Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2016 | Dec. 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 | Oct. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,678,495 | |
Trading Symbol | IHT | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Oct. 31, 2016 | Jan. 31, 2016 |
Current Assets: | ||
Cash and Cash Equivalents | $ 496,037 | $ 1,955,534 |
Accounts Receivable, including $0 and $20,683 from related parties, respectively | 441,622 | 250,470 |
Advances to Affiliates - Related Party | 115,517 | 972,184 |
Notes Receivable - Related Party | 5,761 | |
Prepaid Expenses and Other Current Assets | 150,067 | 127,325 |
Current Assets of Discontinued Operations | 19,271 | 14,648 |
Total Current Assets | 1,222,514 | 3,325,922 |
Property, Plant and Equipment, net | 19,785,128 | 19,614,767 |
Intangible Assets, net | 449,750 | 500,000 |
Goodwill | 500,000 | 500,000 |
TOTAL ASSETS | 21,957,392 | 23,940,689 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 1,910,425 | 2,163,144 |
Line of Credit - Related Party | 426,184 | |
Current Portion of Mortgage Notes Payable, net of Discount of $8,012 as of October 31, 2016 and January 31, 2016, respectively | 505,400 | 485,994 |
Current Portion of Notes Payable to Banks, net of Discount of $36,927 and $0 as of October 31, 2016 and January 31, 2016, respectively | 1,069,604 | 665,622 |
Current Portion of Other Notes Payable | 84,682 | 40,801 |
Current Liabilities of Discontinued Operations | 27,246 | |
Total Current Liabilities | 3,996,295 | 3,382,807 |
Mortgage Notes Payable, net of discount of $52,895 and $58,903 as of October 31, 2016 and January 31, 2016, respectively | 12,933,401 | 13,306,598 |
Notes Payable to Banks, net of Discount of $1,738 and $0 as of October 31, 2016 and January 31, 2016, respectively | 598,611 | 266,666 |
Other Notes Payable | 8,552 | 13,889 |
TOTAL LIABILITIES | 17,536,859 | 16,969,960 |
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8) | ||
SHAREHOLDERS' EQUITY | ||
Shares of Beneficial Interest, without par value, unlimited authorization; 17,970,846 and 17,406,846 shares issued and 9,678,746 and 8,791,500 shares outstanding at October 31, 2016 and January 31, 2016, respectively | 17,229,284 | 18,769,849 |
Treasury Stock, 8,632,155 and 8,615,346 shares held at cost at October 31, 2016 and January 31, 2016, respectively | (12,328,300) | (12,285,915) |
TOTAL TRUST SHAREHOLDERS' EQUITY | 4,900,984 | 6,483,934 |
NON-CONTROLLING INTEREST | (480,451) | 486,795 |
TOTAL EQUITY | 4,420,533 | 6,970,729 |
TOTAL LIABILITIES AND EQUITY | $ 21,957,392 | $ 23,940,689 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Oct. 31, 2016 | Jan. 31, 2016 | |
Accounts Receivable from Related Parties | $ 0 | $ 20,683 |
Shares of Beneficial Interest, without par value | ||
Shares of Beneficial Interest, Authorized Shares | Unlimited | Unlimited |
Shares of Beneficial Interest, shares issued | 17,970,846 | 17,406,846 |
Shares of Beneficial Interest, shares outstanding | 9,678,746 | 8,791,500 |
Treasury Stock, shares held | 8,632,155 | 8,615,346 |
Current Portion of Mortgage Notes Payable [Member] | ||
Note Payable, Discount | $ 8,012 | $ 8,012 |
Current Portion of Notes Payable to Banks [Member] | ||
Note Payable, Discount | 36,927 | 0 |
Mortgage Notes Payable [Member] | ||
Note Payable, Discount | 52,895 | 58,903 |
Notes Payable to Banks [Member] | ||
Note Payable, Discount | $ 1,738 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
REVENUE | ||||
Room | $ 2,907,714 | $ 2,457,167 | $ 8,977,101 | $ 8,261,506 |
Food and Beverage | 44,996 | 29,915 | 151,183 | 119,895 |
Management and Trademark Fees | 69,955 | 42,886 | 208,256 | 171,028 |
Reservation and Convention | 125,726 | 13,353 | 524,555 | 187,765 |
Other | 8,176 | 17,968 | 38,269 | 70,048 |
TOTAL REVENUE | 3,156,567 | 2,561,289 | 9,899,364 | 8,810,242 |
OPERATING EXPENSES | ||||
Room | 924,568 | 806,323 | 2,715,757 | 2,483,060 |
Food and Beverage | 80,507 | 73,830 | 247,440 | 218,780 |
Telecommunications | 5,417 | 3,048 | 14,268 | 14,379 |
General and Administrative | 1,052,423 | 770,308 | 3,232,250 | 2,503,274 |
Sales and Marketing | 446,045 | 282,302 | 1,135,357 | 830,648 |
Repairs and Maintenance | 248,088 | 231,931 | 738,293 | 765,137 |
Hospitality | 179,281 | 165,572 | 568,800 | 528,139 |
Utilities | 222,388 | 219,549 | 632,255 | 591,000 |
Depreciation | 1,511,145 | 122,891 | 1,672,565 | 803,982 |
Intangible Amortization | 16,750 | 50,250 | ||
Real Estate and Personal Property Taxes, Insurance and Ground Rent | 142,273 | 168,870 | 472,789 | 485,971 |
Other | 11,718 | 3,917 | 12,750 | |
TOTAL OPERATING EXPENSES | 4,840,603 | 2,848,541 | 11,480,024 | 9,237,120 |
OPERATING LOSS | (1,684,036) | (287,252) | (1,580,660) | (426,878) |
Interest Income | 62 | 30 | 1,325 | 349 |
Interest Income on Advances to Affiliates - Related Party | 34,805 | |||
TOTAL OTHER INCOME | 62 | 30 | 36,130 | 349 |
Interest on Mortgage Notes Payable | 176,210 | 175,352 | 513,156 | 552,717 |
Interest on Notes Payable to Banks | 6,200 | (3,302) | 48,392 | 381 |
Interest on Other Notes Payable | 11,861 | 14,178 | 8,404 | 41,599 |
Interest on Line of Credit - Related Party | 392 | 5,349 | 13,439 | |
TOTAL INTEREST EXPENSE | 194,663 | 191,577 | 569,952 | 608,136 |
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION | (1,878,637) | (478,799) | (2,114,482) | (1,034,665) |
Income Tax Provision | (2,768) | (2,768) | (71,571) | |
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS | (1,881,405) | (478,799) | (2,117,250) | (1,106,236) |
Discontinued Operations, Net of Non-Controlling Interest | (85) | (535,337) | (16,757) | (478,808) |
Gain on Disposal of Discontinued Operations | 2,351,817 | 2,351,817 | ||
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS | (85) | 1,816,480 | (16,757) | 1,873,009 |
CONSOLIDATED NET (LOSS) INCOME | (1,881,490) | 1,337,681 | (2,134,007) | 766,773 |
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (642,153) | (39,336) | (328,169) | (55,876) |
NET (LOSS) INCOME ATTRIBUTABLE TO CONTROLLING INTERESTS | $ (1,239,337) | $ 1,377,017 | $ (1,805,838) | $ 822,649 |
NET LOSS PER SHARE FROM CONTINUING OPERATIONS - BASIC | $ (0.24) | $ (0.06) | $ (0.27) | $ (0.13) |
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS - BASIC | 0.22 | 0.23 | ||
NET (LOSS) INCOME PER SHARE PER SHARE TOTAL - BASIC | (0.24) | 0.16 | (0.27) | 0.10 |
NET LOSS PER SHARE FROM CONTINUING OPERATIONS - DILUTED | (0.24) | (0.04) | (0.27) | (0.09) |
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS - DILUTED | 0.15 | 0.16 | ||
NET (LOSS) INCOME PER SHARE PER SHARE TOTAL - DILUTED | $ (0.24) | $ 0.11 | $ (0.27) | $ 0.07 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 8,801,256 | 8,260,759 | 8,809,108 | 8,269,827 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 8,801,256 | 11,944,828 | 8,809,108 | 11,953,896 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 9 months ended Oct. 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 | $ (1,805,838) | (1,805,838) | (328,169) | (2,134,007) | |
Shares Issued from Cash Received in Prior Period | |||||
Shares Issued from Cash Received in Prior Period, shares | 861,755 | ||||
Purchase of Treasury Stock | $ (42,385) | (42,385) | (42,385) | ||
Purchase of Treasury Stock,shares | (16,809) | 16,809 | |||
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 | |||||
Distribution to Non-Controlling Interests | (520,150) | (520,150) | |||
Reallocation of Non-Controlling Interests and Other | 193,927 | 193,927 | (193,927) | ||
Balance at Oct. 31, 2016 | $ 17,229,284 | $ (12,328,300) | $ 4,900,984 | $ (480,451) | $ 4,420,533 |
Balance, shares at Oct. 31, 2016 | 9,678,746 | 8,632,155 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Consolidated Net (Loss) Income | $ (2,134,007) | $ 766,773 |
Adjustments to Reconcile Consolidated Net Loss to Net Cash (Used In) Provided By Operating Activities: | ||
Stock-Based Compensation | 84,306 | 44,880 |
Provision For (Recovery of) Uncollectible Receivables | 10,178 | (8,638) |
Depreciation | 1,672,565 | 1,036,642 |
Amortization of Intangibles | 50,250 | |
Amortization of Debt Discounts and Deferred Financing Fees | 14,453 | 69,486 |
Gain on Disposal of Assets | (2,351,817) | |
Changes in Assets and Liabilities: | ||
Accounts Receivable | (208,106) | 303,891 |
Prepaid Expenses and Other Assets | (22,742) | 48,983 |
Accounts Payable and Accrued Expenses | (279,966) | (310,542) |
NET CASH USED IN OPERATING ACTIVITIES | (813,069) | (400,342) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Improvements and Additions to Hotel Properties | (1,842,926) | (1,317,284) |
Cash Received From Sale of Hotel Property | 4,712,611 | |
Lendings on Advances to Affiliates - Related Party | (283,333) | |
Collections on Advances to Affiliates - Related Party | 1,140,000 | 1,236 |
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES | (986,259) | 3,396,563 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal Payments on Mortgage Notes Payable | (359,798) | (507,626) |
Payments on Notes Payable to Banks, net of financing costs | (634,568) | (2,299,648) |
Borrowings on Notes Payable to Banks, net of financing costs | 1,362,050 | 1,591,153 |
Payments on Line of Credit - Related Party | (314,172) | (2,475,321) |
Borrowings on Line of Credit - Related Party | 756,000 | 1,933,611 |
Payments on Notes Payable - Related Party | (693,113) | |
Borrowings on Notes Payable - Related Party | 683,230 | |
Lendings on Note Receivable - Related Party | (30,000) | |
Collections on Note Receivable - Related Party | 5,349 | |
Payments on Other Notes Payable | (41,456) | (454,215) |
Borrowings on Other Notes Payable | 80,000 | |
Proceeds from Sale of Non-Controlling Ownership Interest in Subsidiary | 75,000 | 1,799,699 |
Sale of Stock | 1,100,000 | |
Distributions to Non-Controlling Interest Holders | (533,110) | (1,026,616) |
Repurchase of Treasury Stock | (42,385) | (76,098) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 337,678 | (439,712) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,461,650) | 2,556,509 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,957,687 | 507,686 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 496,037 | $ 3,064,195 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Oct. 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 October 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 October 31, 2016 and January 31, 2016, respectively. The Trusts weighted average ownership for the nine-month period ended October 31, 2016 and 2015 was 72.11%. As of October 31, 2016, the Partnership owned a 51.01% interest in an InnSuites® hotel located in Tucson, Arizona and a 51.33% 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. (InnSuites Hotels), 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 October 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 October 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 October 31, 2016, the limited partners in the Partnership would receive 3,684,069 Shares of Beneficial Interest of the Trust. As of October 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 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 October 31, 2016, the Trust had a related party Demand/Revolving Line of Credit/Promissory Note with an amount payable of approximately $0. 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 December 12, 2016, the outstanding net balance receivable on the Demand/Revolving Line of Credit/Promissory Note was $0. As of October 31, 2016, the Trust had two available Advances to Affiliate credit facilities each with a maximum borrowing capacity of $500,000 for a total maximum borrowing capacity of $1,000,000. As of October 31, 2016, the Trust had an amount payable of approximately $426,000 on one of the Advances to Affiliates credit facility and an amount receivable of approximately $116,000 on the other Advances to Affiliates credit facility. Both the Demand/Revolving Line of Credit/Promissory Note and the Advances to Affiliate credit facilities accrues interest at 7.0% per annum and requires interest only payments quarterly. With approximately $496,000 of cash and cash equivalents as of October 31, 2016 and the availability of a $1,000,000 related party Demand/Revolving Line of Credit/Promissory Note, $1,000,000 Advances to Affiliates credit facilities and the availability of the two unsecured loans of $475,000 provided on December 2, 2016, 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. 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. The results for the period ended October 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 31, 2017 or any future period. BASIS OF PRESENTATION These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the 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 our Annual Report on Form 10-K filed with the SEC on April 29, 2016. 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 Annual Report on Form 10-K for the year ended January 31, 2016 filed with the SEC on April 29, 2016. The results for the period ended October 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year ending January 31, 2017 or any future period. 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. Therefore, the financial statements of the Partnership and InnSuites Hotels 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 the Hotel properties. As of May 1, 2016, the Trust has listed all the Hotel properties with a local real estate hotel broker, and management believes that each of the assets is 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. Through the Trusts Form 10-Q for the quarter ended July 31, 2016 filed with the SEC on September 14, 2016, the Trust classified all the Hotel properties as Assets Held for Sale. As of October 31, 2016, the Trust has decided to reclassify these assets back into operations as many of these assets have been marketed for sale for more than one year. At this time, the Trust is unable to predict when, and if, any of these Hotel properties will be sold, therefore such sale is no longer considered probable. The Trust continues to list these properties with local real estate hotel brokers and, we believe, that each of the assets is being marketed at a price that is reasonable in relation to its current fair value. There have been no other material changes to our basis of presentation since January 31, 2016. 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 Since July 31, 2016, no significant recently issued accounting guidance exists that is material to the Trust. Management continues to monitor and review recently issued accounting guidance upon issuance. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 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 Trust’s 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 Trust’s 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 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 asset’s estimated remaining life are greater than the asset’s 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 asset’s 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 Trust’s fiscal quarters ended October 31, 2016 and 2015. REVENUE RECOGNITION Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” (“SAB No. 104”) summarizes the SEC’s views in applying GAAP to revenue recognition in financial statements. SAB No. 104 establishes the SEC’s 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 seller’s 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 seller’s 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 above in Note 1 – “Nature of Operations and Basis of Presentation.” At the beginning of each nine month period ended October 31, 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 nine month period ended October 31, 2016 and 2015. Therefore, no reconciliation of basic and diluted income per share is presented. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 3. STOCK-BASED COMPENSATION TRUSTEE STOCK COMPENSATION For the nine months ended October 31, 2016, the Trust recognized expenses of $38,880 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 nine months ended October 31, 2016: Restricted Shares Shares Weighted-Average Per Share Grant Balance of unvested awards at January 31, 2016 - - Granted 24,000 $ 2.16 Vested (18,000 ) $ 2.16 Forfeited - - Balance of unvested awards at October 31, 2016 6,000 $ 2.16 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, 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 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 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 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 of the Trust and Trustee, and Adam Remis, Chief Financial Officer of the Trust, pursuant to the Trust’s 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 an option to purchase 10,000 Shares of Beneficial Interest of the Trust to each of our Trustees who are expected to continue to serve on the Board of Trustees through the vesting period 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. Effective October 31, 2016, it has been determined that the Shareholders will not approve the 2015 Plan and the proposed grants have been rescinded. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Oct. 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, requires interest payments 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 balance of $0 and $5,671 at October 31, 2016 and 2015, respectively. As of October 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 October 31, 2016 and January 31, 2016, Mr. Wirth and his affiliates held 6,939,429 and 6,175,205, respectively, Shares of Beneficial Interest in the Trust, which represented 74.31% and 70.24%, respectively, of the total issued and outstanding Shares of Beneficial Interest. For the nine months ended October 31, 2016, Mr. Wirths affiliates paid the Trust $208,256 for management and licensing fees and $35,464 for reservation fees. On December 22, 2015, the Trust provided Advances to Affiliates 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 nine months ended October 31, 2016, the Trust received $18,098 and $14,328 interest income from Phoenix Northern Resort, LLC and Tempe/Phoenix Airport Resort LLC, respectively. As of October 31, 2016 the Advances to Affiliates Related Party balance was $115,517 from Phoenix Northern Resort, LLC and the Line of Credit Related Part balance was $426,184 to Tempe Phoenix Airport Resort LLC. Management and trademark fee revenue from related parties were approximately $208,000 for the nine months ended October 31, 2016 as compared to approximately $171,000 for the nine months ended October 31, 2015. 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. Effective May 1, 2016, we increased our management and trademark fee revenues by charging Mr. Wirths hotels 5% of room revenues instead of 3% of room revenues. The accounting fees collected remained constant at $2,000 per month per property. The Trust increased its fees to keep up with market conditions as other management companies have steadily increased their fees. Management and trademark fee revenues were approximately $208,000 for the nine months ended October 31, 2016 as compared to approximately $171,000 for the nine months ended October 31, 2015. For the three months ended October 31, 2016 and October 31, 2015, we had management and trademark fees income of approximately $70,000 and $43,000, respectively. We expect that management and trademark fee revenues will continue to increase during fiscal year 2017 as compared to fiscal year 2016, offset by the loss of the management and trademark fee revenues generated by Mr. Wirth and his affiliated hotel in Fort Worth, Texas, which was managed by the Trust and sold to an independent third party during April 2015. See Notes 3, 5, 6, 12 and 18 to the 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, Subsequent Events and Related Party Transactions, respectively, in our Form 10-K Annual Report filed with the SEC on April 29, 2016 and below in Note 6 Sale of Ownership Interests in Subsidiaries for further description of the Trusts related party transactions. |
Notes Payable
Notes Payable | 9 Months Ended |
Oct. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | 5. NOTES PAYABLE On July 7, 2015, the Trust’s 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 Trust’s trade receivables. As of October 31, 2016, the non-revolving note payable balance was approximately $427,000. On January 8, 2016, in connection with the acquisition of substantially all of the assets of International Vacation Hotels, 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 (the “Laurence Holdings Agreement”). The Laurence Holdings Agreement required the funds be used for the purchase of International Vacation Hotels assets. The Laurence Holdings Agreement provides for interest- only payments for the first three months of the term and principal and interest payments for the remaining portion of the loan. The Laurence Holdings Agreement sets an interest rate of 8% per annum with no prepayment penalty. As of October 31, 2016, the business loan balance was approximately $317,000. On May 3, 2016, the Trust and Yuma Hospitality Properties Limited Partnership (the “Yuma entity”), a subsidiary of the Trust, entered into a $350,000 one-year line of credit with Republic Bank AZ, N.A. (the “Yuma entity Agreement”) that bears interest at the prime rate plus 1.0% per annum. The Yuma entity 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 Trust’s Chairman and Chief Executive Officer, Gail Wirth, Mr. Wirth’s spouse, and the Wirth Family Trust dated July 14, 2006. As of October 31, 2016, the line of credit balance was approximately $0. On September 20, 2016, Albuquerque Suite Hospitality, LLC (the “Albuquerque entity”), a subsidiary of the Trust, entered into a $524,160 business loan, including $20,160 of loan fees which are classified as debt discount and amortized to interest expense over the term of the loan using the effective interest rate method, with American Express Bank, FSB (the “Albuquerque Merchant Agreement”) with a maturity date of September 19, 2017. The Albuquerque Merchant Agreement includes a loan fee of 6% of the original principal balance of the loan with acceleration provisions upon default. The business loan is secured and paid back with 14% of the Albuquerque American Express, VISA, MasterCard and Discover merchant receipts received during the loan period. As of October 31, 2016, the business loan balance was approximately $426,000. On October 17, 2016, the Yuma entity, a subsidiary of the Trust, entered into a $520,000 business loan, including $20,000 of loan fees which are classified as debt discount and amortized to interest expense over the term of the loan using the effective interest rate method, with American Express Bank, FSB (the “Yuma Merchant Agreement”) with a maturity date of October 16, 2017. The Yuma Merchant Agreement includes a loan fee of 6% of the original principal balance of the loan with acceleration provisions upon default. The business loan is secured and paid back with 22% of the Yuma American Express, VISA, MasterCard and Discover merchant receipts received during the loan period. As of October 31, 2016, the business loan balance was approximately $498,000. |
Sale of Ownership Interests in
Sale of Ownership Interests in Subsidiaries | 9 Months Ended |
Oct. 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 with the SEC on April 29, 2016. 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 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 nine months ended October 31, 2016, the priority distributions were paid for the six months ended July 31, 2016 and no priority distributions were accrued for the three months ended October 31, 2016. During the nine months ended October 31, 2016, there were no Class A, B or C units of the Albuquerque entity sold. As of October 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. During the nine months ended October 31, 2016, there were three Class A units of the Tucson entity sold at $10,000 per unit, which were sold by Rare Earth. As of October 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. . During the nine months ended October 31, 2016, there were thirty-two Class A units of the Ontario entity sold at $10,000 per unit, of which two were sold by the Partnership and twenty-eight were sold by Rare Earth. As of October 31, 2016, the Partnership held a 51.33% 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. During the nine months ended October 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 units were sold by the Trust and the remaining units were sold by Rare Earth. As of October 31, 2016, the Trust held a 50.24% 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. |
Statements of Cash Flows, Suppl
Statements of Cash Flows, Supplemental Disclosures | 9 Months Ended |
Oct. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Statements of Cash Flows, Supplemental Disclosures | 7. STATEMENTS OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES The Trust paid $569,952 and $608,135 in cash for interest for the nine months ended October 31, 2016 and 2015, respectively, for continuing operations. The Trust paid $2,768 and $71,571 in cash for income taxes for the nine months ended October 31, 2016 and 2015, respectively, for continuing operations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 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 nine months ended October 31, 2016 and 2015 was approximately $111,000 and $110,000, 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 $24,000 and $21,000 of general and administrative expense related to the lease during the nine months ended October 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 month’s rent each successive lease year. It is the Trust’s 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 $ 36,000 2018 128,000 2019 114,000 2020 114,000 2021 114,000 Thereafter 5,587,000 Total $ 6,093,000 The Trust is obligated under a loan agreement relating to the Tucson Oracle property to deposit 4% of the individual hotel’s 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 Trust’s Consolidated Balance Sheet as “Restricted Cash” as the balance was $0 as of October 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 $252,000 and $248,000 for the nine months ended October 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 Trust’s consolidated financial position, results of operations or liquidity. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 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 Trust’s 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 Trust’s reportable segments, for which there is no intersegment revenues, is as follows: STATEMENT OF OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2016 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 9,376,937 $ 522,427 $ 9,899,364 Loss From Operations (795,047 ) (785,613 ) (1,580,660 ) STATEMENT OF OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2016 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 3,030,841 $ 125,726 $ 3,156,567 Loss From Operations (1,280,789 ) (403,247 ) (1,684,036 ) STATEMENT OF OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2015 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 8,667,206 $ 143,036 $ 8,810,242 Loss From Operations (195,840 ) (231,038 ) (426,878 ) STATEMENT OF OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2015 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 2,547,936 $ 13,353 $ 2,561,289 Loss From Operations (149,781 ) (137,471 ) (287,252 ) |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Oct. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 10. DISCONTINUED OPERATIONS The Trust has recognized the sale of the Tucson St. Mary’s Suite Hospitality LLC (the “Tucson St. Mary’s 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 nine and three months ended October 31, 2016 and October 31, 2015 primarily consists of the Tucson St. Mary’s hotel operational revenues and expenses and does not include the sale proceeds and profit from the sale of our Tucson St. Mary’s hotel. Historical results of the Tucson St. Mary’s hotel has been adjusted for comparability purposes and exclude any corporate general and administrative expenses. On August 1, 2015, the Trust finalized and committed to a plan to sell all the Hotel properties. As of May 1, 2016, the Trust has listed all the Hotel properties with a local real estate hotel broker, and management believes that each of the assets is 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. Through the Trust’s Form 10-Q for the quarter ended July 31, 2016 filed with the SEC on September 14, 2016, the Trust classified all the Hotel properties as Assets Held for Sale. As of October 31, 2016, the Trust has decided to reclassify these assets back into operations as many of these assets have been marketed for sale for more than one year. At this time, the Trust is unable to predict when, and if, any of these Hotel properties will be sold and the Trust no longer deems a sale to be probable. The Trust continues to list these properties with local real estate hotel brokers and, we believe, that each of the assets is being marketed at a price that is reasonable in relation to its current fair value. There have been no other material changes to our basis of presentation since January 31, 2016. The following financial information presents the consolidated balance sheets of the discontinued operations and assets held for sale as of October 31, 2016 and January 31, 2016, as well as the consolidated statements of operations for the three and nine months ended October 31, 2016 and 2015. DISCONTINUED OPERATIONS OCTOBER 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ - $ 2,153 Accounts Receivable 19,271 12,495 Total Current Assets of Discontinued Operations 19,271 14,648 TOTAL ASSETS OF DISCONTINUED OPERATIONS $ 19,271 $ 14,648 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ - $ 27,246 Total Current Liabilities of Discontinued Operations - 27,246 TOTAL LIABILITIES OF DISCONTINUED OPERATIONS $ - $ 27,246 DISCONTINUED OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 2,172,153 Food and Beverage - 658,881 Other - 23,611 TOTAL REVENUE - 2,854,645 OPERATING EXPENSES Room - 963,976 Food and Beverage - 545,737 Telecommunications - 1,898 General and Administrative 16,757 264,074 Sales and Marketing - 150,893 Repairs and Maintenance - 247,691 Hospitality - 188,216 Utilities - 432,070 Hotel Property Depreciation - 232,661 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 159,283 Other - 12,894 TOTAL OPERATING EXPENSES 16,757 3,199,393 OPERATING (LOSS) INCOME (16,757 ) (344,748 ) Interest on Mortgage Notes Payable - 116,838 Interest on Notes Payable to Banks - 17,222 TOTAL INTEREST EXPENSE - 134,060 CONSOLIDATED NET LOSS BEFORE DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST $ (16,757 ) $ (478,808 ) DISCONTINUED OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 415,018 Food and Beverage - 122,262 Other - 5,789 TOTAL REVENUE - 543,069 OPERATING EXPENSES Room - 421,291 Food and Beverage - 133,275 Telecommunications - 31 General and Administrative 85 77,098 Sales and Marketing - 38,820 Repairs and Maintenance - 74,201 Hospitality - 41,883 Utilities - 157,643 Hotel Property Depreciation - - Real Estate and Personal Property Taxes, Insurance and Ground Rent - 94,663 Other - 11,562 TOTAL OPERATING EXPENSES 85 1,050,467 OPERATING LOSS (85 ) (507,398 ) Interest on Mortgage Notes Payable - 15,037 Interest on Notes Payable to Banks - 12,902 TOTAL INTEREST EXPENSE - 27,939 CONSOLIDATED NET LOSS BEFORE DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST $ (85 ) $ (535,337 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. SUBSEQUENT EVENTS On December 5, 2016, The Trust and the Partnership together entered into eight unsecured loans for a total of $425,000 with varying principal amounts ranging from $25,000 to $100,000 with H. W. Hayes Trust (“Hayes Loans”). The Trust and the Partnership together also entered into two unsecured on-demand $25,000 loans for a total of $50,000 with Lita M. Sweitzer (“Sweitzer Loans”). The total principal amount of the Hayes Loans and the Sweitzer Loans is $475,000. The Hayes Loans and the Sweitzer Loans are due on June 20, 2019 or on demand, whichever occurs first. The Hayes Loans requires from a 0-120 day notification of the demand to repay the loans prior to June 20, 2019. Both the Hayes Loans and the Sweitzer Loans accrue interest at 7.0% per year on the unpaid balance and interest only payments shall be made monthly and are due on the first of the following month. The Trust and Partnership may pay all or part of these notes without any repayment penalties. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 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 Trust’s 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 Trust’s 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 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 asset’s estimated remaining life are greater than the asset’s 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 asset’s 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 Trust’s fiscal quarters ended October 31, 2016 and 2015. |
Revenue Recognition | REVENUE RECOGNITION Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” (“SAB No. 104”) summarizes the SEC’s views in applying GAAP to revenue recognition in financial statements. SAB No. 104 establishes the SEC’s 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 seller’s 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 seller’s 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 above in Note 1 – “Nature of Operations and Basis of Presentation.” At the beginning of each nine month period ended October 31, 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 nine month period ended October 31, 2016 and 2015. Therefore, no reconciliation of basic and diluted income per share is presented. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Restricted Shares Activity | The following table summarizes restricted share activity during the nine months ended October 31, 2016: Restricted Shares Shares Weighted-Average Per Share Grant Balance of unvested awards at January 31, 2016 - - Granted 24,000 $ 2.16 Vested (18,000 ) $ 2.16 Forfeited - - Balance of unvested awards at October 31, 2016 6,000 $ 2.16 |
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 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 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Oct. 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 $ 36,000 2018 128,000 2019 114,000 2020 114,000 2021 114,000 Thereafter 5,587,000 Total $ 6,093,000 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segments | Information relative to the Trust’s reportable segments, for which there is no intersegment revenues, is as follows: STATEMENT OF OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2016 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 9,376,937 $ 522,427 $ 9,899,364 Loss From Operations (795,047 ) (785,613 ) (1,580,660 ) STATEMENT OF OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2016 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 3,030,841 $ 125,726 $ 3,156,567 Loss From Operations (1,280,789 ) (403,247 ) (1,684,036 ) STATEMENT OF OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2015 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 8,667,206 $ 143,036 $ 8,810,242 Loss From Operations (195,840 ) (231,038 ) (426,878 ) STATEMENT OF OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2015 CONTINUING OPERATIONS Hotel Operations & Corporate Overhead IBC Developments Total Total Revenue $ 2,547,936 $ 13,353 $ 2,561,289 Loss From Operations (149,781 ) (137,471 ) (287,252 ) |
Discontinued Operations and Ass
Discontinued Operations and Assets Held for Sale (Tables) | 9 Months Ended |
Oct. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Group Including Discontinued Operation Balance Sheet | DISCONTINUED OPERATIONS OCTOBER 31, 2016 JANUARY 31, 2016 (UNAUDITED) ASSETS Current Assets: Cash and Cash Equivalents $ - $ 2,153 Accounts Receivable 19,271 12,495 Total Current Assets of Discontinued Operations 19,271 14,648 TOTAL ASSETS OF DISCONTINUED OPERATIONS $ 19,271 $ 14,648 LIABILITIES LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses $ - $ 27,246 Total Current Liabilities of Discontinued Operations - 27,246 TOTAL LIABILITIES OF DISCONTINUED OPERATIONS $ - $ 27,246 |
Schedule of Disposal Group Including Discontinued Operation Statements | DISCONTINUED OPERATIONS NINE MONTHS ENDED OCTOBER 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 2,172,153 Food and Beverage - 658,881 Other - 23,611 TOTAL REVENUE - 2,854,645 OPERATING EXPENSES Room - 963,976 Food and Beverage - 545,737 Telecommunications - 1,898 General and Administrative 16,757 264,074 Sales and Marketing - 150,893 Repairs and Maintenance - 247,691 Hospitality - 188,216 Utilities - 432,070 Hotel Property Depreciation - 232,661 Real Estate and Personal Property Taxes, Insurance and Ground Rent - 159,283 Other - 12,894 TOTAL OPERATING EXPENSES 16,757 3,199,393 OPERATING (LOSS) INCOME (16,757 ) (344,748 ) Interest on Mortgage Notes Payable - 116,838 Interest on Notes Payable to Banks - 17,222 TOTAL INTEREST EXPENSE - 134,060 CONSOLIDATED NET LOSS BEFORE DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST $ (16,757 ) $ (478,808 ) DISCONTINUED OPERATIONS THREE MONTHS ENDED OCTOBER 31, 2016 2015 (UNAUDITED) (UNAUDITED) REVENUE Room $ - $ 415,018 Food and Beverage - 122,262 Other - 5,789 TOTAL REVENUE - 543,069 OPERATING EXPENSES Room - 421,291 Food and Beverage - 133,275 Telecommunications - 31 General and Administrative 85 77,098 Sales and Marketing - 38,820 Repairs and Maintenance - 74,201 Hospitality - 41,883 Utilities - 157,643 Hotel Property Depreciation - - Real Estate and Personal Property Taxes, Insurance and Ground Rent - 94,663 Other - 11,562 TOTAL OPERATING EXPENSES 85 1,050,467 OPERATING LOSS (85 ) (507,398 ) Interest on Mortgage Notes Payable - 15,037 Interest on Notes Payable to Banks - 12,902 TOTAL INTEREST EXPENSE - 27,939 CONSOLIDATED NET LOSS BEFORE DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST $ (85 ) $ (535,337 ) |
Nature of Operations and Basi23
Nature of Operations and Basis of Presentation (Details Narrative) | Dec. 12, 2016USD ($) | Oct. 31, 2016USD ($)Integershares | Oct. 31, 2015USD ($) | Jan. 31, 2016USD ($)shares | Dec. 01, 2014USD ($) |
Percentage of total partnership units | 50.10% | ||||
Note Receivable - Related Party | $ 5,671 | $ 5,761 | |||
Line of credit limit | 1,000,000 | ||||
Trust [Member] | |||||
Note Receivable - Related Party | 0 | ||||
Line of credit limit | 1,000,000 | $ 1,000,000 | |||
Demand/Revolving Line of Credit/Promissory Note amount | $ 0 | 1,000,000 | |||
Due to affliates | $ 1,000,000 | ||||
Debt instrument interest rate | 7.00% | 7.00% | |||
Cash and cash equivalents | $ 496,000 | ||||
Trust [Member] | December 31, 2017 [Member] | |||||
Line of credit limit | $ 1,000,000 | ||||
Line of credit maturity date | Dec. 31, 2017 | ||||
Trust [Member] | December 2, 2016 [Member] | |||||
Line of credit value of unsecured loans | $ 475,000 | ||||
Trust One [Member] | |||||
Line of credit limit | 500,000 | ||||
Due to affliates | 426,000 | ||||
Trust Two [Member] | |||||
Line of credit limit | 500,000 | ||||
Due from affiliates | $ 116,000 | ||||
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 | 51.33% | ||||
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 | ||||
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) - USD ($) | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Impairment of long-lived assets | $ 0 | $ 0 |
Aggregate weighted average shares of beneficial for units of partnership | 3,684,069 | $ 3,693,972 |
Class A and Class B Units [Member] | ||
Aggregate weighted average shares of beneficial for units of partnership | $ 3,684,069 | |
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 | Oct. 31, 2016 |
Stock-based compensation expenses | $ 38,880 | ||
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 | ||
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) | 9 Months Ended |
Oct. 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 | (18,000) |
Number of Options Forfeited | shares | |
Number of Options Ending Balance | shares | 6,000 |
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 - Sche
Stock-Based Compensation - Schedule of Stock Option Vested (Details) | 9 Months Ended |
Oct. 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 - Sc28
Stock-Based Compensation - Schedule of Performance Objective for Applicable Performance Period (Details) - IBC Hotels [Member] | 9 Months Ended |
Oct. 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 ($) | May 02, 2016 | Dec. 22, 2015 | Dec. 01, 2014 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Jan. 31, 2016 |
Line of credit maximum borrowing capacity | $ 1,000,000 | $ 1,000,000 | ||||||
Note receivable - related party | $ 5,671 | $ 5,671 | $ 5,761 | |||||
Due from related party | 115,517 | 115,517 | 972,184 | |||||
Line of credit - related party | 426,184 | 426,184 | ||||||
Management and trademark fee revenue from related parties | 208,000 | 171,000 | ||||||
Property accounting fees | $ 2,000 | |||||||
Management and trademark fees income | $ 69,955 | $ 42,886 | 208,256 | $ 171,028 | ||||
Mr. Wirth [Member] | ||||||||
Officer compensation | $ 47,500 | |||||||
Mr. Wirth [Member] | Minimum [Member] | ||||||||
Percentage of advances affiliate owns | 3.00% | |||||||
Mr. Wirth [Member] | Maximum [Member] | ||||||||
Percentage of advances affiliate owns | 5.00% | |||||||
Mr. Wirth and Affiliates [Member] | ||||||||
Number of shares held for beneficial interest of trust | 6,939,429 | 6,939,429 | 6,175,205 | |||||
Percentage of shares issued and outstanding of beneficial interest | 74.31% | 74.31% | 70.24% | |||||
Management and licensing fees | $ 208,256 | |||||||
Reservation fees | $ 35,464 | |||||||
Mr. Wirth and Affiliates [Member] | Class B Limited Partnership Units [Member] | ||||||||
Number of partnership unit held for affiliates | 3,407,938 | 3,407,938 | 3,407,938 | |||||
Percentage of outstanding partnership units | 25.80% | 25.80% | 25.80% | |||||
Trust [Member] | ||||||||
Debt face value | $ 1,000,000 | |||||||
Debt instrument interest rate | 7.00% | 7.00% | 7.00% | |||||
Note maturity date | Dec. 31, 2017 | |||||||
Line of credit maximum borrowing capacity | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |||||
Note receivable - related party | $ 0 | 0 | ||||||
Phoenix Northern Resort, LLC [Member] | ||||||||
Debt instrument interest rate | 7.00% | |||||||
Note maturity date | Jun. 30, 2017 | |||||||
Advances to affiliate | $ 500,000 | |||||||
Percentage of advances affiliate owns | 32.00% | |||||||
Interest income | 18,098 | |||||||
Tempe/Phoenix Airport Resort LLC [Member] | ||||||||
Debt instrument interest rate | 7.00% | |||||||
Note maturity date | Jun. 30, 2017 | |||||||
Advances to affiliate | $ 500,000 | |||||||
Percentage of advances affiliate owns | 42.00% | |||||||
Interest income | $ 14,328 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Oct. 17, 2016 | Sep. 20, 2016 | May 03, 2016 | Jan. 08, 2016 | Jul. 07, 2015 | Oct. 31, 2016 |
Line of credit limit | $ 1,000,000 | |||||
Non-revolving note payable | 427,000 | |||||
Albuquerque Suite Hospitality [Member] | ||||||
Proceeds from business loans | $ 524,160 | |||||
Debt maturity date | Sep. 19, 2017 | |||||
Business loan balance | 426,000 | |||||
Loan fees classified as debt discount and amortized to interest expense | $ 20,160 | |||||
Loan fees, percent | 6.00% | |||||
Business loan repayment, description | The business loan is secured and paid back with 14% of the Albuquerque American Express, VISA, MasterCard and Discover merchant receipts received during the loan period. | |||||
Yuma entity [Member] | ||||||
Proceeds from business loans | $ 520,000 | |||||
Business loan balance | 498,000 | |||||
Loan fees classified as debt discount and amortized to interest expense | $ 20,000 | |||||
Loan fees, percent | 6.00% | |||||
Business loan repayment, description | The business loan is secured and paid back with 22% of the Yuma American Express, VISA, MasterCard and Discover merchant receipts received during the loan period. | |||||
Trust and Yuma Hospitality Properties Limited Partnership [Member] | ||||||
Line of credit bear interest rate | 1.00% | |||||
Line of credit value | $ 350,000 | 0 | ||||
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 | $ 317,000 |
Sale of Ownership Interests i31
Sale of Ownership Interests in Subsidiaries (Details Narrative) - $ / shares | 9 Months Ended | 12 Months Ended |
Oct. 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 | 51.33% | |
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 | 50.24% | |
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% | |
Yuma Hospitality Properties LP [Member] | Unrelated Unit Holders [Member] | ||
Percentage of membership interest in a subsidiary committed to purchase by an affiliate | 49.25% | |
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] | 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 | 5.5 | |
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] | ||
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] | ||
Number of units sold during period | 9.5 | |
Number of partnership units | 394 | |
Class A Limited Partnership Units [Member] | Yuma Hospitality Properties [Member] | ||
Sale price per unit | $ 10,000 | |
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 A Units [Member] | Tucson Hospitality Properties LLP [Member] | ||
Sale price per unit | $ 10,000 |
Statements of Cash Flows, Sup32
Statements of Cash Flows, Supplemental Disclosures (Details Narrative) - USD ($) | 9 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 569,952 | $ 608,135 |
Cash paid for income taxes | $ 2,768 | $ 71,571 |
Commitments and Contingencies33
Commitments and Contingencies (Details Narrative) - USD ($) | Apr. 30, 2014 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Jan. 31, 2010 | Jan. 31, 2016 |
General and administrative expense related to the lease | $ 1,052,423 | $ 770,308 | $ 3,232,250 | $ 2,503,274 | |||
Restricted cash balance | $ 0 | 0 | $ 0 | ||||
Membership fees and reservation amount | $ 252,000 | 248,000 | |||||
Albuquerque Hotel [Member] | |||||||
Ground lease expiration year | 2,058 | ||||||
Lease expense | $ 111,000 | 110,000 | |||||
Corporate Headquarters [Member] | |||||||
Ground lease expiration year | 2,017 | ||||||
Lease term | 36 months | 5 years | |||||
General and administrative expense related to the lease | 24,000 | $ 21,000 | |||||
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) | Oct. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of FY 2017 | $ 36,000 |
2,018 | 128,000 |
2,019 | 114,000 |
2,020 | 114,000 |
2,021 | 114,000 |
Thereafter | 5,587,000 |
Total | $ 6,093,000 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Reportable Segments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Total Revenue | $ 3,156,567 | $ 2,561,289 | $ 9,899,364 | $ 8,810,242 |
Loss From Operations | (1,684,036) | (287,252) | (1,580,660) | (426,878) |
Segment Reporting [Member] | ||||
Total Revenue | 3,156,567 | 2,561,289 | 9,899,364 | 8,810,242 |
Loss From Operations | (1,684,036) | (287,252) | (1,580,660) | (426,878) |
Hotel Operations & Corporate Overhead [Member] | ||||
Total Revenue | 3,030,841 | 2,547,936 | 9,376,937 | 8,667,206 |
Loss From Operations | (1,280,789) | (149,781) | (795,047) | (195,840) |
IBC Developments [Member] | ||||
Total Revenue | 125,726 | 13,353 | 522,427 | 143,036 |
Loss From Operations | $ (403,247) | $ (137,471) | $ (785,613) | $ (231,038) |
Discontinued Operations and A36
Discontinued Operations and Assets Held for Sale - Schedule of Disposal Group Including Discontinued Operation Balance Sheet (Details) - Discontinued Operations [Member] - USD ($) | Oct. 31, 2016 | Jan. 31, 2016 |
Cash and Cash Equivalents | $ 2,153 | |
Accounts Receivable | 19,271 | 12,495 |
Total Current Assets of Discontinued Operations | 19,271 | 14,648 |
TOTAL ASSETS OF DISCONTINUED OPERATIONS | 19,271 | 14,648 |
Accounts Payable and Accrued Expenses | 27,246 | |
Total Current Liabilities of Discontinued Operations | 27,246 | |
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS | $ 27,246 |
Discontinued Operations and A37
Discontinued Operations and Assets Held for Sale - Schedule of Disposal Group Including Discontinued Operation Statements (Details) - Discontinued Operations [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | |
Room | $ 415,018 | $ 2,172,153 | ||
Food and Beverage | 122,262 | 658,881 | ||
Other | 5,789 | 23,611 | ||
TOTAL REVENUE | 543,069 | 2,854,645 | ||
Room | 421,291 | 963,976 | ||
Food and Beverage | 133,275 | 545,737 | ||
Telecommunications | 31 | 1,898 | ||
General and Administrative | 85 | 77,098 | 16,757 | 264,074 |
Sales and Marketing | 38,820 | 150,893 | ||
Repairs and Maintenance | 74,201 | 247,691 | ||
Hospitality | 41,883 | 188,216 | ||
Utilities | 157,643 | 432,070 | ||
Hotel Property Depreciation | 232,661 | |||
Real Estate and Personal Property Taxes, Insurance and Ground Rent | 94,663 | 159,283 | ||
Other | 11,562 | 12,894 | ||
TOTAL OPERATING EXPENSES | 85 | 1,050,467 | 16,757 | 3,199,393 |
OPERATING (LOSS) INCOME | (85) | (507,398) | (16,757) | (344,748) |
Interest on Mortgage Notes Payable | 15,037 | 116,838 | ||
Interest on Notes Payable to Banks | 12,902 | 17,222 | ||
TOTAL INTEREST EXPENSE | 27,939 | 134,060 | ||
CONSOLIDATED NET LOSS BEFORE DISCONTINUED OPERATIONS, NET OF NON-CONTROLLING INTEREST | $ (85) | $ (535,337) | $ (16,757) | $ (478,808) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Dec. 05, 2016USD ($) |
Trust [Member] | |
Unsecured loans | $ 25,000 |
Partnership [Member] | |
Unsecured loans | 25,000 |
Hayes Loans [Member] | |
Unsecured loans | $ 425,000 |
Loan due date | Jun. 20, 2019 |
Accrued interest percentage | 7.00% |
Hayes Loans [Member] | Minimum [Member] | |
Debt principal amount | $ 25,000 |
Hayes Loans [Member] | Maximum [Member] | |
Debt principal amount | 100,000 |
Sweitzer Loans [Member] | |
Unsecured loans | 50,000 |
Debt principal amount | $ 475,000 |
Loan due date | Jun. 20, 2019 |
Accrued interest percentage | 7.00% |