,210) |
Income Tax Provision | (30,000) | (71,571) | ||
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS | (653,872) | (589,370) | (1,258,298) | (964,781) |
Net Income (Loss) From Discontinued Operations and Assets Held for Sale, Net of Non-Controlling Interest | 383,955 | (388,692) | 1,005,618 | 393,873 |
CONSOLIDATED NET LOSS TOTAL | (269,917) | (978,062) | (252,680) | (570,908) |
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 92,782 | (217,163) | 311,673 | (16,540) |
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ (362,699) | $ (760,899) | $ (564,353) | $ (554,368) |
NET LOSS PER SHARE FROM CONTINUING OPERATIONS - BASIC | $ (0.07) | $ (0.07) | $ (0.14) | $ (0.12) |
NET INCOME (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE – BASIC | 0.04 | (0.05) | 0.11 | 0.05 |
NET LOSS PER SHARE PER SHARE TOTAL - BASIC | (0.03) | (0.12) | (0.03) | (0.07) |
NET LOSS PER SHARE FROM CONTINUING OPERATIONS - DILUTED | (0.05) | (0.05) | (0.10) | (0.08) |
NET INCOME (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE - DILUTED | 0.03 | (0.03) | 0.08 | 0.03 |
NET LOSS PER SHARE PER SHARE TOTAL - DILUTED | $ (0.02) | $ (0.08) | $ (0.02) | $ (0.05) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 8,809,485 | 8,265,225 | 8,812,748 | 8,274,317 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 12,493,554 | 11,949,294 | 12,496,817 | 11,958,386 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 6 months ended Jul. 31, 2016 - USD ($) | Shares of Beneficial Interest [Member] | Treasury Stock [Member] | Trust Shareholders' Equity [Member] | Non-Controlling Interest [Member] | Total |
Balance at Jan. 31, 2016 | $ 18,769,849 | $ (12,285,915) | $ 6,483,934 | $ 486,795 | $ 6,970,729 |
Balance, shares at Jan. 31, 2016 | 8,791,500 | 8,615,346 | |||
Net (Loss) Income | $ (564,353) | (564,353) | 311,673 | (252,680) | |
Purchase of Treasury Stock | $ (19,676) | (19,676) | (19,676) | ||
Purchase of Treasury Stock,shares | (7,596) | 7,596 | |||
Shares of Beneficial Interest Issued for Services Rendered | $ 71,346 | 71,346 | 71,346 | ||
Shares of Beneficial Interest Issued for Services Rendered, shares | 42,300 | ||||
Sales of Ownership Interests in Subsidiary, net | 75,000 | 75,000 | |||
Sales of Ownership Interests in Subsidiary, net, shares | 540,000 | ||||
Distribution to Non-Controlling Interests | (266,158) | (266,158) | |||
Reallocation of Non-Controlling Interests and Other | 30,568 | 30,568 | (30,568) | ||
Balance at Jul. 31, 2016 | $ 18,307,410 | $ (12,305,591) | $ 6,001,819 | $ 576,742 | $ 6,578,561 |
Balance, shares at Jul. 31, 2016 | 9,366,204 | 8,622,942 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Consolidated Net Loss | $ (252,680) | $ (570,908) | |
Adjustments to Reconcile Consolidated Net Loss to Net Cash (Used In) Provided By Operating Activities: | |||
Stock-Based Compensation | 71,346 | 32,640 | |
Recovery of Uncollectible Receivables | (10,297) | (13,101) | |
Depreciation | 161,420 | 913,751 | |
Amortization of Intangibles | 33,500 | ||
Amortization of Debt Discounts and Deferred Financing Fees | 5,164 | 61,621 | |
Changes in Assets and Liabilities: | |||
Accounts Receivable | (665,435) | 173,427 | |
Prepaid Expenses and Other Assets | (51,099) | (8,295) | |
Accounts Payable and Accrued Expenses | (37,677) | (308,360) | |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (745,758) | 280,775 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Improvements and Additions to Hotel Properties | (1,253,058) | (841,912) | |
Lendings on Advances to Affiliates - Related Party | (211,150) | ||
Collections on Advances to Affiliates - Related Party | 745,000 | 1,236 | |
NET CASH USED IN INVESTING ACTIVITIES | (719,208) | (840,676) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Principal Payments on Mortgage Notes Payable | (240,023) | (358,917) | |
Payments on Notes Payable to Banks, net of financing costs | (164,547) | (2,659,224) | |
Borrowings on Notes Payable to Banks | 358,050 | 2,067,515 | |
Payments on Line of Credit - Related Party | (49,356) | (1,519,051) | |
Borrowings on Line of Credit - Related Party | 65,000 | 1,085,611 | |
Payments on Notes Payable - Related Party | (693,113) | (287,013) | |
Borrowings on Notes Payable - Related Party | 683,230 | ||
Payments on Other Notes Payable | (33,240) | ||
Borrowings on Other Notes Payable | 55,000 | ||
Proceeds from Sale of Non-Controlling Ownership Interest in Subsidiary | 75,000 | 2,570,690 | |
Distributions to Non-Controlling Interest Holders | (266,158) | (487,660) | |
Repurchase of Treasury Stock | (19,676) | (58,786) | |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (229,833) | 353,165 | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,694,799) | (206,736) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,957,687 | 507,686 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD (i) | [1] | $ 262,888 | $ 300,950 |
[1] | Including $237,766 and $222,011 of cash included in discontinued operations as of July 31, 2016 and 2015, respectively |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) | Jul. 31, 2016 | Jan. 31, 2016 |
Statement of Cash Flows [Abstract] | ||
Cash included as discontinued operations | $ 237,766 | $ 222,011 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jul. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION As of July 31, 2016, InnSuites Hospitality Trust (the Trust, we or our) owns interests directly and through a partnership interest, in four hotels with an aggregate of 575 suites in Arizona, southern California and New Mexico (the Hotels). The Hotels operate under the trade name InnSuites Hotels. Full service hotels often contain upscale full-service facilities with a large volume of full service accommodations, on-site full service restaurant(s), and a variety of on-site amenities such as swimming pools, a health club, childrens activities, ballrooms and on-site conference facilities. Moderate or limited service hotels are small to medium-sized hotel establishments that offer a limited number of on-site amenities. Most moderate or limited service establishments may still offer full service accommodations but lack leisure amenities such as an on-site restaurant or a swimming pool. We consider our Tucson, Arizona hotel and our hotel located in Albuquerque, New Mexico to be moderate or limited service establishments. All of our other properties are full service hotels. The Trust is the sole general partner of RRF Limited Partnership, a Delaware limited partnership (the Partnership), and owned a 72.11% interest in the Partnership as of July 31, 2016 and January 31, 2016, respectively. The Trusts weighted average ownership for the six-month period ended July 31, 2016 and 2015 was 72.11%. As of July 31, 2016, the Partnership owned a 51.01% interest in an InnSuites® hotel located in Tucson, Arizona, and a 51.34% interest in an InnSuites® hotel located in Ontario, California. The Trust owns a direct 50.24% interest in a Yuma, Arizona hotel property, and a direct 50.91% interest in an InnSuites® hotel located in Albuquerque, New Mexico. Under certain management agreements, InnSuites Hotels Inc., our subsidiary, manages the Hotels daily operations. The Trust also provides the use of the InnSuites trademark to the Hotels through wholly-owned InnSuites Hotels. All such expenses and reimbursements between the Trust, InnSuites Hotels and the Partnership have been eliminated in consolidation. InnDependent Boutique Collection (IBC Hotels) or IBC Developments, a wholly owned subsidiary of InnSuites Hospitality Trust, has a network of approximately 6,500 unrelated hotel properties and provides revenue generating services and cost savings solutions to independent boutique hotels. During the fiscal year ended January 31, 2014 IBC Hotels formed a marketing alliance with the Independent Lodging Industry Association (ILIA). PARTNERSHIP AGREEMENT The Partnership Agreement of the Partnership provides for the issuance of two classes of Limited Partnership units, Class A and Class B. Class A and Class B Partnership units are identical in all respects, except that each Class A Partnership unit is convertible into one newly-issued Share of Beneficial Interest of the Trust at any time at the option of the particular limited partner. The Class B Partnership units may only become convertible, each into one newly-issued Share of Beneficial Interest of the Trust, with the approval of the Board of Trustees, in its sole discretion. On July 31, 2016 and January 31, 2016, 276,131 Class A Partnership units were issued and outstanding, representing 2.09% of the total Partnership units. Additionally, as of both July 31, 2016 and January 31, 2016, 3,407,938 Class B Partnership units were outstanding to James Wirth, the Trusts Chairman and Chief Executive Officer, and Mr. Wirths affiliates. If all of the Class A and B Partnership units were converted on July 31, 2016, the limited partners in the Partnership would receive 3,684,069 Shares of Beneficial Interest of the Trust. As of July 31, 2016 and January 31, 2016, the Trust owns 9,527,448 general partner units in the Partnership, representing 72.11% of the total Partnership units. LIQUIDITY Our principal source of cash to meet our cash requirements, including distributions to our shareholders, is our share of the Partnerships cash flow, quarterly distributions from the Albuquerque, New Mexico and Yuma, Arizona properties and more recently, sales of non-controlling interests in certain of our Hotels. The Partnerships principal source of cash flow is quarterly distributions from the Tucson, Arizona and Ontario, California properties. Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability and the Partnerships ability to generate sufficient cash flow from hotel operations and to service our debt. As of July 31, 2016, the Trust had a related party Demand/Revolving Line of Credit/Promissory Note with an amount payable of $0. The Demand/Revolving Line of Credit/Promissory Note accrued interest at 7.0% per annum and requires interest only payments. The Demand/Revolving Line of Credit/Promissory Note has a maximum borrowing capacity to $1,000,000, which is available through December 31, 2017. As of September 12, 2016, the outstanding net balance receivable on the Demand/Revolving Line of Credit/Promissory Note was $0. With approximately $263,000 of cash, including approximately $238,000 from discontinued operations, as of July 31, 2016 and the availability of a $1,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of $40,000 of the $350,000 Line of Credit issued on May 3, 2016 by RepublicBankAZ, we believe that we will have enough cash on hand to meet all of our financial obligations as they become due for at least the next year. In addition, our management is analyzing other strategic options available to us, including the refinancing of another property or raising additional funds through additional non-controlling interest sales; however, such transactions may not be available on terms that are favorable to us, or at all. We also expect to complete the sale of our four hotel properties by the end of this fiscal year. There can be no assurance that we will be successful in obtaining extensions, refinancing debt or raising additional or replacement funds, or that these funds may be available on terms that are favorable to us. If we are unable to raise additional or replacement funds, we may be required to sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable. BASIS OF PRESENTATION These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information related to the Trusts organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in the Trusts annual consolidated financial statements for the year ended January 31, 2016, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with the Trusts Form 10-K for the year ended January 31, 2016. As sole general partner of the Partnership, the Trust exercises unilateral control over the Partnership, and the Trust owns all of the issued and outstanding classes of shares of InnSuites Hotels Inc. Therefore, the financial statements of the Partnership and InnSuites Hotels Inc. are consolidated with the Trust, and all significant intercompany transactions and balances have been eliminated. On August 1, 2015, the Trust finalized and committed to a plan to sell all of its hotel properties. As of May 1, 2016, the Trust has listed all of their properties with a local real estate hotel broker and management believes that the assets are being marketed at a price that is reasonable in relation to its current fair value. The Trust believes that the plan to sell these assets will not be withdrawn and the sales are probable by January 31, 2017 for all of the hotel properties except the Yuma hotel property which was listed for sale on May 1, 2016. The Trust believes that the Yuma hotel property will be sold prior to May 1, 2017. SEASONALITY OF THE HOTEL BUSINESS The Hotels operations historically have been somewhat seasonal. The two southern Arizona hotels experience their highest occupancy in the first fiscal quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal quarter tends to be the lowest occupancy period at those two southern Arizona hotels. This seasonality pattern can be expected to cause fluctuations in the Trusts quarterly revenues. The two hotels located in California and New Mexico historically experience their most profitable periods during the second and third fiscal quarters (the summer season), providing some balance to the general seasonality of the Trusts hotel business. The seasonal nature of the Trusts business increases its vulnerability to risks such as labor force shortages and cash flow issues. Further, if an adverse event such as an actual or threatened terrorist attack, international conflict, data breach, regional economic downturn or poor weather conditions should occur during the first or fourth fiscal quarters, the adverse impact to the Trusts revenues could likely be greater as a result of its southern Arizona seasonal business. It is too early to determine what the seasonality of the IBC segment is. The Trust does not anticipate much seasonality due to the diversification of the location of the IBC Hotels. RECENTLY ISSUED ACCOUNTING GUIDANCE In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15). Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entitys liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entitys liquidation becomes imminent, financial statements should be prepared under the Liquidation Basis of Accounting. Even if an entitys liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entitys ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in ASU 2014-15 require additional disclosure of information about the relevant conditions and events. The amendments in ASU 2014-15 are effective for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Trust has evaluated the impact of the adoption of this guidance on its consolidated financial statements and we believe no material impact exists at this time. In June 2014, FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification Topic No. 718, CompensationStock Compensation (ASC 718), as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (i) prospectively to all awards granted or modified after the effective date; or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Trust has adopted this ASU during the first fiscal quarter of 2017 and evaluated the impact of the adoption of this guidance on its consolidated financial statements and we believe no material impact exists at this time. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This will improve certain areas of consolidation guidance for reporting organizations that are required to evaluate whether to consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. ASU 2015-02 simplified and improved accounting principles generally accepted in the United States of America (GAAP) by: eliminating the presumption that a general partner should consolidate a limited partnership, eliminating the indefinite deferral of FASB Statement No. 167, thereby reducing the number of Variable Interest Entity (VIE) consolidation models from four to two (including the limited partnership consolidation model), and clarifying when fees paid to a decision maker should be a factor to include in the consolidation of VIEs. ASU 2015-02 is effective for periods beginning after December 15, 2015. The Trust has evaluated the impact of the adoption of this guidance on its consolidated financial statements and we believe no material impact exists at this time. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The ASU specifies that issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note and that amortization of debt issue costs shall also be reported as interest expense. According to the ASUs Basis for Conclusions, debt issuance costs incurred before the associated funding is received (i.e., the debt liability) should be reported on the balance sheet as deferred charges until that debt liability amount is recorded. For public business entities, the guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For entities other than public business entities, the guidance is effective for fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is allowed for all entities for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted). The Trust has adopted this ASU during the first fiscal quarter of 2017 and evaluated the impact of the adoption of this guidance on its consolidated financial statements and we believe no material impact exists at this time. In February 2016, the FASB issued a new standard which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. It will be effective for us beginning in 2020. We are currently assessing the impact this standard will have on our consolidated financial statements. In March 2016, the FASB issued a new standard which simplifies the accounting for share-based payment transactions. This guidance requires that excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the Consolidated Statements of Income rather than additional paid-in capital. Additionally, the excess tax benefits will be classified along with other income tax cash flows as an operating activity, rather than a financing activity, on the Statement of Cash Flows. Further, the update allows an entity to make a policy election to recognize forfeitures as they occur or estimate the number of awards expected to be forfeited. It will be effective for us beginning in 2018 and should be applied prospectively, with certain cumulative effect adjustments. Early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosures of financial instruments including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. ASU 2016-01 will become effective for the Company beginning interim period April 1, 2018. The Company is currently evaluating the guidance to determine the potential impact on its financial condition, results of operations, cash flows and financial statement disclosures. In February 2016, the FASB issued ASU 2016-02, Leases. This new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). This ASU makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. The FASB issued the following accounting standard updates related to Topic 606, Revenue Contracts with Customers: ● ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09) in May 2014. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. ● ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) in March 2016. ASU 2016-08 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on principal versus agent considerations. ● ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (ASU 2016-10) in April 2016. ASU 2016-10 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ● ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) (ASU 2016-11) in May 2016. ASU 2016-11 rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 EITF meeting. The SEC Staff is rescinding SEC Staff Observer comments that are codified in Topic 605 and Topic 932, effective upon adoption of Topic 606. ● ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients in May 2016. ASU 2016-12 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation guidance on a few narrow areas and adds some practical expedients to the guidance. These ASUs will become effective for the Company beginning interim period February 1, 2018. The Company is currently evaluating the impact of ASC 606, but at the current time does not know what impact the new standard will have on revenue recognized and other accounting decisions in future periods, if any, nor what method of adoption will be selected if the impact is material. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Trusts operations are affected by numerous factors, including the economy, competition in the hotel industry and the effect of the economy on the travel and hospitality industries. The Trust cannot predict if any of the above items will have a significant impact in the future, nor can it predict what impact, if any, the occurrence of these or other events might have on the Trusts operations and cash flows. Significant estimates and assumptions made by management include, but are not limited to, the estimated useful lives of long-lived assets and estimates of future cash flows used to test a long-lived asset for recoverability and the fair values of the long-lived assets. PROPERTY, PLANT AND EQUIPMENT AND HOTEL PROPERTIES Furniture, fixtures, building improvements and hotel properties are stated at cost and are depreciated using the straight-line method over estimated lives ranging up to 40 years for buildings and 3 to 10 years for furniture and equipment. Management applies guidance under Accounting Standards Codification (ASC) 360-10-35, to determine when it is required to test an asset for recoverability of its carrying value and whether an impairment exists. Under ASC 360-10-35, the Trust is required to test a long-lived asset for impairment when there is an indicator of impairment. Impairment indicators may include, but are not limited to, a drop in the performance of a long-lived asset, a decline in the hospitality industry or a decline in the economy. If an indicator of potential impairment is present, then an assessment is performed of whether the carrying amount of an asset exceeds its estimated undiscounted future cash flows over its estimated remaining life. If the estimated undiscounted future cash flows over the assets estimated remaining life are greater than the assets carrying value, no impairment is recognized; however, if the carrying value of the asset exceeds the estimated undiscounted future cash flows, then the Trust would recognize an impairment expense to the extent the assets carrying value exceeds its fair value, if any. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. Long-lived assets evaluated for impairment are analyzed on a property-specific basis independent of the cash flows of other groups of assets. Evaluation of future cash flows is based on historical experience and other factors, including certain economic conditions and committed future bookings. Management has determined that no impairment of long-lived assets existed during the Trusts fiscal quarters ended July 31, 2016 and 2015. INTANGIBLE ASSETS Intangible assets with finite lives are amortized on a straight-line basis over the estimated useful lives, which range from 7 to 10 years. The useful life of the intangible asset is evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining useful life. BUSINESS COMBINATIONS We account for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The final purchase price may be adjusted up to one year from the date of the acquisition. Identifying the fair value of the tangible and intangible assets and liabilities requires the use of estimated by management and was based upon currently available data. The Trust allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. Such goodwill is not deductible for tax purposes and represents the value placed on entering new markets and expanding market share (see Note 27 Acquisition of International Vacation Hotels footnote in our Annual Report on Form 10-K filed on April 29, 2016 with the Securities Exchange Commission). Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, included changes from events after the acquisition date, such as changes in our estimate of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated statements of operations, financial position and cash flows in the period of the change in the estimate. REVENUE RECOGNITION Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition summarizes the SECs views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 104 establishes the SECs view that it is not appropriate to recognize revenue until all of the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the sellers price to the buyer is fixed or determinable; and collectability is reasonably assured. Further, SAB No. 104 requires that both title and the risks and rewards of ownership be transferred to the buyer before revenue can be recognized. We believe that our revenue recognition policies as described below are in compliance with SAB No. 104. Revenues are primarily derived from the following sources and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities. Revenues primarily consist of room rentals, food and beverage sales, management and trademark fees and other miscellaneous revenues from our properties. Revenues are recorded when rooms are occupied and when food and beverage sales are delivered. Management and trademark fees from hotels include a monthly accounting fee and a percentage of hotel room revenues for managing the daily operations of the Hotels and the two hotels owned by affiliates of Mr. Wirth. IBC Development revenues are recognized after services are rendered by the IBC member hotel. We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in revenues. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. Based on our policy, we recognize revenue when we believe that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sellers price to the buyer is fixed or determinable, and the collectability of our revenues are reasonably assured. INCOME PER SHARE Basic and diluted income per Share of Beneficial Interest is computed based on the weighted-average number of Shares of Beneficial Interest and potentially dilutive securities outstanding during the period. Dilutive securities are limited to the Class A and Class B units of the Partnership, which are convertible into 3,684,069 Shares of the Beneficial Interest, as discussed in Note 1. As of February 1, 2016 and 2015, the aggregate weighted-average of these Shares of Beneficial Interest for units of the Partnership would have been 3,684,069 and 3,693,972, respectively. These Shares of Beneficial Interest issuable upon conversion of the Class A and Class B Partnership units were anti-dilutive during the six month period ended July 31, 2016 and 2015. Therefore, no reconciliation of basic and diluted income per share is presented. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE On August 1, 2015, the Trust finalized and committed to a plan to sell all of its hotel properties. On May 1, 2016, the Trust added the Yuma hotel property to the listing of all of their properties with a local real estate hotel broker and management believes that the assets are being marketed at a price that is reasonable in relation to its current fair value. The Trust believes that the plan to sell these assets will not be withdrawn and the sales are probable by January 31, 2017 for all of the hotel properties except the Yuma hotel property which was listed on May 1, 2016. The Trust believes that the Yuma hotel property will be sold prior to May 1, 2017. Events and circumstances, which were initially considered unlikely, that were beyond the Trusts control have extended the time required to complete the sale of its hotel properties beyond a one-year period. Accordingly, the Companys management performed a detailed analysis of its accounting for such properties as held for sale in accordance with ASC 360 as of July 31, 2016. Based on the analysis performed by management, it concluded that continuing to classify the properties as held for sale was reasonable based on the circumstances that created the extended time frame and managements related actions. The Trust has reclassified its hotels into discontinued operations and assets held for sale in accordance with ASC No. 205-20, Discontinued Operations Property, Plant and Equipment Discontinued operations for the periods ended July 31, 2016 and 2015 primarily consists of each hotels operational revenues and expenses. SEGMENT REPORTING During the fourth quarter of fiscal year 2015, the Trust determined that its operations are comprised of two reportable segments, a Hotel Operations & Corporate Overhead segment that has ownership interest in four hotel properties with an aggregate of 576 suites in Arizona, southern California and New Mexico, and the IBC Developments segment serving 6,500 unrelated hotel properties. The Trust has a concentration of assets in the southwest United States, and the southern Arizona market. On an overall basis, the Trust has elected to only put the costs directly attributable to the IBC Developments in that segment. Included in these costs are sales, marketing and technology development costs. IBC Hotels was formed during the fiscal year ended January 31, 2014. Operating results became significant during the fiscal year ended January 31, 2015. IBC Hotels charges a 10% to 20% booking fee which, we believe, increases the independent hotel profits. Competitors of IBC Hotels can charge anywhere from a 30% to 50% booking fee. InnDependent InnCentives, IBCs loyalty program, allows hoteliers to benefit from guests who frequently stay at IBC independent hotels. We are planning significant expansion of IBC Hotels during the next couple of fiscal years as we concentrate our sales and marketing efforts towards consumers, but can provide no assurance that we will be successful. The Chief Operating Decision Maker (CODM), the Trusts CEO, Mr. Wirth, does not see any value in allocating costs for items not directly attributable to the IBC Developments segment for several reasons. The first is that the Trusts base business is the Hotel Operations & Corporate Overhead segment, and the majority of the expenses of the Trust would continue even if the Trust was not in the reservation business. If the Trust were to allocate general expenses to the reservation business based on some allocation method (e.g., on sales), it would not improve the value of segment reporting, but it would only serve to make the results of the Hotel Operations & Corporate Overhead segment look better and give investors a false sense of the profitability of the Hotel Operations & Corporate Overhead segment without the IBC Developments segment. The CODM wants to understand the true investment in the reservation business and that result is delivered by allocating only costs directly associated with the IBC Developments segment. By retaining the remainder of costs not associated with the IBC Developments segment in the Hotel Operations & Corporate Overhead segment, the Trust is able to compare the Hotel Operations & Corporate Overhead segment to historical figures where the bulk of the business was only that segment of operations to gauge relative efficiency of the Hotel Operations & Corporate Overhead segment as compared to historical norms. The Trust has chosen to focus its hotel investments in the southwest region of the United States. The CODM does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 3. STOCK-BASED COMPENSATION TRUSTEE STOCK COMPENSATION For the six months ended July 31, 2016, the Trust recognized expenses of $25,920 related to stock-based compensation. The Trust issued 24,000 restricted shares with a total market value of $51,840 in the first fiscal quarter of fiscal year 2017 as compensation to its three outside Trustees for fiscal year 2017. On a monthly basis through January 31, 2017, these shares vest at a rate of approximately 500 shares for each outside Trustee. These purchases were made by the recipients on the open market in May 2016. The following table summarizes restricted share activity during the six months ended July 31, 2016: Restricted Shares Shares Weighted-Average Per Share Grant Date Fair Value Balance of unvested awards at January 31, 2016 - - Granted 24,000 $ 2.16 Vested (12,000 ) $ 2.16 Forfeited - - Balance of unvested awards at July 31, 2016 12,000 $ 2.16 OFFICER STOCK COMPENSATION On February 22, 2016, the Compensation Committee of the Board of Trustees (the Committee) of Trust approved stock incentive bonus plan for Pamela J. Barnhill, President, Chief Operating Officer, Vice Chairperson, and Trustee of the Trust, Marc E. Berg, Executive Vice President, Secretary, Treasurer and Trustee of the Trust, and Adam B. Remis, Chief Financial Officer of the Trust (individually, an Executive and collectively, the Executives). To give incentive to get hotel operations off to a strong start for the current fiscal year starting February 1, 2016, the Committee also adopted an incentive bonus programs for the Executives based on the targeted gross operating profit (i.e., total revenues less operating expenses) (the Target GOP) for February 2016 and March 2016, the first two months of the fiscal year. If the Target GOP is achieved or exceeded, each Executive will be entitled to a bonus consisting of cash and Shares of Beneficial Interest of the Trust in the amounts set forth below: Executive Officer Cash Equity Pamela J. Barnhill $ 10,000 10,000 Shares of Beneficial Interest Marc E. Berg $ 2,500 2,500 Shares of Beneficial Interest Adam B. Remis $ 5,000 5,000 Shares of Beneficial Interest The Committee also adopted an incentive bonus program for the Executives for the fiscal year ending January 31, 2017 (the 2017 Fiscal Year Bonus Program). Under the 2017 Fiscal Year Bonus Program, an Executive will be entitled to receive a bonus consisting of cash and Shares of Beneficial Interest of the Trust of the maximum amount set forth below upon the achievement by the Executive of performance-based objectives, which include revenue, gross operating profit and strategy for the hotel and IBC Developments Division. These performance-based objectives were achieved for the period ended July 31, 2016. Executive Officer Cash Equity Pamela J. Barnhill $ 25,000 10,000 Shares of Beneficial Interest Marc E. Berg $ 5,000 2,500 Shares of Beneficial Interest Adam B. Remis $ 10,000 5,000 Shares of Beneficial Interest The Trust met the Target GOP for February 2016 and March 2016. The Executives agreed to purchase the stock on the open market and were reimbursed by the Trust. On May 16, 2016, Ms. Barnhill purchased 5,000 Shares of Beneficial Interest at $2.449 per share and on May 20, 2016, Ms. Barnhill purchased 2,000 Shares of Beneficial Interest at $2.4883 per share and 3,000 Shares of Beneficial Interest at $2.4999 per share as described on Forms 4 filed with the Securities Exchange Commission on May 18, 2016 and May 24, 2016. Mr. Berg purchased 2,500 Shares of Beneficial Interest at $2.49 per share on May 10, 2016 as described on Form 4 filed with the Securities Exchange Commission on May 17, 2016. Mr. Remis purchased 5,000 Shares of Beneficial Interest at $2.50 per share on May 18, 2016 as described on Form 4 filed with the Securities Exchange Commission on May 18, 2016. The Trust recognized expenses of $45,426 related to stock-based compensation during the six month ended July 31, 2016. STOCK OPTIONS Effective February 5, 2015, the Board of Trustees of the Trust adopted the 2015 Equity Incentive Plan (2015 Plan), subject to shareholder approval, under which up to 1,600,000 Shares of Beneficial Interest of the Trust are authorized to be issued pursuant to grant of stock options, stock appreciation rights, restricted shares, restricted share units or other awards. The purpose of the 2015 Plan and the awards described below is to promote the interests of the Trust and its shareholders by providing certain employees and members of the Board of Trustees, who are largely responsible for the management and growth of the subsidiary of the Trust, IBC Hotels, LLC, with incentives and rewards to encourage them to continue in the service of the Trust. The Board of Trustees of the Trust approved a Nonqualified Stock Option Agreement (2015 Plan Agreement) to be used for all stock option awards. The 2015 Plan Agreement provides the grantee a four-year option to purchase a set number of Shares of Beneficial Interest of the Trust at an exercise price of $3.50 per share, exercisable to the extent the stock options vest and GAAP pre-tax profits of IBC Hotels, LLC are greater than or equal to the performance objectives described in the 2015 Plan agreement. For purposes of the 2015 Plan Agreement, a Tranche is the number of Shares for which the Stock Option has vested on a particular vesting date. The 2015 Plan Agreement has the following vesting schedule: Tranche Shares for which the Stock Option is Vested Vesting Date A 1/3 5/17/2016 B 1/3 2nd anniversary of the Date of Grant C 1/3 3rd anniversary of the Date of Grant Stock options will become immediately vested in full if, prior to a vesting date (i) the grantee ceases to be employed by the Trust or its subsidiaries by reason of death or disability or (ii) a change of control occurs while the grantee is employed by the Trust or any of its subsidiaries. Vested tranches become exercisable as set forth below to the extent that the GAAP pre-tax profit of IBC Hotels LLC is greater than or equal to the performance objective for the applicable performance period, as described below. Performance Period Performance Objective Exercisable ( Fiscal Year Ending ( GAAP pre-tax profit of IBC Hotels LLC Tranche(s) 1/31/2016 $ 60,000 A 1/31/2017 $ 200,000 A and B 1/31/2018 $ 400,000 A, B, and C On February 5, 2015, the Board of Trustees of the Trust granted to Pamela Barnhill, President, Vice Chairperson of the Board of Trustees and Chief Operating Officer of the Trust and IBC Hotels Founder and President, pursuant to the 2015 Plan and 2015 Plan Agreement, an option to purchase of 1,000,000 Shares of Beneficial Interest of the Trust. On April 24, 2015, the Board of Trustees of the Trust granted to James Wirth, Chairman of the Board of Trustees and Chief Executive Officer of the Trust, Marc Berg, Executive Vice President and Trustee and Adam Remis, Chief Financial Officer of the Trust, pursuant to the Trusts 2015 Plan and 2015 Plan Agreement, each an option to purchase 60,000 Shares of Beneficial Interest of the Trust. On April 24, 2015, the Board of Trustees of the Trust also granted to each of our Trustees who are expected to continue to serve on the Board of Trustees through the vesting period, an option to purchase 10,000 Shares of Beneficial Interest of the Trust and also granted to key operational staff options to purchase Shares of Beneficial Interest. The number of options granted to each key operational staff was based on InnSuites employment history and their direct IBC Hotels involvement. A total of 1,434,500 stock options were granted during the first quarter of fiscal year 2016. The options are subject to shareholder approval. Consistent with ASC 718-10-55-10, compensation cost associated with issuance of these options has not been recognized as shareholder approval is not perfunctory. The Board of Trustees of the Trust has decided to terminate the 2015 Plan. Management believes that a new plan needs to be created to act as a financial incentive to the Trusts employees. Management is currently working with each of the 2015 Plan participants to have them surrender their options as no value exists and is expected to exist during the 2015 Plan performance periods. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 4. RELATED PARTY TRANSACTIONS On December 1, 2014, the Trust entered into a $1,000,000 net maximum Demand/Revolving Line of Credit/Promissory Note with Rare Earth. The Demand/Revolving Line of Credit/Promissory Note bears interest at 7.0% per annum, is interest only quarterly and matures on December 31, 2017. No prepayment penalty exists on the Demand/Revolving Line of Credit/Promissory Note. The balance fluctuates significantly through the period. The Demand/Revolving Line of Credit/Promissory Note has a net maximum borrowing capacity of $1,000,000. The above Demand/Revolving Line of Credit/Promissory Note or Note Receivable is presented as one line item on the balance sheet and totaled a receivable of $0 and $5,761 at July 31, 2016 and January 31, 2016, respectively. As of July 31, 2016 and January 31, 2016, Mr. Wirth and his affiliates held 3,407,938 Class B Partnership units, which represented 25.80% of the total outstanding Partnership units. As of July 31, 2016 and January 31, 2016, Mr. Wirth and his affiliates held 6,939,429 and 6,175,2015, respectively, Shares of Beneficial Interest in the Trust, which represented 74.09% and 70.24%, respectively, of the total issued and outstanding Shares of Beneficial Interest. For the six months ended July 31, 2016, Mr. Wirths affiliates paid the Trust $138,301 for management and licensing fees, and $33,409 for reservation fees. On December 22, 2015, the Trust provided Advances to Affiliate Related Party each in the amount of $500,000 to Phoenix Northern Resort, LLC and Tempe/Phoenix Airport Resort LLC. Mr. Wirth, individually and through one of his affiliates owns approximately 32% and 42%, respectively, of Phoenix Northern Resort, LLC and Tempe/Phoenix Airport Resort LLC. Both notes have a due date of June 30, 2017 and accrue interest of 7.0%. During the six months ended July 31, 2016, the Trust received $14,822 and $14,328 interest income from Phoenix Northern Resort, LLC and Tempe/Phoenix Airport Resort LLC, respectively. As of July 31, 2016, the Advances to Affiliate Related Party balance was $300,517 and $137,816 from Phoenix Northern Resort, LLC and Tempe/Phoenix Airport Resort LLC, respectively. Besides Pamela Barnhill, Vice Chairperson and President of the Trust and daughter of Mr. Wirth, the Trusts Chairman and Chief Executive Officer, the Trust also employs two other immediate family members of Mr. Wirth who provide technology and administrative support services to the Trust with each receiving a $47,500 yearly salary. See Related Party Transactions footnote in our Form 10-K Annual Report filed on April 29, 2016 with the Securities Exchange Commission and our Notes 3, 4, 5, 6, 7 and 12 to our Consolidated Financial Statements Sale of Ownership Interests in Albuquerque Subsidiary, Sale of Ownership Interests in Tucson Hospitality Properties Subsidiary, Sale of Ownership Interests in Ontario Hospitality Properties Subsidiary, Sale of Ownership Interests in Yuma Hospitality Properties Subsidiary, Sale of Ownership Interests in Tucson Saint Marys Suite Hospitality and Subsequent Events, and Note 6 to our this Form 10Q Quarterly Report, respectively. |
Notes Payable
Notes Payable | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | 5. NOTES PAYABLE On July 7, 2015, the Trusts revolving bank line of credit agreement, with a credit limit of $600,000, was changed to a four-year non-revolving note payable. The non-revolving note payable has a variable interest rate of Wall Street Journal Prime Rate plus a margin of 1% with a floor rate of 5.5%, maturing on July 3, 2019 and monthly payments of $13,978.08. The line is secured by a junior security interest in the Yuma, Arizona property and the Trusts trade receivables. As of July 31, 2016, the non-revolving note payable balance was approximately $462,000. On January 8, 2016, in connection with the acquisition of substantially all of the assets of International Vacation Hotels (IVH), the Trust entered into a $400,000 business loan with Laurence Holdings Limited, an Ontario, Canada Corporation with a maturity date of February 1, 2019 pursuant to the terms of the Security Agreement and Promissory Note (Agreement). The Agreement required the funds be used for the purchase of IVH assets. The agreement provides interest only payments for the first three months of the term and principal and interest payments for the remaining portion of the loan. The Agreement sets an interest rate of 8% per annum with no prepayment penalty. As of July 31, 2016, the business loan balance was approximately $360,000. On May 3, 2016, the Trust and Yuma Hospitality Properties Limited Partnership, a subsidiary of the Trust, entered into a $350,000 one-year line of credit with Republic Bank AZ, N.A. (the Agreement) that bears interest at the prime rate plus 1.0% per annum The agreement includes acceleration provisions upon default. The line of credit is secured by the Deed of Trust in the Yuma, Arizona property. The funds may be used for working capital and the line is guaranteed by James Wirth, the Trusts Chairman and Chief Executive Officer, Gail Wirth, Mr. Wirths spouse and the Wirth Family Trust Dated July 14, 2006. As of July 31, 2016, the line of credit balance was approximately $310,000. |
Sale of Ownership Interests in
Sale of Ownership Interests in Subsidiaries | 6 Months Ended |
Jul. 31, 2016 | |
Business Combinations [Abstract] | |
Sale of Ownership Interests in Subsidiaries | 6. SALE OF OWNERSHIP INTERESTS IN SUBSIDIARIES The Trust has sold non-controlling interests in certain subsidiaries, including Albuquerque Suite Hospitality, LLC (the Albuquerque entity), Tucson Hospitality Properties, LP (the Tucson entity), Ontario Hospitality Properties, LP (the Ontario entity), and Yuma Hospitality Properties, Limited Partnership (the Yuma entity), which sales are described in detail in our Annual Report on Form 10-K filed on April 29, 2016 with the Securities and Exchange Commission. Generally, interests have sold for $10,000 per unit with a two-unit minimum subscription. The Trust or the Partnership maintains at least 50.1% of the units in each entity and intends to maintain this minimum ownership percentage. Generally, the units in the each of the entities are allocated to three classes with differing cumulative discretionary priority distribution rights through a certain time period. Class A units are owned by unrelated third parties and have first priority for distributions. Class B units are owned by the Trust and have second priority for distributions. Class C units are owned by Rare Earth or other affiliates of Mr. Wirth and have the lowest priority for distributions. Priority distributions of $700 per unit per year are cumulative until a certain date; however, after that date, generally Class A unit holders continue to hold a preference on distributions over Class B and Class C unit holders. As of February 1, 2016, the Trust no longer accrues for these distributions as the preference period generally has expired. During the six months ended July 31, 2016, the priority distributions were paid for the three months ended April 30, 2016 and no priority distributions were accrued for the three months ended July 31, 2016. During the six months ended July 31, 2016, there were no Class A, B or C units of the Albuquerque entity sold. As of July 31, 2016 and January 31, 2016, the Trust held a 50.91% ownership interest, or 279 Class B units, in the Albuquerque entity, Mr. Wirth and his affiliates held a 0.18% interest, or 1 Class C unit, and other third parties held a 48.91% interest, or 268 Class A units. As of February 1, 2016, the Trust no longer accrues for these distributions as the preference period generally has expired. During the six months ended July 31, 2016, the priority distributions were paid for the three months ended April 30, 2016 and no priority distributions were accrued for the three months ended July 31, 2016. During the six months ended July 31, 2016, there were three Class A units of the Tucson entity sold at $10,000 per unit, which was sold from Rare Earth. As of July 31, 2016 and January 31, 2016, the Partnership held a 51.01% ownership interest, or 404 Class B units, in the Tucson entity, Mr. Wirth and his affiliates held a 0.38% interest, or 3 Class C units, and other parties held a 48.61% interest, or 385 Class A units. As of February 1, 2016, the Trust no longer accrues for these distributions as the preference period generally has expired. During the six months ended July 31, 2016, the priority distributions were paid for the three months ended April 30, 2016 and no priority distributions were accrued for the three months ended July 31, 2016. During the six months ended July 31, 2016, there were thirty-two Class A units of the Ontario entity sold at $10,000 per unit, of which two were sold from the Partnership and thirty were sold from Rare Earth. As of July 31, 2016, the Partnership held a 51.34% ownership interest, or 496 Class B units, in the Ontario entity, Mr. Wirth and his affiliates held a 0.21% interest through Rare Earth, or 2 Class C units, and other parties held a 48.46% interest, or 468.25 Class A units. As of February 1, 2016, the Trust no longer accrues for these distributions as the preference period generally has expired. During the six months ended July 31, 2016, the priority distributions were paid for the three months ended April 30, 2016 and no priority distributions were accrued for the three months ended July 31, 2016. During the six months ended July 31, 2016, there were 9.5 Class A units of the Yuma entity sold, at $10,000 per unit, of which 5.5 Class C unit was sold from the Trust and the remaining units were sold from Rare Earth. As of July 31, 2016, the Trust held a 50.29% ownership interest, or 401.90 Class B units, in the Yuma entity, Mr. Wirth and his affiliates held a 0.51% interest, or 4.10 Class C units, and other parties held a 49.25% interest, or 394 Class A units. As of January 31, 2016, the Trust held a 50.93% ownership interest, or 407.40 Class B units, in the Tucson entity, Mr. Wirth and his affiliates held a 1.01% interest, or 8.1 Class C unit, and other parties held a 48.06% interest, or 384.50 Class A units. As of February 1, 2016, the Trust no longer accrues for these distributions as the preference period generally has expired. During the six months ended July 31, 2016, the priority distributions were paid for the three months ended April 30, 2016 and no priority distributions were accrued for the three months ended July 31, 2016. |
Statements of Cash Flows, Suppl
Statements of Cash Flows, Supplemental Disclosures | 6 Months Ended |
Jul. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Statements of Cash Flows, Supplemental Disclosures | 7. STATEMENTS OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES The Trust paid $15,031 and $13,002 in cash for interest for the six months ended July 31, 2016 and 2015, respectively for continuing operations. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. COMMITMENTS AND CONTINGENCIES The Albuquerque Hotel is subject to a non-cancelable ground lease that expires in 2058. Total expense associated with the non-cancelable ground lease for the six months ended July 31, 2016 and 2015 was approximately $74,000 and $64,000, respectively. During 2010, the Trust entered into a five-year office lease for its corporate headquarters. On April 30, 2014, the lease was extended for 36 months and expires in 2017. The Trust recorded approximately $9,000 and $5,000 of general and administrative expense related to the lease during the three months ended July 31, 2016 and 2015, respectively. The lease included a base rent charge of $31,994 for the first lease year beginning in fiscal year 2014, with annual increases to a final year base rent of $34,120 for lease year ending in fiscal year 2017. The Trust has the option to cancel the lease after each lease year for penalties of four months rent after the first year with the penalty decreasing by one months rent each successive lease year. It is the Trusts intention to remain in the office for the duration of the lease period, as extended. Future minimum lease payments under the non-cancelable ground leases and office lease are as follows: Fiscal Year Ending Remainder of FY 2017 $ 72,000 2018 128,000 2019 114,000 2020 114,000 2021 114,000 Thereafter 5,700,000 Total $ 6,242,000 The Trust is obligated under a loan agreement relating to the Tucson Oracle property to deposit 4% of the individual hotels room revenue into an escrow account to be used for capital expenditures. The escrow funds applicable to the Tucson Oracle property for which a mortgage lender escrow exists are not reported on the Trusts Consolidated Balance Sheet as Restricted Cash as the balance was $0 as of July 31, 2016 and January 31, 2016. InnSuites Hotels has entered into membership agreements with Best Western International, Inc. (Best Western) with respect to all four of the Hotels. In exchange for use of the Best Western name, trademark and reservation system, the participating Hotels pay fees to Best Western based on reservations received through the use of the Best Western reservation system and the number of available suites at the participating Hotels. The agreements with Best Western have no specific expiration terms and may be cancelled by either party. Best Western requires that the participating hotels meet certain requirements for room quality, and the Hotels are subject to removal from its reservation system if these requirements are not met. The Hotels with third-party membership agreements received significant reservations through the Best Western reservation system. Under these arrangements, fees paid for membership fees and reservations were approximately $169,000 and $166,000 for the six months ended July 31, 2016 and 2015, respectively. The nature of the operations of the Hotels exposes them to risks of claims and litigation in the normal course of their business. Although the outcome of these matters cannot be determined and is covered by insurance, management does not expect that the ultimate resolution of these matters will have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Trust. The Trust is involved from time to time in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Trusts consolidated financial position, results of operations or liquidity. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jul. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | 9. SEGMENT REPORTING In the fourth quarter of fiscal year 2015, the Trust determined that its reportable segments are the Hotel Operations & Corporate Overhead and IBC Developments segments. Reportable segments are determined based on discrete financial information reviewed by the Trusts CODM. The Trust organizes and reviews operations based on products and services, and currently there are no operating segments that are aggregated. Consistent with the change in reportable segments, the Trust revised its prior period financial information for the new segment structure. Historical financial information presented in this Form 10-Q reflects this change. Information relative to the Trusts reportable segments, for which there is no intersegment revenues, is as follows: SIX MONTHS ENDED JULY 31, 2016 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 6,346,144 $ - $ 396,701 $ 6,742,845 Income (Loss) From Operations 485,581 (16,673 ) (382,366 ) 86,542 THREE MONTHS ENDED JULY 31, 2016 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 2,925,565 $ - $ 179,216 $ 3,104,781 Income (Loss) From Operations 171,441 (5,353 ) (263,775 ) (98,414 ) (i) Hotels Operations & Corporate Overhead segment includes Assets Held for Sale SIX MONTHS ENDED JULY 31, 2015 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 6,096,920 $ 2,311,577 $ 133,208 $ 8,541,705 (Loss) Income From Operations (49,585 ) 162,649 (90,041 ) 23,023 THREE MONTHS ENDED JULY 31, 2015 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 2,752,148 $ 734,519 $ 19,011 $ 3,505,678 Loss From Operations (331,364 ) (261,792 ) (104,084 ) (697,240 ) (i) Hotels Operations & Corporate Overhead segment includes Assets Held for Sale |
Discontinued Operations and Ass
Discontinued Operations and Assets Held for Sale | 6 Months Ended |
Jul. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Assets Held for Sale | 10. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE The Trust has recognized the sale of the Tucson St. Marys Suite Hospitality LLC (the Tucson St. Marys entity) as discontinued operations. After the sale of this asset, the Trust incurred some additional minor expenses which are presented below. Discontinued operations in the three and six months ended July 31, 2016 and July 31, 2015 primarily consists of all hotels operational revenues and expenses and does not include the sale proceeds and profit from the sale of our Tucson St. Marys hotel. The Trust has reclassified its four hotels into assets held for sale. Historical results of these hotels have been adjusted for comparability purposes and exclude any corporate general and administrative expenses. The following financial information presents the consolidated balance sheets of the discontinued operations and assets held for sale as of July 31, 2016 and January 31, 2016, as well as the consolidated statements of operations for the three and six months ended July 31, 2016 and 2015. DISCONTINUED OPERATIONS JULY 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ 1,458 $ 2,153 Accounts Receivable 21,704 12,495 Total Current Assets of Discontinued Operations 23,162 14,648 TOTAL ASSETS OF DISCONTINUED OPERATIONS $ 23,162 $ 14,648 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ 2,434 $ 27,246 Total Current Liabilities of Discontinued Operations 2,434 27,246 TOTAL LIABILITIES OF DISCONTINUED OPERATIONS $ 2,434 $ 27,246 ASSETS HELD FOR SALE JULY 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ 236,308 $ 250,683 Accounts Receivable 501,278 234,770 Prepaid Expenses and Other Current Assets 132,174 125,316 Total Current Assets of Assets Held for Sale 869,760 610,769 Noncurrent assets of Assets Held for Sale 20,352,564 19,328,032 TOTAL ASSETS OF ASSETS HELD FOR SALE $ 21,222,324 $ 19,938,801 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ 1,632,049 $ 1,735,514 Current Portion of Mortgage Notes Payable 499,394 485,993 Total Current Liabilities of Assets Held for Sale 2,131,443 2,221,507 Noncurrent Liabilities of Assets Held for Sale 13,057,180 13,306,598 TOTAL LIABILITIES OF ASSETS HELD FOR SALE $ 15,188,623 $ 15,528,105 DISCONTINUED OPERATIONS SIX MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 1,757,135 Food and Beverage - 536,620 Other - 17,822 TOTAL REVENUE - 2,311,577 OPERATING EXPENSES Room - 542,685 Food and Beverage - 412,462 Telecommunications - 1,867 General and Administrative 16,673 186,977 Sales and Marketing - 112,073 Repairs and Maintenance - 173,491 Hospitality - 146,333 Utilities - 274,427 Hotel Property Depreciation - 232,661 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 64,620 Other - 1,332 TOTAL OPERATING EXPENSES 16,673 2,148,928 OPERATING (LOSS) INCOME (16,673 ) 162,649 Interest on Mortgage Notes Payable - 101,801 Interest on Notes Payable to Banks - 4,319 TOTAL INTEREST EXPENSE - 106,120 DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST (16,673 ) 56,529 CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS $ (16,673 ) $ 56,529 DISCONTINUED OPERATIONS THREE MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 553,032 Food and Beverage - 168,696 Other - 12,791 TOTAL REVENUE - 734,519 OPERATING EXPENSES Room - 242,400 Food and Beverage - 187,712 Telecommunications - 522 General and Administrative 5,353 78,036 Sales and Marketing - 49,147 Repairs and Maintenance - 86,269 Hospitality - 63,451 Utilities - 139,547 Hotel Property Depreciation - 116,423 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 31,827 Other - 977 TOTAL OPERATING EXPENSES 5,353 996,311 OPERATING LOSS (5,353 ) (261,792 ) Interest on Mortgage Notes Payable - 57,515 Interest on Notes Payable to Banks - 1,574 TOTAL INTEREST EXPENSE - 59,089 DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST (5,353 ) (320,881 ) CONSOLIDATED NET LOSS FROM DISCONTINUED OPERATIONS $ (5,353 ) $ (320,881 ) ASSETS HELD FOR SALE SIX MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ 6,069,310 $ 5,804,261 Food and Beverage 106,187 89,980 Other 50,025 42,856 TOTAL REVENUE 6,225,522 5,937,097 OPERATING EXPENSES Room 1,791,189 1,654,340 Food and Beverage 166,932 144,951 Telecommunications 8,852 11,332 General and Administrative 753,565 701,230 Sales and Marketing 437,209 437,892 Repairs and Maintenance 490,205 533,205 Hospitality 389,519 362,567 Utilities 409,867 371,450 Hotel Property Depreciation 110,748 660,463 Real Estate and Personal Property Taxes, Insurance and Ground Rent 330,516 317,101 Other (28,845 ) 12,498 TOTAL OPERATING EXPENSES 4,859,757 5,207,029 OPERATING INCOME 1,365,765 730,068 Interest on Mortgage Notes Payable 335,788 377,365 Interest on Notes Payable to Banks 7,686 15,359 TOTAL INTEREST EXPENSE 343,474 392,724 CONSOLIDATED NET INCOME FROM ASSETS HELD FOR SALE $ 1,022,291 $ 337,344 ASSETS HELD FOR SALE THREE MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ 2,793,953 $ 2,632,510 Food and Beverage 44,705 44,777 Other 30,252 19,314 TOTAL REVENUE 2,868,910 2,696,601 OPERATING EXPENSES Room 897,741 810,147 Food and Beverage 73,373 67,705 Telecommunications 4,738 5,216 General and Administrative 367,830 359,552 Sales and Marketing 227,607 185,462 Repairs and Maintenance 217,069 275,176 Hospitality 179,672 185,659 Utilities 202,690 188,229 Hotel Property Depreciation - 331,051 Real Estate and Personal Property Taxes, Insurance and Ground Rent 149,896 167,620 Other (15,173 ) 3,425 TOTAL OPERATING EXPENSES 2,305,443 2,579,242 OPERATING INCOME 563,467 117,359 Interest on Mortgage Notes Payable 169,335 183,527 Interest on Notes Payable to Banks 4,824 1,731 TOTAL INTEREST EXPENSE 174,159 185,258 CONSOLIDATED NET INCOME (LOSS) FROM ASSETS HELD FOR SALE $ 389,308 $ (67,899 ) |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Trusts operations are affected by numerous factors, including the economy, competition in the hotel industry and the effect of the economy on the travel and hospitality industries. The Trust cannot predict if any of the above items will have a significant impact in the future, nor can it predict what impact, if any, the occurrence of these or other events might have on the Trusts operations and cash flows. Significant estimates and assumptions made by management include, but are not limited to, the estimated useful lives of long-lived assets and estimates of future cash flows used to test a long-lived asset for recoverability and the fair values of the long-lived assets. |
Property, Plant and Equipment and Hotel Properties | PROPERTY, PLANT AND EQUIPMENT AND HOTEL PROPERTIES Furniture, fixtures, building improvements and hotel properties are stated at cost and are depreciated using the straight-line method over estimated lives ranging up to 40 years for buildings and 3 to 10 years for furniture and equipment. Management applies guidance under Accounting Standards Codification (ASC) 360-10-35, to determine when it is required to test an asset for recoverability of its carrying value and whether an impairment exists. Under ASC 360-10-35, the Trust is required to test a long-lived asset for impairment when there is an indicator of impairment. Impairment indicators may include, but are not limited to, a drop in the performance of a long-lived asset, a decline in the hospitality industry or a decline in the economy. If an indicator of potential impairment is present, then an assessment is performed of whether the carrying amount of an asset exceeds its estimated undiscounted future cash flows over its estimated remaining life. If the estimated undiscounted future cash flows over the assets estimated remaining life are greater than the assets carrying value, no impairment is recognized; however, if the carrying value of the asset exceeds the estimated undiscounted future cash flows, then the Trust would recognize an impairment expense to the extent the assets carrying value exceeds its fair value, if any. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. Long-lived assets evaluated for impairment are analyzed on a property-specific basis independent of the cash flows of other groups of assets. Evaluation of future cash flows is based on historical experience and other factors, including certain economic conditions and committed future bookings. Management has determined that no impairment of long-lived assets existed during the Trusts fiscal quarters ended July 31, 2016 and 2015. |
Intangible Assets | INTANGIBLE ASSETS Intangible assets with finite lives are amortized on a straight-line basis over the estimated useful lives, which range from 7 to 10 years. The useful life of the intangible asset is evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining useful life. |
Business Combinations | BUSINESS COMBINATIONS We account for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The final purchase price may be adjusted up to one year from the date of the acquisition. Identifying the fair value of the tangible and intangible assets and liabilities requires the use of estimated by management and was based upon currently available data. The Trust allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. Such goodwill is not deductible for tax purposes and represents the value placed on entering new markets and expanding market share (see Note 27 Acquisition of International Vacation Hotels footnote in our Annual Report on Form 10-K filed on April 29, 2016 with the Securities Exchange Commission). Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, included changes from events after the acquisition date, such as changes in our estimate of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated statements of operations, financial position and cash flows in the period of the change in the estimate. |
Revenue Recognition | REVENUE RECOGNITION Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition summarizes the SECs views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 104 establishes the SECs view that it is not appropriate to recognize revenue until all of the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the sellers price to the buyer is fixed or determinable; and collectability is reasonably assured. Further, SAB No. 104 requires that both title and the risks and rewards of ownership be transferred to the buyer before revenue can be recognized. We believe that our revenue recognition policies as described below are in compliance with SAB No. 104. Revenues are primarily derived from the following sources and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities. Revenues primarily consist of room rentals, food and beverage sales, management and trademark fees and other miscellaneous revenues from our properties. Revenues are recorded when rooms are occupied and when food and beverage sales are delivered. Management and trademark fees from hotels include a monthly accounting fee and a percentage of hotel room revenues for managing the daily operations of the Hotels and the two hotels owned by affiliates of Mr. Wirth. IBC Development revenues are recognized after services are rendered by the IBC member hotel. We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in revenues. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. Based on our policy, we recognize revenue when we believe that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sellers price to the buyer is fixed or determinable, and the collectability of our revenues are reasonably assured. |
Income Per Share | INCOME PER SHARE Basic and diluted income per Share of Beneficial Interest is computed based on the weighted-average number of Shares of Beneficial Interest and potentially dilutive securities outstanding during the period. Dilutive securities are limited to the Class A and Class B units of the Partnership, which are convertible into 3,684,069 Shares of the Beneficial Interest, as discussed in Note 1. As of February 1, 2016 and 2015, the aggregate weighted-average of these Shares of Beneficial Interest for units of the Partnership would have been 3,684,069 and 3,693,972, respectively. These Shares of Beneficial Interest issuable upon conversion of the Class A and Class B Partnership units were anti-dilutive during the six month period ended July 31, 2016 and 2015. Therefore, no reconciliation of basic and diluted income per share is presented. |
Discontinued Operations and Assets Held for Sale | DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE On August 1, 2015, the Trust finalized and committed to a plan to sell all of its hotel properties. On May 1, 2016, the Trust added the Yuma hotel property to the listing of all of their properties with a local real estate hotel broker and management believes that the assets are being marketed at a price that is reasonable in relation to its current fair value. The Trust believes that the plan to sell these assets will not be withdrawn and the sales are probable by January 31, 2017 for all of the hotel properties except the Yuma hotel property which was listed on May 1, 2016. The Trust believes that the Yuma hotel property will be sold prior to May 1, 2017. Events and circumstances, which were initially considered unlikely, that were beyond the Trusts control have extended the time required to complete the sale of its hotel properties beyond a one-year period. Accordingly, the Companys management performed a detailed analysis of its accounting for such properties as held for sale in accordance with ASC 360 as of July 31, 2016. Based on the analysis performed by management, it concluded that continuing to classify the properties as held for sale was reasonable based on the circumstances that created the extended time frame and managements related actions. The Trust has reclassified its hotels into discontinued operations and assets held for sale in accordance with ASC No. 205-20, Discontinued Operations Property, Plant and Equipment Discontinued operations for the periods ended July 31, 2016 and 2015 primarily consists of each hotels operational revenues and expenses. |
Segment Reporting | SEGMENT REPORTING During the fourth quarter of fiscal year 2015, the Trust determined that its operations are comprised of two reportable segments, a Hotel Operations & Corporate Overhead segment that has ownership interest in four hotel properties with an aggregate of 576 suites in Arizona, southern California and New Mexico, and the IBC Developments segment serving 6,500 unrelated hotel properties. The Trust has a concentration of assets in the southwest United States, and the southern Arizona market. On an overall basis, the Trust has elected to only put the costs directly attributable to the IBC Developments in that segment. Included in these costs are sales, marketing and technology development costs. IBC Hotels was formed during the fiscal year ended January 31, 2014. Operating results became significant during the fiscal year ended January 31, 2015. IBC Hotels charges a 10% to 20% booking fee which, we believe, increases the independent hotel profits. Competitors of IBC Hotels can charge anywhere from a 30% to 50% booking fee. InnDependent InnCentives, IBCs loyalty program, allows hoteliers to benefit from guests who frequently stay at IBC independent hotels. We are planning significant expansion of IBC Hotels during the next couple of fiscal years as we concentrate our sales and marketing efforts towards consumers, but can provide no assurance that we will be successful. The Chief Operating Decision Maker (CODM), the Trusts CEO, Mr. Wirth, does not see any value in allocating costs for items not directly attributable to the IBC Developments segment for several reasons. The first is that the Trusts base business is the Hotel Operations & Corporate Overhead segment, and the majority of the expenses of the Trust would continue even if the Trust was not in the reservation business. If the Trust were to allocate general expenses to the reservation business based on some allocation method (e.g., on sales), it would not improve the value of segment reporting, but it would only serve to make the results of the Hotel Operations & Corporate Overhead segment look better and give investors a false sense of the profitability of the Hotel Operations & Corporate Overhead segment without the IBC Developments segment. The CODM wants to understand the true investment in the reservation business and that result is delivered by allocating only costs directly associated with the IBC Developments segment. By retaining the remainder of costs not associated with the IBC Developments segment in the Hotel Operations & Corporate Overhead segment, the Trust is able to compare the Hotel Operations & Corporate Overhead segment to historical figures where the bulk of the business was only that segment of operations to gauge relative efficiency of the Hotel Operations & Corporate Overhead segment as compared to historical norms. The Trust has chosen to focus its hotel investments in the southwest region of the United States. The CODM does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Summary of Restricted Shares Activity | The following table summarizes restricted share activity during the six months ended July 31, 2016: Restricted Shares Shares Weighted-Average Per Share Grant Date Fair Value Balance of unvested awards at January 31, 2016 - - Granted 24,000 $ 2.16 Vested (12,000 ) $ 2.16 Forfeited - - Balance of unvested awards at July 31, 2016 12,000 $ 2.16 |
Summary of Bonus Consisting of Cash and Shares of Beneficial Interest | Executive Officer Cash Equity Pamela J. Barnhill $ 10,000 10,000 Shares of Beneficial Interest Marc E. Berg $ 2,500 2,500 Shares of Beneficial Interest Adam B. Remis $ 5,000 5,000 Shares of Beneficial Interest |
Schedule of Stock Option Vested | The 2015 Plan Agreement has the following vesting schedule: Tranche Shares for which the Stock Option is Vested Vesting Date A 1/3 5/17/2016 B 1/3 2nd anniversary of the Date of Grant C 1/3 3rd anniversary of the Date of Grant |
Schedule of Performance Objective for Applicable Performance Period | Performance Period Performance Objective Exercisable ( Fiscal Year Ending ( GAAP pre-tax profit of IBC Hotels LLC Tranche(s) 1/31/2016 $ 60,000 A 1/31/2017 $ 200,000 A and B 1/31/2018 $ 400,000 A, B, and C |
2017 Fiscal Year Bonus Program [Member] | |
Summary of Bonus Consisting of Cash and Shares of Beneficial Interest | Executive Officer Cash Equity Pamela J. Barnhill $ 25,000 10,000 Shares of Beneficial Interest Marc E. Berg $ 5,000 2,500 Shares of Beneficial Interest Adam B. Remis $ 10,000 5,000 Shares of Beneficial Interest |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under the non-cancelable ground leases and office lease are as follows: Fiscal Year Ending Remainder of FY 2017 $ 72,000 2018 128,000 2019 114,000 2020 114,000 2021 114,000 Thereafter 5,700,000 Total $ 6,242,000 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segments | Information relative to the Trusts reportable segments, for which there is no intersegment revenues, is as follows: SIX MONTHS ENDED JULY 31, 2016 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 6,346,144 $ - $ 396,701 $ 6,742,845 Income (Loss) From Operations 485,581 (16,673 ) (382,366 ) 86,542 THREE MONTHS ENDED JULY 31, 2016 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 2,925,565 $ - $ 179,216 $ 3,104,781 Income (Loss) From Operations 171,441 (5,353 ) (263,775 ) (98,414 ) (i) Hotels Operations & Corporate Overhead segment includes Assets Held for Sale SIX MONTHS ENDED JULY 31, 2015 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 6,096,920 $ 2,311,577 $ 133,208 $ 8,541,705 (Loss) Income From Operations (49,585 ) 162,649 (90,041 ) 23,023 THREE MONTHS ENDED JULY 31, 2015 STATEMENT OF OPERATIONS (i) Hotel Operations & Corporate Overhead Discontinued Operations IBC Developments Total Total Revenue $ 2,752,148 $ 734,519 $ 19,011 $ 3,505,678 Loss From Operations (331,364 ) (261,792 ) (104,084 ) (697,240 ) (i) Hotels Operations & Corporate Overhead segment includes Assets Held for Sale |
Discontinued Operations and A22
Discontinued Operations and Assets Held for Sale (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Group Including Discontinued Operation Balance Sheet | The following financial information presents the consolidated balance sheets of the discontinued operations and assets held for sale as of July 31, 2016 and January 31, 2016, as well as the consolidated statements of operations for the three and six months ended July 31, 2016 and 2015. DISCONTINUED OPERATIONS JULY 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ 1,458 $ 2,153 Accounts Receivable 21,704 12,495 Total Current Assets of Discontinued Operations 23,162 14,648 TOTAL ASSETS OF DISCONTINUED OPERATIONS $ 23,162 $ 14,648 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ 2,434 $ 27,246 Total Current Liabilities of Discontinued Operations 2,434 27,246 TOTAL LIABILITIES OF DISCONTINUED OPERATIONS $ 2,434 $ 27,246 ASSETS HELD FOR SALE JULY 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ 236,308 $ 250,683 Accounts Receivable 501,278 234,770 Prepaid Expenses and Other Current Assets 132,174 125,316 Total Current Assets of Assets Held for Sale 869,760 610,769 Noncurrent assets of Assets Held for Sale 20,352,564 19,328,032 TOTAL ASSETS OF ASSETS HELD FOR SALE $ 21,222,324 $ 19,938,801 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ 1,632,049 $ 1,735,514 Current Portion of Mortgage Notes Payable 499,394 485,993 Total Current Liabilities of Assets Held for Sale 2,131,443 2,221,507 Noncurrent Liabilities of Assets Held for Sale 13,057,180 13,306,598 TOTAL LIABILITIES OF ASSETS HELD FOR SALE $ 15,188,623 $ 15,528,105 |
Schedule of Disposal Group Including Discontinued Operation Statements | DISCONTINUED OPERATIONS SIX MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 1,757,135 Food and Beverage - 536,620 Other - 17,822 TOTAL REVENUE - 2,311,577 OPERATING EXPENSES Room - 542,685 Food and Beverage - 412,462 Telecommunications - 1,867 General and Administrative 16,673 186,977 Sales and Marketing - 112,073 Repairs and Maintenance - 173,491 Hospitality - 146,333 Utilities - 274,427 Hotel Property Depreciation - 232,661 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 64,620 Other - 1,332 TOTAL OPERATING EXPENSES 16,673 2,148,928 OPERATING (LOSS) INCOME (16,673 ) 162,649 Interest on Mortgage Notes Payable - 101,801 Interest on Notes Payable to Banks - 4,319 TOTAL INTEREST EXPENSE - 106,120 DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST (16,673 ) 56,529 CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS $ (16,673 ) $ 56,529 DISCONTINUED OPERATIONS THREE MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 553,032 Food and Beverage - 168,696 Other - 12,791 TOTAL REVENUE - 734,519 OPERATING EXPENSES Room - 242,400 Food and Beverage - 187,712 Telecommunications - 522 General and Administrative 5,353 78,036 Sales and Marketing - 49,147 Repairs and Maintenance - 86,269 Hospitality - 63,451 Utilities - 139,547 Hotel Property Depreciation - 116,423 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 31,827 Other - 977 TOTAL OPERATING EXPENSES 5,353 996,311 OPERATING LOSS (5,353 ) (261,792 ) Interest on Mortgage Notes Payable - 57,515 Interest on Notes Payable to Banks - 1,574 TOTAL INTEREST EXPENSE - 59,089 DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST (5,353 ) (320,881 ) CONSOLIDATED NET LOSS FROM DISCONTINUED OPERATIONS $ (5,353 ) $ (320,881 ) ASSETS HELD FOR SALE SIX MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ 6,069,310 $ 5,804,261 Food and Beverage 106,187 89,980 Other 50,025 42,856 TOTAL REVENUE 6,225,522 5,937,097 OPERATING EXPENSES Room 1,791,189 1,654,340 Food and Beverage 166,932 144,951 Telecommunications 8,852 11,332 General and Administrative 753,565 701,230 Sales and Marketing 437,209 437,892 Repairs and Maintenance 490,205 533,205 Hospitality 389,519 362,567 Utilities 409,867 371,450 Hotel Property Depreciation 110,748 660,463 Real Estate and Personal Property Taxes, Insurance and Ground Rent 330,516 317,101 Other (28,845 ) 12,498 TOTAL OPERATING EXPENSES 4,859,757 5,207,029 OPERATING INCOME 1,365,765 730,068 Interest on Mortgage Notes Payable 335,788 377,365 Interest on Notes Payable to Banks 7,686 15,359 TOTAL INTEREST EXPENSE 343,474 392,724 CONSOLIDATED NET INCOME FROM ASSETS HELD FOR SALE $ 1,022,291 $ 337,344 ASSETS HELD FOR SALE THREE MONTHS ENDED JULY 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ 2,793,953 $ 2,632,510 Food and Beverage 44,705 44,777 Other 30,252 19,314 TOTAL REVENUE 2,868,910 2,696,601 OPERATING EXPENSES Room 897,741 810,147 Food and Beverage 73,373 67,705 Telecommunications 4,738 5,216 General and Administrative 367,830 359,552 Sales and Marketing 227,607 185,462 Repairs and Maintenance 217,069 275,176 Hospitality 179,672 185,659 Utilities 202,690 188,229 Hotel Property Depreciation - 331,051 Real Estate and Personal Property Taxes, Insurance and Ground Rent 149,896 167,620 Other (15,173 ) 3,425 TOTAL OPERATING EXPENSES 2,305,443 2,579,242 OPERATING INCOME 563,467 117,359 Interest on Mortgage Notes Payable 169,335 183,527 Interest on Notes Payable to Banks 4,824 1,731 TOTAL INTEREST EXPENSE 174,159 185,258 CONSOLIDATED NET INCOME (LOSS) FROM ASSETS HELD FOR SALE $ 389,308 $ (67,899 ) |
Nature of Operations and Basi23
Nature of Operations and Basis of Presentation (Details Narrative) | May 03, 2016USD ($) | Jul. 31, 2016USD ($)Integershares | Jul. 31, 2015 | Jan. 31, 2016USD ($)shares | Jan. 31, 2015Integer | Dec. 01, 2014USD ($) |
Number of hotels | Integer | 4 | |||||
Number of suites | Integer | 576 | |||||
Percentage of total partnership units | 50.10% | |||||
Note Receivable - Related Party | $ 5,761 | |||||
Demand/Revolving Line of Credit/Promissory Note amount | $ 40,000 | |||||
Cash included as discontinued operations | 237,766 | $ 222,011 | ||||
Line of credit value | $ 350,000 | 310,000 | ||||
Trust [Member] | ||||||
Note Receivable - Related Party | $ 0 | |||||
Debt instrument interest rate | 7.00% | 7.00% | ||||
Line of credit limit | $ 1,000,000 | |||||
Demand/Revolving Line of Credit/Promissory Note amount | $ 1,000,000 | |||||
Cash and cash equivalents | 263,000 | |||||
Cash included as discontinued operations | 238,000 | |||||
Trust [Member] | December 31, 2017 [Member] | ||||||
Line of credit limit | $ 1,000,000 | |||||
Line of credit maturity date | Dec. 31, 2017 | |||||
Trust [Member] | June 10, 2016 [Member] | ||||||
Demand/Revolving Line of Credit/Promissory Note amount | $ 0 | |||||
Class A Limited Partnership Units [Member] | ||||||
Partnership unit issued | shares | 276,131 | 276,131 | ||||
Partnership unit outstanding | shares | 276,131 | 276,131 | ||||
Percentage of total partnership units | 2.09% | 2.09% | ||||
Class B Partnership Units [Member] | James Wirth [Member] | ||||||
Partnership unit outstanding | shares | 3,407,938 | 3,407,938 | ||||
InnSuites Hotel Located in Yuma, Arizona [Member] | ||||||
Percentage of Ownership Interest Held by the Trust | 50.24% | |||||
InnSuites Hotel Located in Albuquerque New Mexico [Member] | ||||||
Percentage of Ownership Interest Held by the Trust | 50.91% | |||||
RRF Limited Partnership [Member] | Inn Suites Hotel Located in Tucson Arizona [Member] | ||||||
Partnership ownership interest percentage | 51.01% | |||||
RRF Limited Partnership [Member] | InnSuites Hotel Located in Ontario California [Member] | ||||||
Partnership ownership interest percentage | 51.34% | |||||
RRF Limited Partnership [Member] | Weighted Average [Member] | ||||||
Percentage of Ownership Interest Held by the Trust | 72.11% | 72.11% | ||||
IBC Hotels [Member] | ||||||
Number of real estate properties | Integer | 6,500 | 6,500 | ||||
General Partner [Member] | ||||||
Partnership ownership interest percentage | 72.11% | 72.11% | ||||
Number of partnership units | shares | 9,527,448 | 9,527,448 | ||||
General Partner [Member] | RRF Limited Partnership [Member] | ||||||
Number of hotels | Integer | 4 | |||||
Number of suites | Integer | 575 | |||||
Percentage of Ownership Interest Held by the Trust | 72.11% | 72.11% | ||||
Limited Partner [Member] | ||||||
Number of partnership units | shares | 3,684,069 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details Narrative) | 6 Months Ended | 12 Months Ended | |
Jul. 31, 2016USD ($)Integer | Jul. 31, 2015USD ($) | Jan. 31, 2015Integer | |
Impairment of long-lived assets | $ | |||
Aggregate weighted average shares of beneficial for units of partnership | $ | $ 3,684,069 | $ 3,693,972 | |
Number of reportable segments | 2 | ||
Number of hotels | 4 | ||
Number of suites | 576 | ||
IBC Hotels [Member] | |||
Number of real estate properties | 6,500 | 6,500 | |
Maximum [Member] | |||
Finite lives are amoritzed on straight-line estimated useful lives | 10 years | ||
Maximum [Member] | IBC Hotels [Member] | |||
Percentage of booking fee | 20.00% | ||
Maximum [Member] | Competitors Of IBC Hotels [Member] | |||
Percentage of booking fee | 50.00% | ||
Minimum [Member] | |||
Finite lives are amoritzed on straight-line estimated useful lives | 7 years | ||
Minimum [Member] | IBC Hotels [Member] | |||
Percentage of booking fee | 10.00% | ||
Minimum [Member] | Competitors Of IBC Hotels [Member] | |||
Percentage of booking fee | 30.00% | ||
Buildings [Member] | Maximum [Member] | |||
Property, plant and equipment, useful life | 40 years | ||
Furniture and Equipment [Member] | Maximum [Member] | |||
Property, plant and equipment, useful life | 10 years | ||
Furniture and Equipment [Member] | Minimum [Member] | |||
Property, plant and equipment, useful life | 3 years |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | Apr. 24, 2015 | Feb. 05, 2015 | Jul. 31, 2016 |
Stock-based compensation expenses | $ 25,920 | ||
Stock based compensation vested shares | 500 | ||
Stock option granted shares | 1,434,500 | ||
Trustee Stock Compensation [Member] | |||
Issuance of restricted stock, shares | 24,000 | ||
Issuance of restricted stock, market value | $ 51,840 | ||
Ms. Barnhill [Member] | May 16, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 5,000 | ||
Value per share purchased in beneficial interest | $ 2.449 | ||
Ms. Barnhill [Member] | May 20, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 2,000 | ||
Value per share purchased in beneficial interest | $ 2.4883 | ||
Ms. Barnhill [Member] | May 18, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 3,000 | ||
Value per share purchased in beneficial interest | $ 2.4999 | ||
Ms. Barnhill [Member] | May 24, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 3,000 | ||
Value per share purchased in beneficial interest | $ 2.4999 | ||
Mr. Berg [Member] | May 10, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 2,500 | ||
Value per share purchased in beneficial interest | $ 2.49 | ||
Mr. Remis [Member] | May 17, 2016 [Member] | |||
Number of shares purchased in beneficial interest | 5,000 | ||
Value per share purchased in beneficial interest | $ 2.50 | ||
Trust [Member] | |||
Stock-based compensation expenses | $ 45,426 | ||
Board of Trustees [Member] | 2015 Plan Agreement [Member] | |||
Stock option grantee period | 4 years | ||
Shares of beneficial interest of trust exercise price per share | $ 3.50 | ||
Shares of beneficial interest of trust option | 10,000 | ||
Board of Trustees [Member] | 2015 Plan Agreement [Member] | Pamela Barnhill [Member] | |||
Shares of beneficial interest of trust option | 1,000,000 | ||
Board of Trustees [Member] | 2015 Plan Agreement [Member] | Adam Remis [Member] | |||
Shares of beneficial interest of trust option | 60,000 | ||
Board of Trustees [Member] | 2015 Equity Incentive Plan [Member] | |||
Shares of beneficial interest of trust are authorized to issued | 1,600,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Shares Activity (Details) | 6 Months Ended |
Jul. 31, 2016$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Number of Options Beginning Balance | shares | |
Number of Option Granted | shares | 24,000 |
Number of Options Vested | shares | (12,000) |
Number of Options Forfeited | shares | |
Number of Options Ending Balance | shares | 12,000 |
Weighted-Average Exercise Price Per Share Beginning Balance | $ / shares | |
Weighted-Average Exercise Price Per Share Granted | $ / shares | 2.16 |
Weighted-Average Exercise Price Per Share Vested | $ / shares | 2.16 |
Weighted-Average Exercise Price Per Share Forfeited | $ / shares | |
Weighted-Average Exercise Price Per Share Ending Balance | $ / shares | $ 2.16 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Bonus Consisting of Cash and Shares of Beneficial Interest (Details) | 6 Months Ended |
Jul. 31, 2016USD ($)shares | |
Ms. Barnhill [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 10,000 |
Bonus paid in shares of beneficial interest, shares | shares | 10,000 |
Ms. Barnhill [Member] | 2017 Fiscal Year Bonus Program [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 25,000 |
Bonus paid in shares of beneficial interest, shares | shares | 10,000 |
Mr. Berg [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 2,500 |
Bonus paid in shares of beneficial interest, shares | shares | 2,500 |
Mr. Berg [Member] | 2017 Fiscal Year Bonus Program [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 5,000 |
Bonus paid in shares of beneficial interest, shares | shares | 2,500 |
Mr. Remis [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 5,000 |
Bonus paid in shares of beneficial interest, shares | shares | 5,000 |
Mr. Remis [Member] | 2017 Fiscal Year Bonus Program [Member] | |
Bonus paid in shares of beneficial interest, cash | $ | $ 10,000 |
Bonus paid in shares of beneficial interest, shares | shares | 5,000 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Vested (Details) | 6 Months Ended |
Jul. 31, 2016 | |
Tranche A [Member] | |
Shares for which the Stock Option is Vested | 1/3 |
Vesting Date | May 17, 2016 |
Tranche B [Member] | |
Shares for which the Stock Option is Vested | 1/3 |
Vesting Date Description | 2nd anniversary of the Date of Grant |
Tranche C [Member] | |
Shares for which the Stock Option is Vested | 1/3 |
Vesting Date Description | 3rd anniversary of the Date of Grant |
Stock-Based Compensation - Sc29
Stock-Based Compensation - Schedule of Performance Objective for Applicable Performance Period (Details) - IBC Hotels LLC [Member] | 6 Months Ended |
Jul. 31, 2016USD ($) | |
Exercisable Tranche A [Member] | |
Performance Period | Jan. 31, 2016 |
Performance objective | $ 60,000 |
Exercisable Tranche A and B [Member] | |
Performance Period | Jan. 31, 2017 |
Performance objective | $ 200,000 |
Exercisable Tranche A, B and C [Member] | |
Performance Period | Jan. 31, 2018 |
Performance objective | $ 400,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Dec. 22, 2015 | Dec. 01, 2014 | Jul. 31, 2016 | Jan. 31, 2016 |
Note receivable - related party | $ 5,761 | |||
Mr. Wirth [Member] | ||||
Officer compensation | $ 47,500 | |||
Mr. Wirth and Affiliates [Member] | ||||
Number of shares held for beneficial interest of trust | 6,939,429 | 61,752,015 | ||
Percentage of shares issued and outstanding of beneficial interest | 74.09% | 70.24% | ||
Management and licensing fees | $ 138,301 | |||
Reservation fees | $ 33,409 | |||
Mr. Wirth and Affiliates [Member] | Class B Limited Partnership Units [Member] | ||||
Number of partnership unit held for affiliates | 3,407,938 | 3,407,938 | ||
Percentage of outstanding partnership units | 25.80% | 25.80% | ||
Trust [Member] | ||||
Debt face value | $ 1,000,000 | |||
Debt instrument interest rate | 7.00% | 7.00% | ||
Note maturity date | Dec. 31, 2017 | |||
Line of credit maximum borrowing capacity | $ 1,000,000 | |||
Note receivable - related party | $ 0 | |||
Phoenix Northern Resort, LLC [Member] | ||||
Debt instrument interest rate | 7.00% | |||
Note maturity date | Jun. 30, 2017 | |||
Advances to affiliate | $ 500,000 | 300,517 | ||
Percentage of advances affiliate owns | 32.00% | |||
Interest income | 14,822 | |||
Tempe/Phoenix Airport Resort LLC [Member] | ||||
Debt instrument interest rate | 7.00% | |||
Note maturity date | Jun. 30, 2017 | |||
Advances to affiliate | $ 500,000 | 137,816 | ||
Percentage of advances affiliate owns | 42.00% | |||
Interest income | $ 14,328 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | May 03, 2016 | Jan. 08, 2016 | Jul. 07, 2015 | Jul. 31, 2016 |
Non-revolving note payable | $ 462,000 | |||
Line of credit value | $ 350,000 | $ 310,000 | ||
Trust and Yuma Hospitality Properties Limited Partnership [Member] | ||||
Line of credit bear interest rate | 1.00% | |||
Line of credit value | $ 350,000 | |||
Line of credit Expiration period | 1 year | |||
Revolving Bank Line of Credit Agreement [Member] | ||||
Line of credit limit | $ 600,000 | |||
Line of credit maturity date | Jul. 3, 2019 | |||
Monthly payment of debt | $ 13,978 | |||
Revolving Bank Line of Credit Agreement [Member] | Interest Floor Rate [Member] | ||||
Line of credit bear interest rate | 5.50% | |||
Revolving Bank Line of Credit Agreement [Member] | Prime Rate [Member] | ||||
Line of credit bear interest rate | 1.00% | |||
International Vacation Hotels [Member] | ||||
Line of credit bear interest rate | 8.00% | |||
Proceeds from business loans | $ 400,000 | |||
Debt maturity date | Feb. 1, 2019 | |||
Business loan balance | $ 360,000 |
Sale of Ownership Interests i32
Sale of Ownership Interests in Subsidiaries (Details Narrative) - $ / shares | 6 Months Ended | 12 Months Ended |
Jul. 31, 2016 | Jan. 31, 2016 | |
Sale price per unit | $ 10,000 | |
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 50.10% | |
Ontario Hospitality Properties LP [Member] | ||
Sale price per unit | $ 10,000 | |
Mr. Wirth and Affiliates [Member] | Ontario Hospitality Properties LP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 0.21% | |
Partnership [Member] | Ontario Hospitality Properties LP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 51.34% | |
Other Parties Holders [Member] | Ontario Hospitality Properties LP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 48.46% | |
Albuquerque Suite Hospitality, LLC [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 50.91% | 50.91% |
Albuquerque Suite Hospitality Properties LLC [Member] | Mr. Wirth and Affiliates [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 0.18% | 0.18% |
Albuquerque Suite Hospitality Properties LLC [Member] | Unrelated Unit Holders [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 48.91% | 48.91% |
Tucson Hospitality Properties LLP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 51.01% | 51.01% |
Tucson Hospitality Properties LLP [Member] | Mr. Wirth and Affiliates [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 0.38% | 0.38% |
Tucson Hospitality Properties LLP [Member] | Unrelated Unit Holders [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 48.61% | 48.61% |
Yuma Hospitality Properties LP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 50.29% | |
Yuma Hospitality Properties LP [Member] | Mr. Wirth and Affiliates [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 0.51% | 1.01% |
Yuma Hospitality Properties LP [Member] | Unrelated Unit Holders [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 49.25% | |
Yuma Hospitality Properties LP [Member] | The Trust [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 50.93% | |
Class C Limited Partnership Units [Member] | ||
Cumulative priority distributions per unit per year | $ 700 | |
Class C Limited Partnership Units [Member] | Ontario Hospitality Properties LP [Member] | ||
Number of partnership units | 2 | |
Class C Limited Partnership Units [Member] | Tucson Hospitality Properties LP [Member] | ||
Number of partnership units | 3 | |
Class C Limited Partnership Units [Member] | Yuma Hospitality Properties LP [Member] | ||
Number of partnership units | 8.1 | |
Class C Limited Partnership Units [Member] | Albuquerque Suite Hospitality, LLC [Member] | ||
Number of units sold during period | 0 | |
Number of partnership units | 1 | 1 |
Class C Limited Partnership Units [Member] | Tucson Hospitality Properties LLP [Member] | ||
Number of partnership units | 3 | |
Class C Limited Partnership Units [Member] | Yuma Hospitality Properties LP [Member] | ||
Number of units sold during period | 10,000 | |
Number of partnership units | 4.10 | |
Class A Limited Partnership Units [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 2.09% | 2.09% |
Class A Limited Partnership Units [Member] | Ontario Hospitality Properties LP [Member] | ||
Number of units sold during period | 32 | |
Number of partnership units | 468.25 | |
Class A Limited Partnership Units [Member] | Albuquerque Suite Hospitality, LLC [Member] | ||
Sale price per unit | $ 10,000 | |
Number of partnership units | 268 | |
Class A Limited Partnership Units [Member] | Albuquerque Suite Hospitality, LLC [Member] | ||
Number of units sold during period | 0 | |
Number of partnership units | 268 | |
Class A Limited Partnership Units [Member] | Tucson Hospitality Properties LLP [Member] | ||
Number of partnership units | 385 | 385 |
Class A Limited Partnership Units [Member] | Yuma Hospitality Properties LP [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 48.06% | |
Number of units sold during period | 9.5 | |
Number of partnership units | 394 | 384.50 |
Class B Limited Partnership Units [Member] | Ontario Hospitality Properties LP [Member] | ||
Number of partnership units | 496 | |
Class B Limited Partnership Units [Member] | Tucson Hospitality Properties LP [Member] | ||
Number of partnership units | 404 | |
Class B Limited Partnership Units [Member] | Albuquerque Suite Hospitality, LLC [Member] | ||
Number of units sold during period | 0 | |
Number of partnership units | 279 | 279 |
Class B Limited Partnership Units [Member] | Tucson Hospitality Properties LLP [Member] | ||
Number of partnership units | 404 | |
Class B Limited Partnership Units [Member] | Yuma Hospitality Properties LP [Member] | ||
Number of partnership units | 401.90 | |
Class B Limited Partnership Units [Member] | Yuma Hospitality Properties LP [Member] | Tucson Hospitality Properties LLP [Member] | ||
Number of partnership units | 407.40 |
Statements of Cash Flows, Sup33
Statements of Cash Flows, Supplemental Disclosures (Details Narrative) - USD ($) | 6 Months Ended | |
Jul. 31, 2016 | Jul. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 15,031 | $ 13,002 |
Commitments and Contingencies34
Commitments and Contingencies (Details Narrative) - USD ($) | Apr. 30, 2014 | Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2010 | Jan. 31, 2016 |
General and administrative expense related to the lease | $ 708,328 | $ 519,713 | $ 1,443,598 | $ 1,031,644 | |||
Restricted cash balance | $ 0 | 0 | $ 0 | ||||
Membership fees and reservation amount | $ 169,000 | 166,000 | |||||
Albuquerque Hotel [Member] | |||||||
Ground lease expiration year | 2,058 | ||||||
Lease expense | $ 74,000 | 64,000 | |||||
Corporate Headquarters [Member] | |||||||
Ground lease expiration year | 2,017 | ||||||
Lease term | 36 months | 5 years | |||||
General and administrative expense related to the lease | 9,000 | $ 5,000 | |||||
First Lease Year Beginning In Fiscal Year 2014 [Member] | |||||||
Lease expense | 31,994 | ||||||
Lease Year Ending In Fiscal Year 2017 [Member] | |||||||
Lease expense | $ 34,120 | ||||||
Tucson Oracle Property [Member] | |||||||
Percentage of deposit used for capital expenditures | 4.00% | 4.00% |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) | Jul. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of FY 2017 | $ 72,000 |
2,018 | 128,000 |
2,019 | 114,000 |
2,020 | 114,000 |
2,021 | 114,000 |
Thereafter | 5,700,000 |
Total | $ 6,242,000 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Reportable Segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | ||
Total Revenue | $ 235,918 | $ 63,623 | $ 517,323 | $ 293,031 | |
Income (Loss) From Operations | (652,985) | (546,502) | (1,262,550) | (869,694) | |
Segment Reporting [Member] | |||||
Total Revenue | [1] | 3,104,781 | 3,505,678 | 6,742,845 | 8,541,705 |
Income (Loss) From Operations | [1] | (98,414) | (697,240) | 86,542 | 23,023 |
Hotel Operations & Corporate Overhead [Member] | |||||
Total Revenue | [1] | 2,925,565 | 2,752,148 | 6,346,144 | 6,096,920 |
Income (Loss) From Operations | [1] | 171,441 | (331,364) | 485,581 | (49,585) |
Discontinued Operations [Member] | |||||
Total Revenue | [1] | ||||
Income (Loss) From Operations | [1] | (5,353) | (16,673) | ||
IBC Developments [Member] | |||||
Total Revenue | [1] | 179,216 | 19,011 | 396,701 | 133,208 |
Income (Loss) From Operations | [1] | $ (263,775) | (104,084) | $ (382,366) | (90,041) |
Discontinued Operations [Member] | |||||
Total Revenue | [1] | 734,519 | 2,311,577 | ||
Income (Loss) From Operations | [1] | $ (261,792) | $ 162,649 | ||
[1] | Hotels Operations & Corporate Overhead segment includes Assets Held for Sale |
Discontinued Operations and A37
Discontinued Operations and Assets Held for Sale - Schedule of Disposal Group Including Discontinued Operation Balance Sheet (Details) - USD ($) | Jul. 31, 2016 | Jul. 31, 2015 |
Discontinued Operations [Member] | ||
Cash and Cash Equivalents | $ 1,458 | $ 2,153 |
Accounts Receivable | 21,704 | 12,495 |
Total Current Assets of Discontinued Operations | 23,162 | 14,648 |
TOTAL ASSETS OF DISCONTINUED OPERATIONS | 23,162 | 14,648 |
Accounts Payable and Accrued Expenses | 2,434 | 27,246 |
Total Current Liabilities of Discontinued Operations | 2,434 | 27,246 |
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS | 2,434 | 27,246 |
Assets Held-for-Sale [Member] | ||
Cash and Cash Equivalents | 236,308 | 250,683 |
Accounts Receivable | 501,278 | 234,770 |
Prepaid Expenses and Other Current Assets | 132,174 | 125,316 |
Total Current Assets of Assets Held for Sale | 869,760 | 610,769 |
Noncurrent assets of Assets Held for Sale | 20,352,564 | 19,328,032 |
TOTAL ASSETS OF ASSETS HELD FOR SALE | 21,222,324 | 19,938,801 |
Accounts Payable and Accrued Expenses | 1,632,049 | 1,735,514 |
Current Portion of Mortgage Notes Payable | 499,394 | 485,993 |
Total Current Liabilities of Assets Held for Sale | 2,131,443 | 2,221,507 |
Noncurrent Liabilities of Assets Held for Sale | 13,057,180 | 13,306,598 |
TOTAL LIABILITIES OF ASSETS HELD FOR SALE | $ 15,188,623 | $ 15,528,105 |
Discontinued Operations and A38
Discontinued Operations and Assets Held for Sale - Schedule of Disposal Group Including Discontinued Operation Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
Discontinued Operations [Member] | ||||
Room | $ 553,032 | $ 1,757,135 | ||
Food and Beverage | 168,696 | 536,620 | ||
Other | 12,791 | 17,822 | ||
TOTAL REVENUE | 734,519 | 2,311,577 | ||
Room | 242,400 | 542,685 | ||
Food and Beverage | 187,712 | 412,462 | ||
Telecommunications | 522 | 1,867 | ||
General and Administrative | 5,353 | 78,036 | 16,673 | 186,977 |
Sales and Marketing | 49,147 | 112,073 | ||
Repairs and Maintenance | 86,269 | 173,491 | ||
Hospitality | 63,451 | 146,333 | ||
Utilities | 139,547 | 274,427 | ||
Hotel Property Depreciation | 116,423 | 232,661 | ||
Real Estate and Personal Property Taxes, Insurance and Ground Rent | 31,827 | 64,620 | ||
Other | 977 | 1,332 | ||
TOTAL OPERATING EXPENSES | 5,353 | 996,311 | 16,673 | 2,148,928 |
OPERATING (LOSS) INCOME | (5,353) | (261,792) | (16,673) | 162,649 |
Interest on Mortgage Notes Payable | 57,515 | 101,801 | ||
Interest on Notes Payable to Banks | 1,574 | 4,319 | ||
TOTAL INTEREST EXPENSE | 59,089 | 106,120 | ||
DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST | (5,353) | (320,881) | (16,673) | 56,529 |
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS | (5,353) | (320,881) | (16,673) | 56,529 |
Assets Held-for-Sale [Member] | ||||
Room | 2,793,953 | 2,632,510 | 6,069,310 | 5,804,261 |
Food and Beverage | 44,705 | 44,777 | 106,187 | 89,980 |
Other | 30,252 | 19,314 | 50,025 | 42,856 |
TOTAL REVENUE | 2,868,910 | 2,696,601 | 6,225,522 | 5,937,097 |
Room | 897,741 | 810,147 | 1,791,189 | 1,654,340 |
Food and Beverage | 73,373 | 67,705 | 166,932 | 144,951 |
Telecommunications | 4,738 | 5,216 | 8,852 | 11,332 |
General and Administrative | 367,830 | 359,552 | 753,565 | 701,230 |
Sales and Marketing | 227,607 | 185,462 | 437,209 | 437,892 |
Repairs and Maintenance | 217,069 | 275,176 | 490,205 | 533,205 |
Hospitality | 179,672 | 185,659 | 389,519 | 362,567 |
Utilities | 202,690 | 188,229 | 409,867 | 371,450 |
Hotel Property Depreciation | 331,051 | 110,748 | 660,463 | |
Real Estate and Personal Property Taxes, Insurance and Ground Rent | 149,896 | 167,620 | 330,516 | 317,101 |
Other | (15,173) | 3,425 | (28,845) | 12,498 |
TOTAL OPERATING EXPENSES | 2,305,443 | 2,579,242 | 4,859,757 | 5,207,029 |
OPERATING INCOME | 563,467 | 117,359 | 1,365,765 | 730,068 |
Interest on Mortgage Notes Payable | 169,335 | 183,527 | 335,788 | 377,365 |
Interest on Notes Payable to Banks | 4,824 | 1,731 | 7,686 | 15,359 |
TOTAL INTEREST EXPENSE | 174,159 | 185,258 | 343,474 | 392,724 |
CONSOLIDATED NET INCOME (LOSS) FROM ASSETS HELD FOR SALE | $ 389,308 | $ (67,899) | $ 1,022,291 | $ 337,344 |