ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended January 31, 2013.
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|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to .
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Commission File No. 1-7062
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InnSuites Hospitality Trust
|
||
(Exact Name of Registrant as Specified in Its Charter)
|
||
Ohio
|
34-6647590
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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InnSuites Hotels Centre, 1625 E. Northern Avenue,
Suite 105, Phoenix, Arizona
|
85020
|
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(Address of Principal Executive Offices)
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(ZIP Code)
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Registrant’s Telephone Number, including area code: (602) 944-1500
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Title of Each Class
|
Name of Exchange on Which Registered
|
|
Shares of Beneficial Interest,
without par value
|
NYSE MKT
|
PROPERTY
|
NUMBER
OF
SUITES
|
YEAR OF
CONSTRUCTION/
ADDITION
|
MOST RECENT
RENOVATION (1)
|
PERCENT
OWNERSHIP BY
THE TRUST
|
||||
InnSuites Hotel and Suites Airport Albuquerque Best Western
|
101
|
1975/1985
|
2004
|
50.13% (2)
|
||||
InnSuites Hotel and Suites Tucson, Catalina Foothills Best Western
|
159
|
1981/1983
|
2005
|
42.34% (3)
|
||||
InnSuites Hotels and Suites Yuma Best Western
|
166
|
1982/1984
|
2012
|
99.9% (4)
|
||||
InnSuites Hotel and Suites Ontario Airport Best Western
|
150
|
1990
|
2012
|
44.56% (5)
|
||||
InnSuites Hotels and Suites Tucson St. Mary’s
|
267
|
1960/1971
|
2012
|
72.04% (6)
|
||||
Total suites
|
843
|
Fiscal Year 2013
|
High
|
Low
|
Dividends
|
|||||||||
First Quarter
|
$
|
2.41
|
$
|
2.00
|
—
|
|||||||
Second Quarter
|
$
|
2.35
|
$
|
1.93
|
—
|
|||||||
Third Quarter
|
$
|
2.35
|
$
|
1.98
|
—
|
|||||||
Fourth Quarter
|
$
|
2.20
|
$
|
1.53
|
$
|
0.01
|
Fiscal Year 2012
|
High
|
Low
|
Dividends
|
|||||||||
First Quarter
|
$
|
2.44
|
$
|
1.21
|
—
|
|||||||
Second Quarter
|
$
|
2.06
|
$
|
1.53
|
—
|
|||||||
Third Quarter
|
$
|
2.42
|
$
|
1.69
|
—
|
|||||||
Fourth Quarter
|
$
|
2.28
|
$
|
2.02
|
$
|
0.01
|
Issuer Purchases of Equity Securities
|
||||||||||||||||
Period
|
Total Number
of Shares
Purchased
|
Average Price
Paid per
Share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans
|
Maximum Number of
Shares that May Be Yet
Purchased Under the
Plans
|
||||||||||||
November 1 – November 30, 2012
|
400 | $ | 2.40 | 400 | 291,800 | |||||||||||
December 1 – December 31, 2012
|
425 | $ | 2.41 | 425 | 291,375 | |||||||||||
January 1 – January 31, 2013
|
12,555 | $ | 1.90 | 12,555 | 278,820 | |||||||||||
Total
|
13,380 | 13,380 |
For the Years Ended January 31,
|
||||||||
2013
|
2012
|
|||||||
Occupancy
|
64.59
|
%
|
61.73
|
%
|
||||
Average Daily Rate (ADR)
|
$
|
67.43
|
$
|
71.20
|
||||
Revenue Per Available Room (REVPAR)
|
$
|
43.55
|
$
|
43.95
|
•
|
For a discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management and Licensing Contracts.”
|
•
|
For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 10 to our Consolidated Financial Statements – “Mortgage Notes Payable.”
|
|
•
|
For a discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, 4 and 5 to our Consolidated Financial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” “Sale of Partnership Interests in Tucson Hospitality Properties Subsidiary,” and “Sale of Partnership Interests in Ontario Hospitality Properties Subsidiary,” respectively.
|
•
|
For a discussion of other related party transactions, see Note 16 to our Consolidated Financial Statements – “Other Related Party Transactions.”
|
2013
|
2012
|
Changes
|
% Change
|
|||||||||||||
Total Revenues
|
$ | 14,977,619 | $ | 17,068,036 | $ | (2,090,417 | ) | -12.25 | % | |||||||
Less Payroll Reimbursements from Related Parties
|
- | (2,231,712 | ) | 2,231,712 | -100.00 | % | ||||||||||
Total Revenues
|
14,977,619 | 14,836,324 | 141,295 | 0.95 | % | |||||||||||
Operating Expenses without Payroll Costs Related to Management Contracts
|
(15,100,697 | ) | (14,760,882 | ) | (339,815 | ) | 2.30 | % | ||||||||
Operating Income (Loss) without Payroll Costs Related to Management Contracts
|
(123,078 | ) | 75,442 | (198,520 | ) | -263.14 | % | |||||||||
Interest Income
|
8,937 | 3,721 | 5,216 | 140.18 | % | |||||||||||
Interest Expense
|
(961,709 | ) | (1,527,507 | ) | 565,798 | -37.04 | % | |||||||||
Consolidated Loss before Payroll Costs Related to Management Contracts
|
(1,075,850 | ) | (1,448,344 | ) | 372,494 | -25.72 | % |
Hotel Property Asset Values as of January 31, 2013
|
||||||||||||
Hotel Property
|
Net Book Value
|
Mortgage Balance
|
Listed Asking Price
|
|||||||||
Albuquerque
|
$
|
1,329,496
|
$
|
1,227,744
|
$
|
6,000,000
|
||||||
Ontario
|
5,917,780
|
6,323,592
|
16,900,000
|
|||||||||
Tucson Foothills
|
4,205,144
|
1,706,278
|
12,500,000
|
|||||||||
Tucson City Center
|
7,773,196
|
5,227,835
|
10,600,000
|
|||||||||
Yuma
|
5,461,164
|
5,469,475
|
14,000,000
|
|||||||||
Totals
|
$
|
24,686,780
|
$
|
19,954,924
|
$
|
60,000,000
|
·
|
local, national or international economic and business conditions, including, without limitation, conditions that may, or may continue to, affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate;
|
·
|
fluctuations in hotel occupancy rates;
|
·
|
changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise;
|
·
|
seasonality of our business;
|
·
|
our ability to sell any of our Hotels at market value, listed sale price or at all;
|
·
|
interest rate fluctuations;
|
·
|
changes in governmental regulations, including federal income tax laws and regulations;
|
·
|
competition;
|
·
|
any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties;
|
·
|
insufficient resources to pursue our current strategy;
|
·
|
concentration of our investments in the InnSuites Hotels® brand;
|
·
|
loss of membership contracts;
|
·
|
real estate and hospitality market conditions;
|
·
|
hospitality industry factors;
|
·
|
the Trust’s ability to remain listed on the NYSE MKT;
|
·
|
effectiveness of the Trust’s software program;
|
·
|
our ability to meet present and future debt service obligations;
|
·
|
our inability to refinance or extend the maturity of indebtedness at, prior to, or after the time it matures;
|
·
|
terrorist attacks or other acts of war;
|
·
|
outbreaks of communicable diseases;
|
·
|
natural disasters;
|
·
|
data breaches; and
|
·
|
loss of key personnel.
|
Reports of Independent Registered Public Accounting Firms
|
19
|
|
Consolidated Balance Sheets – January 31, 2013 and 2012
|
21
|
|
Consolidated Statements of Operations – Years Ended January 31, 2013 and 2012
|
22
|
|
Consolidated Statements of Shareholders’ Equity – Years Ended January 31, 2013 and 2012
|
23
|
|
Consolidated Statements of Cash Flows – Years Ended January 31, 2013 and 2012
|
24
|
|
Notes to the Consolidated Financial Statements – Years Ended January 31, 2013 and 2012
|
25
|
Schedule III – Real Estate and Accumulated Depreciation
|
39
|
|
Schedule IV – Mortgage Loans on Real Estate
|
41
|
January 31,
|
||||||||
2013
|
2012
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and Cash Equivalents ($0 and $133,637 of variable interest entity (VIE), Note 6)
|
$ | 493,953 | $ | 983,424 | ||||
Restricted Cash ($0 and $31,300 of VIE)
|
13,783 | 136,808 | ||||||
Accounts Receivable, including $81,176 and $102,358 from related parties, net of Allowance for Doubtful Accounts of $34,415 and $38,159, as of January 31, 2013 and 2012, respectively ($0 and $12,653 of VIE)
|
568,186 | 619,916 | ||||||
Prepaid Expenses and Other Current Assets ($0 and $23,366 of VIE)
|
268,399 | 242,366 | ||||||
Total Current Assets
|
1,344,321 | 1,982,514 | ||||||
Hotel Properties, net ($0 and $1,415,155 of VIE)
|
24,686,780 | 25,141,748 | ||||||
Property, Plant and Equipment, net
|
112,977 | 149,377 | ||||||
Deferred Finance Costs and Other Assets ($0 and $15,858 of VIE)
|
137,884 | 108,619 | ||||||
TOTAL ASSETS
|
$ | 26,281,962 | $ | 27,382,258 | ||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES
|
||||||||
Current Liabilities:
|
||||||||
Accounts Payable and Accrued Expenses ($0 and $112,643 of VIE)
|
$ | 2,298,497 | $ | 2,414,763 | ||||
Current Portion of Mortgage Notes Payable
|
1,208,365 | 2,291,247 | ||||||
Current Portion of Notes Payable to Bank
|
450,000 | - | ||||||
Current Portion of Other Notes Payable
|
189,799 | 212,692 | ||||||
Total Current Liabilities
|
4,146,661 | 4,918,702 | ||||||
Mortgage Notes Payable
|
18,746,559 | 18,980,009 | ||||||
Other Notes Payable
|
162,457 | 337,960 | ||||||
TOTAL LIABILITIES
|
23,055,677 | 24,236,671 | ||||||
COMMITMENTS AND CONTINGENCIES (SEE NOTE 19)
|
||||||||
SHAREHOLDERS' EQUITY
|
||||||||
Shares of Beneficial Interest, without par value, unlimited authorization; 16,804,746 and 16,786,746 shares issued and 8,375,207 and 8,442,338 shares outstanding at January 31, 2013 and 2012, respectively
|
14,940,048 | 14,646,261 | ||||||
Treasury Stock, 8,429,539 and 8,344,408 shares held at January 31, 2013 and 2012, respectively
|
(11,877,886 | ) | (11,682,575 | ) | ||||
TOTAL TRUST SHAREHOLDERS' EQUITY
|
3,062,162 | 2,963,686 | ||||||
NON-CONTROLLING INTEREST
|
164,123 | 181,901 | ||||||
TOTAL EQUITY
|
3,226,285 | 3,145,587 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 26,281,962 | $ | 27,382,258 |
YEARS ENDED JANUARY 31,
|
||||||||
2013
|
2012
|
|||||||
REVENUE
|
||||||||
Room
|
$
|
13,436,362
|
$
|
13,523,680
|
||||
Food and Beverage
|
1,068,025
|
836,984
|
||||||
Telecommunications
|
—
|
1,882
|
||||||
Other
|
210,570
|
242,322
|
||||||
Management and Trademark Fees, including $248,234 and $216,963 from related parties for 2013 and 2012, respectively
|
262,662
|
231,456
|
||||||
Payroll Reimbursements from Related Parties
|
—
|
2,231,712
|
||||||
TOTAL REVENUE
|
14,977,619
|
17,068,036
|
||||||
OPERATING EXPENSES
|
||||||||
Room
|
3,759,867
|
3,546,069
|
||||||
Food and Beverage
|
1,006,975
|
869,574
|
||||||
Telecommunications
|
51,607
|
45,720
|
||||||
General and Administrative
|
2,977,901
|
3,102,388
|
||||||
Sales and Marketing
|
1,083,503
|
1,110,495
|
||||||
Repairs and Maintenance
|
1,430,524
|
1,430,645
|
||||||
Hospitality
|
808,064
|
790,634
|
||||||
Utilities
|
1,263,748
|
1,200,192
|
||||||
Hotel Property Depreciation
|
1,754,289
|
1,734,734
|
||||||
Real Estate and Personal Property Taxes, Insurance and Ground Rent
|
954,232
|
917,878
|
||||||
Other
|
9,987
|
12,553
|
||||||
Payroll Costs Related to Management Contracts
|
—
|
2,231,712
|
||||||
TOTAL OPERATING EXPENSES
|
15,100,697
|
16,992,594
|
||||||
OPERATING INCOME (LOSS)
|
(123,078
|
)
|
75,442
|
|||||
Interest Income
|
8,937
|
3,721
|
||||||
TOTAL OTHER INCOME
|
8,937
|
3,721
|
||||||
Interest on Mortgage Notes Payable
|
909,366
|
1,490,995
|
||||||
Interest on Notes Payable to Banks
|
17,613
|
1,048
|
||||||
Interest on Other Notes Payable
|
34,730
|
35,464
|
||||||
TOTAL INTEREST EXPENSE
|
961,709
|
1,527,507
|
||||||
CONSOLIDATED LOSS BEFORE INCOME TAX PROVISION
|
(1,075,850
|
)
|
(1,448,344
|
)
|
||||
Income Tax Provision
|
—
|
—
|
||||||
CONSOLIDATED NET LOSS
|
$
|
(1,075,850
|
)
|
$
|
(1,448,344
|
)
|
||
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | (69,705 | ) | $ | (369,603 | ) | ||
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS
|
$
|
(1,006,145
|
)
|
$
|
(1,078,741
|
)
|
||
NET LOSS PER SHARE – Basic and Diluted
|
$
|
(0.12
|
)
|
$
|
(0.13
|
)
|
||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – Basic and Diluted
|
8,415,542
|
8,511,730
|
||||||
CASH DIVIDENDS PER SHARE
|
$
|
0.01
|
$
|
0.01
|
Trust Shareholders' Equity
|
||||||||||||||||||||||||||||
Shares of Beneficial Interest
|
Treasury Stock
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Trust Shareholder Equity
|
Non-Controlling Interest
|
Amount
|
||||||||||||||||||||||
Balance, January 31, 2011
|
8,546,793 | $ | 15,412,926 | 8,239,953 | $ | (11,456,375 | ) | 3,956,551 | $ | (675,950 | ) | $ | 3,280,601 | |||||||||||||||
Net Loss
|
- | (1,078,741 | ) | - | - | (1,078,741 | ) | (369,603 | ) | (1,448,344 | ) | |||||||||||||||||
Dividends
|
- | (84,430 | ) | - | - | (84,430 | ) | - | (84,430 | ) | ||||||||||||||||||
Purchase of Treasury Stock
|
(140,455 | ) | - | 140,455 | (276,253 | ) | (276,253 | ) | - | (276,253 | ) | |||||||||||||||||
Repurchase of Partnership Units
|
- | (130,700 | ) | - | - | (130,700 | ) | - | (130,700 | ) | ||||||||||||||||||
Shares of Beneficial Interest Issues for Services Rendered
|
36,000 | 1,787 | (36,000 | ) | 50,053 | 51,840 | - | 51,840 | ||||||||||||||||||||
Sale of Ownership Interests in Subsidiary
|
- | 1,317,579 | - | - | 1,317,579 | 1,096,976 | 2,414,555 | |||||||||||||||||||||
Repurchase of Ownership Interests in Subsidiary
|
- | (761,888 | ) | - | - | (761,888 | ) | 361,888 | (400,000 | ) | ||||||||||||||||||
Distribution to Non-Controlling Interests
|
- | 11,863 | - | - | 11,863 | (273,545 | ) | (261,682 | ) | |||||||||||||||||||
Reallocation of Non-Controlling Interests
|
- | (42,135 | ) | - | - | (42,135 | ) | 42,135 | - | |||||||||||||||||||
Balance, January 31, 2012
|
8,442,338 | 14,646,261 | 8,344,408 | (11,682,575 | ) | 2,963,686 | 181,901 | 3,145,587 | ||||||||||||||||||||
Net Loss
|
- | (1,006,145 | ) | - | - | (1,006,145 | ) | (69,705 | ) | (1,075,850 | ) | |||||||||||||||||
Dividends
|
- | (83,846 | ) | - | - | (83,846 | ) | - | (83,846 | ) | ||||||||||||||||||
Purchase of Treasury Stock
|
(85,131 | ) | - | 85,131 | (195,311 | ) | (195,311 | ) | - | (195,311 | ) | |||||||||||||||||
Repurchase of Partnership Units
|
- | (16,025 | ) | - | - | (16,025 | ) | - | (16,025 | ) | ||||||||||||||||||
Shares of Beneficial Interest Issues for Services Rendered
|
18,000 | 39,600 | - | - | 39,600 | - | 39,600 | |||||||||||||||||||||
Sale of Ownership Interests in Subsidiary
|
- | 1,672,342 | - | - | 1,672,342 | 546,252 | 2,218,594 | |||||||||||||||||||||
Repurchase of Ownership Interests in Subsidiary
|
- | (305,734 | ) | - | - | (305,734 | ) | (9,266 | ) | (315,000 | ) | |||||||||||||||||
Distribution to Non-Controlling Interests
|
- | (14,875 | ) | - | - | (14,875 | ) | (476,589 | ) | (491,464 | ) | |||||||||||||||||
Reallocation of Non-Controlling Interests
|
- | 8,470 | - | - | 8,470 | (8,470 | ) | - | ||||||||||||||||||||
Balance, January 31, 2013
|
8,375,207 | $ | 14,940,048 | 8,429,539 | $ | (11,877,886 | ) | $ | 3,062,162 | $ | 164,123 | $ | 3,226,285 |
YEARS ENDED JANUARY 31,
|
||||||||
2013
|
2012
|
|||||||
CASH FLOW FROM OPERATING ACTIVITIES
|
||||||||
Consolidated Net Loss
|
$
|
(1,075,850
|
)
|
$
|
(1,448,344
|
)
|
||
Adjustments to Reconcile Consolidated Net Loss to Net Cash Provided by Operating Activities:
|
||||||||
Stock-Based Compensation
|
39,600
|
51,840
|
||||||
Provision for Uncollectible Receivables
|
(3,745
|
)
|
(2,837
|
)
|
||||
Hotel Property Depreciation
|
1,754,289
|
1,734,734
|
||||||
Loss on Disposal Sale of Hotel Property
|
1,956
|
1,253
|
||||||
Amortization of Deferred Loan Fees
|
91,988
|
33,244
|
||||||
Changes in Assets and Liabilities:
|
||||||||
Prepaid Expenses and Other Assets
|
(120,001
|
)
|
200,677
|
|||||
Accounts Receivable
|
55,475
|
43,945
|
||||||
Accounts Payable and Accrued Expenses
|
124,436
|
321,535
|
||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
868,148
|
936,047
|
||||||
CASH FLOW FROM INVESTING ACTIVITIES
|
||||||||
Improvements and Additions to Hotel Properties
|
(1,264,878
|
)
|
(969,963
|
)
|
||||
Change in Restricted Cash
|
123,025
|
366
|
||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(1,141,853
|
)
|
(969,597
|
)
|
||||
CASH FLOW FROM FINANCING ACTIVITIES
|
||||||||
Deferred Loan Fees
|
(27,285
|
)
|
—
|
|||||
Principal Payments on Mortgage Notes Payable
|
(2,057,032
|
)
|
(809,460
|
)
|
||||
Net Proceeds from Refinancing of Mortgage Notes Payable
|
500,000
|
—
|
||||||
Payments on Notes Payable to Banks
|
(1,812,432
|
)
|
(641,711
|
)
|
||||
Borrowings on Notes Payable to Banks
|
2,262,432
|
641,711
|
||||||
Proceeds from Sale of Non-Controlling Ownership Interests in Subsidiary
|
2,218,594
|
2,414,555
|
||||||
Repurchase of Subsidiary Equity from Related Party
|
(315,000
|
)
|
(400,000
|
)
|
||||
Distributions to Minority Interest Holders
|
(491,464
|
)
|
(261,682
|
)
|
||||
Repurchase of Partnership Units
|
(525
|
)
|
(1,044
|
)
|
||||
Repurchase of Treasury Stock
|
(187,311
|
)
|
(151,235
|
)
|
||||
Payment of Dividends
|
(83,846
|
)
|
(84,430
|
)
|
||||
Borrowings on Other Notes Payable
|
—
|
8,250
|
||||||
Payments on Other Notes Payable
|
(221,897
|
)
|
(192,824
|
)
|
||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(215,766
|
)
|
522,130
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(489,471
|
)
|
488,580
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
983,424
|
494,844
|
||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
493,953
|
$
|
983,424
|
Fiscal Year
|
Balance at the
Beginning of |
Charged to
Expense |
Deductions
|
Balance at the
End of Year |
||||||||||||
2012
|
$
|
40,997
|
$
|
790
|
$
|
(3,628
|
)
|
$
|
38,159
|
|||||||
2013
|
$
|
38,159
|
$
|
3,831
|
$
|
(7,575
|
)
|
$
|
34,415
|
Restricted Shares
|
||||||||
Shares
|
Weighted-Average Grant Date Fair Value
|
|||||||
Balance of unvested awards at January 31, 2011
|
—
|
$
|
—
|
|||||
Granted
|
36,000
|
$
|
1.44
|
|||||
Vested
|
(36,000
|
)
|
$
|
1.44
|
||||
Forfeited
|
—
|
—
|
||||||
Balance of unvested awards at January 31, 2012
|
—
|
$
|
—
|
|||||
Granted
|
18,000
|
$
|
2.20
|
|||||
Vested
|
(18,000
|
)
|
$
|
2.20
|
||||
Forfeited
|
—
|
—
|
||||||
Balance of unvested awards at January 31, 2013
|
—
|
—
|
|
·
|
Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured;
|
|
·
|
Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and / or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are level 2 valuation techniques.
|
|
·
|
Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect a company’s own judgments about the assumptions that market participants would use in pricing an asset or liability.
|
2013
|
2012
|
|||||||
Land
|
$
|
7,005
|
$
|
7,005
|
||||
Building and improvements
|
75,662
|
75,662
|
||||||
Furniture, fixtures and equipment
|
370,408
|
459,059
|
||||||
Total property, plant and equipment
|
453,075
|
541,726
|
||||||
Less accumulated depreciation
|
(340,098
|
)
|
(392,349
|
)
|
||||
Property, Plant and Equipment, net
|
$
|
112,977
|
$
|
149,377
|
2013
|
2012
|
|||||||
Land
|
$ | 2,817,515 | $ | 2,817,515 | ||||
Building and improvements
|
34,016,176 | 34,567,267 | ||||||
Furniture, fixtures and equipment
|
4,990,808 | 5,337,765 | ||||||
Total hotel properties
|
41,824,499 | 42,722,547 | ||||||
Less accumulated depreciation
|
(17,230,102 | ) | (17,580,799 | ) | ||||
Hotel Properties in Service, net
|
24,594,397 | 25,141,748 | ||||||
Construction in progress
|
92,383 | - | ||||||
Hotel properties, net
|
$ | 24,686,780 | $ | 25,141,748 |
2013
|
2012
|
|||||||
Prepaid Insurance
|
$
|
51,089
|
$
|
69,908
|
||||
Tax and Insurance Escrow
|
110,422
|
113,709
|
||||||
Other Prepaid Expenses and Current Assets
|
106,888
|
58,749
|
||||||
Total Prepaid Expenses and Current Assets
|
$
|
268,399
|
$
|
242,366
|
2013
|
2012
|
|||||||
Accounts Payable
|
$
|
757,086
|
$
|
634,926
|
||||
Accrued Salaries and Wages
|
180,895
|
385,552
|
||||||
Accrued Vacation
|
144,552
|
131,036
|
||||||
Sales Tax Payable
|
314,605
|
212,813
|
||||||
Income Tax Payable
|
25,355
|
27,000
|
||||||
Accrued Interest Payable
|
49,579
|
293,511
|
||||||
Advanced Customer Deposits
|
181,093
|
122,075
|
||||||
Accrued Property Taxes
|
248,012
|
256,997
|
||||||
Accrued Land Lease
|
108,437
|
92,840
|
||||||
Accrued Other
|
288,883
|
258,013
|
||||||
Total Accounts Payable and Accrued Liabilities
|
$
|
2,298,497
|
$
|
2,414,763
|
2013
|
2012
|
|||||||
Mortgage note payable, due in monthly installments of $32,419 at an interest rate of 5.0% per year, through August 1, 2022, plus a balloon payment of $4,112,498 in September 2022, secured by the Yuma property with a carrying value of $5.5 million at January 31, 2013.
|
$
|
5,469,475
|
$
|
—
|
||||
Mortgage note payable, due in monthly installments of $48,738, including interest at 8.0% per year, through May 1, 2016, secured by the Tucson Foothills property with a carrying value of $4.2 million at January 31, 2013.
|
1,706,278
|
2,135,796
|
||||||
Mortgage note payable, due in monthly installments of $31,701, including interest at 5.0% per year, through January 14, 2015, plus a balloon payment of $5,630,315 in January 2015, secured by the Ontario property with a carrying value of $5.9 million at January 31, 2013.
|
6,323,592
|
7,405,289
|
||||||
Mortgage note payable, due in monthly installments of $16,032, including interest at 7.75% per year, through November 1, 2021, secured by the Albuquerque property with a carrying value of $1.3 million at January 31, 2013. At the discretion of the lender, the interest rate can be increased to the market rate, as determined by lender, on November 1, 2014.
|
1,227,744
|
1,321,015
|
||||||
Mortgage note payable, due in variable monthly installments ($29,776 as of January 31, 2013) including interest at prime rate (3.25% per year as of January 31, 2013), through January 28, 2015, plus a balloon payment of $4,874,618 in January 2015, secured by the Tucson St. Mary’s property with a carrying value of $7.8 million at January 31, 2013.
|
5,227,835
|
5,409,156
|
||||||
Mortgage note payable, due in interest only monthly payments of $23,333 at an interest rate of 7.0% per year, through December 30, 2013, plus a balloon payment of $4,023,333 in December 2013, secured by the Yuma property. Satisfied in full in fiscal year 2013.
|
$
|
—
|
$
|
4,000,000
|
||||
Mortgage note payable, due in interest only monthly payments of $6,667 at an interest rate of 8.0% per year, through December 30, 2013, plus a balloon payment of $1,006,667 in December 2013, secured by the Yuma property. Satisfied in full in fiscal year 2013.
|
—
|
1,000,000
|
||||||
Totals
|
$
|
19,954,924
|
$
|
21,271,256
|
FISCAL YEAR
|
MORTGAGES
|
OTHER NOTES
PAYABLE
|
NOTES PAYABLE TO BANK
|
TOTAL
|
||||||||||||
2014
|
$ | 1,208,365 | $ | 189,799 | $ | 450,000 | $ | 1,848,164 | ||||||||
2015
|
6,106,484 | 74,237 | — | 6,180,721 | ||||||||||||
2016
|
6,439,738 | 55,090 | — | 6,494,828 | ||||||||||||
2017
|
451,232 | 33,130 | — | 484,362 | ||||||||||||
2018
|
277,300 | — | — | 277,300 | ||||||||||||
Thereafter
|
5,471,805 | — | — | 5,471,805 | ||||||||||||
$ | 19,954,924 | $ | 352,256 | $ | 450,000 | $ | 20,757,180 |
Total and net deferred income tax assets at January 31,
|
2013
|
2012
|
||||||
Net operating loss carryforwards
|
$
|
4,622,000
|
$
|
4,844,000
|
||||
Bad debt allowance
|
(17,000
|
)
|
(11,000)
|
|||||
Accrued expenses
|
1,496,000
|
1,018,000
|
||||||
Prepaid insurance
|
13,000
|
13,000
|
||||||
Alternative minimum tax credit
|
61,000
|
61,000
|
||||||
Total deferred income tax assets
|
6,175,000
|
5,925,000
|
||||||
Deferred income tax liability associated with book/tax differences in hotel properties
|
(2,263,000
|
)
|
(2,731,000
|
)
|
||||
Net deferred income tax asset
|
3,912,000
|
3,194,000
|
||||||
Valuation allowance
|
(3,912,000
|
)
|
(3,194,000
|
)
|
||||
Net deferred income tax asset
|
$
|
-
|
$
|
-
|
Income taxes for the year ended January 31,
|
2013
|
2012
|
||||||
Current income tax provision (benefit)
|
$
|
-
|
$
|
-
|
||||
Deferred income tax benefit (provision)
|
-
|
-
|
||||||
Net income tax provision (benefit)
|
$
|
-
|
$
|
-
|
Federal statutory rates
|
$
|
(406,000
|
)
|
(34
|
%)
|
|||
State income taxes
|
(88,000
|
)
|
(7
|
%)
|
||||
Change in valuation allowance
|
718,000
|
60
|
%
|
|||||
True-ups to prior year return
|
(237,000
|
)
|
(20
|
%)
|
||||
Other
|
13,000
|
1
|
%
|
|||||
Effective rate
|
$
|
0
|
0
|
%
|
Federal statutory rates
|
$
|
(428,000
|
)
|
(34
|
%)
|
|||
State income taxes
|
(89,000
|
)
|
(7
|
%)
|
||||
Change in valuation allowance
|
1,137,000
|
90
|
%
|
|||||
True-ups to prior year return
|
(620,000)
|
(49
|
%)
|
|||||
Other
|
0
|
0
|
%
|
|||||
Effective rate
|
$
|
0
|
0
|
%
|
2013
|
2012
|
|||||||||||||||
CARRYING
AMOUNT
|
FAIR
VALUE
|
CARRYING
AMOUNT
|
FAIR
VALUE
|
|||||||||||||
Mortgage notes payable
|
$
|
19,954,924
|
$
|
18,390,891
|
$
|
21,271,256
|
$
|
20,593,950
|
||||||||
Notes payable to banks
|
$
|
450,000
|
$
|
450,000
|
$
|
—
|
$
|
—
|
||||||||
Other notes payable
|
$
|
352,256
|
$
|
354,308
|
$
|
550,652
|
$
|
542,824
|
2013
|
2012
|
|||||||
Cash paid for interest
|
$
|
961,709
|
$
|
1,527,507
|
||||
Promissory notes issued by the Trust to acquire Class A Partnership units
|
$
|
15,500
|
$
|
129,656
|
||||
Promissory notes issued by the Trust to acquire Shares of Beneficial Interest
|
$
|
8,000
|
$
|
125,017
|
Fiscal Year Ending
|
||||
2014
|
$
|
253,321
|
||
2015
|
233,721
|
|||
2016
|
212,121
|
|||
2017
|
212,121
|
|||
2018
|
212,121
|
|||
Thereafter
|
5,014,895
|
|||
Total
|
$
|
6,138,300
|
Initial Cost to Tenant
|
Cost Capitalized Subsequent
to Acquisition
|
Gross Amounts at Which Carried
at Close of Period
|
||||||||||||||||||||||||||
Properties
|
Encumbrances
|
Land
|
Building and Improvements
|
Land
|
Building and Improvements
|
Land
|
Building and Improvements
|
|||||||||||||||||||||
InnSuites Hotels and Suites Tucson, Catalina Foothills Best Western Tucson, Arizona
|
$ | 1,706,278 | $ | - | $ | 4,220,820 | $ | - | $ | 2,299,332 | $ | - | $ | 6,520,152 | ||||||||||||||
InnSuites Hotels and Suites Yuma Yuma, Arizona
|
5,469,475 | 251,649 | 4,983,292 | 53,366 | 2,544,040 | 305,015 | 7,527,332 | |||||||||||||||||||||
Best Western Airport Ontario Hotel and Suites Ontario, California
|
6,323,592 | 1,633,064 | 5,450,872 | - | 1,577,883 | 1,633,064 | 7,028,755 | |||||||||||||||||||||
InnSuites Hotels and Suites Tucson St. Mary's Tucson, Arizona
|
5,227,835 | 900,000 | 9,166,549 | (20,564 | ) | 1,643,590 | 879,436 | 10,810,139 | ||||||||||||||||||||
InnSuites Hotels and Suites Albuquerque Airport Best Western Albuquerque, New Mexico
|
1,227,744 | - | 1,903,970 | - | 225,828 | - | 2,129,798 | |||||||||||||||||||||
InnSuites Hospitality Trust Phoenix, Arizona
|
- | 7,005 | 75,662 | - | - | 7,005 | 75,662 | |||||||||||||||||||||
$ | 19,954,924 | $ | 2,791,718 | $ | 25,801,165 | $ | 32,802 | $ | 8,290,673 | $ | 2,824,520 | $ | 34,091,838 |
Gross Land and Building
|
Accumulated Depreciation
|
Net Book Value Land and Buildings and Improvements
|
Date of Construction
|
Date of Acquisition
|
Depreciation in Income Statement is Computed (years)
|
|||||||||||||||||||||
InnSuites Hotels and Suites Tucson, Catalina Foothills Best Western Tucson, Arizona
|
$ | 6,520,152 | $ | 2,609,344 | $ | 3,910,808 | 1981 | 1998 | 5 | - | 40 | |||||||||||||||
InnSuites Hotels and Suites Yuma Yuma, Arizona
|
7,832,347 | 2,846,333 | 4,986,014 | 1982 | 1998 | 5 | - | 40 | ||||||||||||||||||
Best Western Airport Ontario Hotel and Suites Ontario, California
|
8,661,819 | 3,108,508 | 5,553,311 | 1990 | 1998 | 5 | - | 40 | ||||||||||||||||||
InnSuites Hotels and Suites Tucson St. Mary's Tucson, Arizona
|
11,689,575 | 4,390,892 | 7,298,683 | 1960 | 1998 | 5 | - | 40 | ||||||||||||||||||
InnSuites Hotels and Suites Albuquerque Airport Best Western Albuquerque, New Mexico
|
2,129,798 | 961,488 | 1,168,310 | 1975 | 2000 | 5 | - | 40 | ||||||||||||||||||
InnSuites Hospitality Trust Phoenix, Arizona
|
82,667 | 20,062 | 62,605 | 2004 | 2004 |
33
|
||||||||||||||||||||
$ | 36,916,358 | $ | 13,936,627 | $ | 22,979,731 |
2013
|
2012
|
|||||||
Land
|
$
|
1,856,788
|
$
|
1,856,788
|
||||
Buildings and improvements
|
18,863,378
|
19,414,468
|
||||||
$
|
20,720,166
|
$
|
21,271,256
|
Balance at January 31, 2011
|
$
|
37,199,045
|
||
Improvement to Hotel Properties
|
301,629
|
|||
Disposal of Property Improvements
|
(33,226
|
)
|
||
Balance at January 31, 2012
|
$
|
37,467,448
|
||
Improvement to Hotel Properties
|
447,289
|
|||
Disposal of Property Improvements
|
(998,379
|
)
|
||
Balance at January 31, 2013
|
$
|
36,916,358
|
Description
|
Interest
Rate
|
Maturity Date
|
Periodic Payment Term
|
Face
Amount of
Mortgages
|
1/31/13
Carrying
Amount
|
||||||||||
Mortgage Note Secured by Albuquerque, NM property
|
7.75
|
%
|
11/1/2021
|
144 monthly installments
|
$
|
1,500,000
|
$
|
1,227,744
|
|||||||
Mortgage Note Secured by Ontario, CA property
|
5.00
|
%
|
1/11/2015
|
35 monthly installments, with balloon payment of $5,630,315 due at maturity
|
9,000,000
|
6,323,592
|
|||||||||
Mortgage Note Secured by Yuma, AZ property
|
5.00
|
%
|
9/01/2022
|
119 monthly installments, with balloon payment of $4,112,498 at maturity
|
5,500,000
|
5,469,475
|
|||||||||
Mortgage Note Secured by Tucson St. Mary’s, AZ property
|
Prime rate
|
1/28/2015
|
83 monthly installments, with balloon payment of $4,874,618 due at maturity
|
6,050,000
|
5,227,835
|
||||||||||
Mortgage Note Secured by Tucson Oracle, AZ property
|
8.00
|
%
|
5/1/2016
|
180 monthly installments
|
5,100,000
|
1,706,278
|
|||||||||
$
|
27,150,000
|
$
|
19,954,924
|
Balance at January 31, 2011
|
$ |
22,080,716
|
||
Deductions during period:
|
||||
Principal payments
|
(809,460
|
)
|
||
Balance at January 31, 2012
|
21,271,256
|
|||
Additions during period:
|
||||
Proceeds from refinancing
|
500,000
|
|||
Accrued interest reclassified to note payable
|
240,700
|
|||
Deductions during period:
|
||||
Principal payments
|
(2,057,032
|
)
|
||
Balance at January 31, 2013
|
S |
19,954,924
|
Plan Category
|
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(a)
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
|
Number of Securities
Remaining
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
0 | $ | N/A | 1,000,000 | (1) | |||||||
Equity compensation plans not approved by security holders
|
None
|
None
|
None
|
Financial Statements/Schedules of InnSuites Hospitality Trust
|
|||
1.
|
Report of Independent Registered Public Accounting Firm – January 31, 2013
|
19
|
|
2.
|
Report of Independent Registered Public Accounting Firm – January 31, 2012
|
20
|
|
3.
|
Consolidated Balance Sheets – January 31, 2013 and 2012
|
21
|
|
4.
|
Consolidated Statements of Operations – Years Ended January 31, 2013 and 2012
|
22
|
|
5.
|
Consolidated Statements of Shareholders’ Equity – Years Ended January 31, 2013 and 2012
|
23
|
|
6.
|
Consolidated Statements of Cash Flows – Years Ended January 31, 2013 and 2012
|
24
|
|
7.
|
Notes to Consolidated Financial Statements – Years Ended January 31, 2013 and 2012
|
25
|
|
8.
|
Schedule III – Real Estate and Accumulated Depreciation
|
39
|
|
9.
|
Schedule IV – Mortgage Loans on Real Estate
|
41
|
(a)(3)
|
Exhibit List
|
Exhibit No.
|
Exhibit
|
|
3.1
|
Second Amended and Restated Declaration of Trust of InnSuites Hospitality Trust dated June 16, 1998, as further amended on July 12, 1999 (incorporated by reference to Exhibit 3.1 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended January 31, 2005 filed with the Securities and Exchange Commission on May 16, 2005).
|
|
10.1
|
First Amended and Restated Agreement of Limited Partnership of RRF Limited Partnership dated January 31, 1998 (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-2, filed with the Securities and Exchange Commission on September 8, 1998).
|
|
10.2*
|
Form of Indemnification Agreement between InnSuites Hospitality Trust and each Trustee and executive officer (incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended January 31, 2006 filed with the Securities and Exchange Commission on May 12, 2006).
|
|
10.3*
|
InnSuites Hospitality Trust 1997 Stock Incentive and Option Plan (incorporated by reference to Exhibit 4(a) of the Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on September 19, 2000).
|
|
10.4
|
Line of Credit Agreement, dated August 1, 2010, by and between RRF Limited Partnership and Rare Earth Financial, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2010 filed with the Securities and Exchange Commission on September 3, 2010).
|
|
10.5
|
Revolving Bank Line of Credit Promissory Note, dated November 23, 2010, executed by InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, in favor of RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2010 filed with the Securities and Exchange Commission on December 9, 2010).
|
|
10.6
|
Revolving Bank Line of Credit Business Loan Agreement, dated November 23, 2010, by and among InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2010 filed with the Securities and Exchange Commission on December 9, 2010).
|
|
10.7
|
Change in Terms Agreement for Bank Line of Credit, dated May 12, 2011, executed by InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and James F. Wirth, as Guarantor, in favor of RepublicBankAZ N.A., as Lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2011 filed with the Securities and Exchange Commission on June 3, 2011).
|
|
10.8 | Change in Terms Agreement for Bank Line of Credit, dated May 25, 2012, executed by InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and James F. Wirth, as Guarantor, in favor of RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.11 of the Registrant’s Annual Report on Form 10-K/A for the fiscal year ended January 31, 2012 filed with the Securities and Exchange Commission on May 30, 2012). | |
10.9 | Change in Terms Agreement for Bank Line of Credit, dated June 22, 2012, executed by InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and James F. Wirth, as Guarantor, in favor of RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 25, 2012). | |
10.10 | Addendum, dated August 27, 2012, to Business Loan Agreement, dated November 23, 2010, by and among InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2012 filed with the Securities and Exchange Commission on September 14, 2012). | |
10.11 | Change in Terms Agreement for Bank Line of Credit, dated September 14, 2012, executed by InnSuites Hospitality Trust, Yuma Hospitality Properties Limited Partnership and RRF Limited Partnership, as Borrowers, and James F. Wirth, as Guarantor, in favor of RepublicBankAZ, N.A., as Lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2012 filed with the Securities and Exchange Commission on December 17, 2012). |
10.12 | Business Loan Agreement, dated as of August 24, 2012, by and among Yuma Hospitality Properties Limited Partnership, as Borrower, and 1st Bank Yuma, as Lender, guaranteed by InnSuites Hospitality Trust (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2012 filed with the Securities and Exchange Commission on December 17, 2012). | |
10.13 | Promissory Note, dated as of August 24, 2012, issued by Yuma Hospitality Properties Limited Partnership, as Borrower, in favor of 1st Bank Yuma, as Lender, executed by Yuma Hospitality Properties Limited Partnership and InnSuites Hospitality Trust (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2012 filed with the Securities and Exchange Commission on December 17, 2012). | |
10.14 | Albuquerque Suite Hospitality, LLC Restructuring Agreement, dated August 30, 2010, by and among RRF Limited Partnership, Rare Earth Financial, LLC, InnSuites Hospitality Trust, James F. Wirth, and Albuquerque Suite Hospitality, LLC (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2010 filed with the Securities and Exchange Commission on September 3, 2010). | |
10.15
|
Tucson Hospitality Properties LP Restructuring Agreement, dated February 17, 2011, by and among Rare Earth Financial, LLC, RRF Limited Partnership, InnSuites Hospitality Trust, Tucson Hospitality Properties LP, and James F. Wirth (incorporated by reference to Exhibit 10.1 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011 filed with the Securities and Exchange Commission on April 29, 2011).
|
|
10.16 | Ontario Hospitality Properties LP Restructuring Agreement, dated February 29, 2012, by and among Rare Earth Financial, LLC, RRF Limited Partnership, InnSuites Hospitality Trust, Ontario Hospitality Properties LP, and James F. Wirth (incorporated by reference to Exhibit 10.10 of the Registrant’s Annual report on Form 10-K for the fiscal year ended January 31, 2012 filed with the Securities and Exchange Commission on April 30, 2012). | |
10.17*
|
Employment Offer Letter from InnSuites Hospitality Trust to Adam B. Remis (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 18, 2013).
|
|
21
|
Subsidiaries of the Registrant.
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
XBRL Exhibits: **
|
|
101.INS
|
XBRL Instance Document**
|
|
101.SCH
|
XBRL Schema Document**
|
|
101.CAL
|
XBRL Calculation Linkbase Document**
|
|
101.LAB
|
XBRL Labels Linkbase Document**
|
|
101.PRE
|
XBRL Presentation Linkbase Document**
|
|
101.DEF
|
XBRL Definition Linkbase Document**
|
*
|
Management contract or compensatory plan or arrangement.
|
**
|
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|
INNSUITES HOSPITALITY TRUST
|
||
Dated: April 30, 2013
|
By:
|
/s/ James F. Wirth
|
James F. Wirth, Chairman and
Chief Executive Officer
(Principal Executive Officer)
|
||
Dated: April 30, 2013
|
By:
|
/s/ Adam B. Remis
|
Adam B. Remis, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Dated: April 30, 2013
|
By:
|
/s/ James F. Wirth
|
James F. Wirth, Chairman and
Chief Executive Officer
(Principal Executive Officer)
|
||
Dated: April 30, 2013
|
By:
|
/s/ Adam B. Remis
|
Adam B. Remis, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
||
Dated: April 30, 2013
|
By:
|
/s/ Marc E. Berg
|
Marc E. Berg, Trustee
|
||
Dated: April 30, 2013
|
By:
|
/s/ Steven S. Robson
|
Steven S. Robson, Trustee
|
||
Dated: April 30, 2013
|
By:
|
/s/ Les Kutasi
|
Les Kutasi, Trustee
|
||
Dated: April 30, 2013
|
By:
|
/s/ Larry Pelegrin
|
Larry Pelegrin, Trustee
|
1.
|
I have reviewed this annual report on Form 10-K of InnSuites Hospitality Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 30, 2013
|
By:
|
/s/ James F. Wirth
|
|
Name: James F. Wirth
|
|||
Title: Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of InnSuites Hospitality Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 30, 2013
|
By:
|
/s/ Adam B. Remis
|
||
Name:
|
Adam B. Remis
|
|||
Title:
|
Chief Financial Officer
|
Date: April 30, 2013
|
By:
|
/s/ James F. Wirth
|
|
Name: James F. Wirth
|
|||
Title: Chief Executive Officer
|
Date: April 30, 2013
|
By:
|
/s/ Adam B. Remis
|
|
Name: Adam B. Remis
|
|||
Title: Chief Financial Officer
|
Note 18 - Supplemental Cash Flow Disclosures (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] |
|
Note 10 - Mortgage Notes Payable (Detail) - Mortgage Notes Payable (USD $)
|
Jan. 31, 2013
|
Jan. 31, 2012
|
---|---|---|
Mortgage note payable | $ 19,954,924 | $ 21,271,256 |
Secured by Yuma Property [Member]
|
||
Mortgage note payable | 5,469,475 | |
Secured by Tucson Foothills Property [Member]
|
||
Mortgage note payable | 1,706,278 | 2,135,796 |
Secured by Ontario Property [Member]
|
||
Mortgage note payable | 6,323,592 | 7,405,289 |
Secured by Albuquerque Property [Member]
|
||
Mortgage note payable | 1,227,744 | 1,321,015 |
Secured by Tucson St.Mary's Property [Member]
|
||
Mortgage note payable | 5,227,835 | 5,409,156 |
First Mortgage Note Secured by Yuma Property, Satisfied in Full in 2013 [Member]
|
||
Mortgage note payable | 4,000,000 | |
Second Mortgage Note Secured by Yuma Property, Satisfied in Full in 2013 [Member]
|
||
Mortgage note payable | $ 1,000,000 |
Note 6 - Variable Interest Entity (Detail) (USD $)
|
12 Months Ended |
---|---|
Jan. 31, 2013
|
|
Number of Partnership Units Repurchased During Period | 31.5 |
Payments for Repurchase of Equity (in Dollars) | $ 315,000 |
Schedule III - Real Estate and Accumulated Depreciation (Detail) - Aggregate Cost for Federal Income Tax Purposes (USD $)
|
Jan. 31, 2013
|
Jan. 31, 2012
|
---|---|---|
Real Estate, Federal Income Tax Basis | $ 20,720,166 | $ 21,271,256 |
Land [Member]
|
||
Real Estate, Federal Income Tax Basis | 1,856,788 | 1,856,788 |
Building and Building Improvements [Member]
|
||
Real Estate, Federal Income Tax Basis | $ 18,863,378 | $ 19,414,468 |
Note 10 - Mortgage Notes Payable (Detail) - Mortgage Notes Payable (Parentheticals) (USD $)
|
0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2012
|
Aug. 24, 2012
Secured by Yuma Property [Member]
|
Jan. 31, 2013
Secured by Yuma Property [Member]
|
Jan. 31, 2013
Secured by Tucson Foothills Property [Member]
|
Jan. 31, 2012
Secured by Tucson Foothills Property [Member]
|
Jan. 31, 2012
Secured by Ontario Property [Member]
|
May 11, 2011
Secured by Ontario Property [Member]
|
Jan. 31, 2013
Secured by Ontario Property [Member]
|
Jan. 31, 2012
Secured by Ontario Property [Member]
|
Feb. 14, 2012
Secured by Ontario Property [Member]
|
Jan. 31, 2011
Secured by Ontario Property [Member]
|
Jan. 31, 2013
Secured by Albuquerque Property [Member]
|
Jan. 31, 2012
Secured by Albuquerque Property [Member]
|
Jan. 31, 2013
Secured by Tucson St.Mary's Property [Member]
|
Jan. 31, 2012
First Mortgage Note Secured by Yuma Property, Satisfied in Full in 2013 [Member]
|
Jan. 31, 2013
Second Mortgage Note Secured by Yuma Property, Satisfied in Full in 2013 [Member]
|
Jan. 31, 2012
Second Mortgage Note Secured by Yuma Property, Satisfied in Full in 2013 [Member]
|
|
Mortgage note payable, monthly payments (in Dollars) | $ 32,419 | $ 32,419 | $ 48,738 | $ 48,738 | $ 31,700 | $ 71,100 | $ 31,701 | $ 31,701 | $ 16,032 | $ 16,032 | $ 29,776 | $ 23,333 | $ 6,667 | $ 6,667 | |||
Mortgage note payable, interest rate | 5.00% | 5.00% | 8.00% | 8.00% | 5.00% | 5.00% | 5.00% | 5.00% | 8.28% | 7.75% | 7.75% | 3.25% | 7.00% | 8.00% | |||
Mortgage note payable, balloon payment (in Dollars) | 4,023,333 | 4,112,498 | 5,630,315 | 5,630,315 | 5,630,315 | 4,874,618 | 1,006,667 | ||||||||||
Mortgage note payable, carrying value of secured property (in Dollars) | $ 5,500,000 | $ 4,200,000 | $ 5,900,000 | $ 1,300,000 | $ 7,800,000 |
Note 4 - Sale of Partnership Interests in Tucson Hospitality Properties Subsidiary (Detail) (USD $)
|
12 Months Ended | 0 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
Jan. 31, 2012
|
Feb. 27, 2011
Rare Earth [Member]
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2013
Unrelated Unit Holders [Member]
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2013
The Trust [Member]
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2013
The Partnership [Member]
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2013
Rare Earth [Member]
Tucson Hospitality Properties, LP [Member]
|
Oct. 29, 2010
Rare Earth [Member]
|
Feb. 17, 2011
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2013
Tucson Hospitality Properties, LP [Member]
|
Jan. 31, 2012
Tucson Hospitality Properties, LP [Member]
|
Feb. 27, 2011
Tucson Hospitality Properties, LP [Member]
|
|
Number of Units of Partnership Interest in a Subsidiary Committed to Purchase by an Affiliate (in Shares) | 250 | |||||||||||
Percentage of Membership Interest in a Subsidiary Committed to Purchase by an Affiliate | 41.00% | |||||||||||
Cumulative Priority Distribution Period | 5 years | |||||||||||
Formation Fee Earned by an Affiliate (in Dollars) | $ 320,000 | $ 320,000 | ||||||||||
Number of Partnership Units Sold Threshold (in Shares) | 160 | |||||||||||
Per Annum Simple Return | 7.00% | |||||||||||
Percentage of Additional Profits Allocated to an Affiliate | 50.00% | |||||||||||
Percentage of Profits Allocated Proportionately to All Unit Classes | 50.00% | |||||||||||
Priority Distributions, Year Two Through Five (in Dollars) | 452,900 | |||||||||||
Number of Membership Interest Units Sold to Unrelated Parties (in Shares) | 259 | |||||||||||
Sale Price Per Membership Interest Unit (in Dollars per share) | $ 10,000 | |||||||||||
Proceeds from Divestiture of Interest in Joint Venture (in Dollars) | 2,218,594 | 2,414,555 | 2,590,000 | |||||||||
Percentage of Ownership Interest Held by RRF Limited Partnership | 56.41% | |||||||||||
Percentage of Ownership Interest Held by the Trust | 1.70% | |||||||||||
Percentage of Ownership Interest Held by Related Parties | 1.86% | |||||||||||
Percentage of Ownership Interest Held by Unrelated Third Parties | 40.03% | |||||||||||
Estimated Annual Minimum Preference Payments (in Dollars) | $ 181,300 | $ 7,700 | $ 255,500 | $ 8,400 |
Note 8 - Prepaid Expenses and Other Current Assets (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] |
|
Schedule IV - Mortgage Loans on Real Estate (Detail) - Mortgage Note Reconciliation (USD $)
|
12 Months Ended | |
---|---|---|
Jan. 31, 2013
|
Jan. 31, 2012
|
|
Balance | $ 21,271,256 | $ 22,080,716 |
Proceeds from refinancing | 500,000 | |
Accrued interest reclassified to note payable | 240,700 | |
Principal payments | (2,057,032) | (809,460) |
Balance | $ 19,954,924 | $ 21,271,256 |
Note 12 - Other Notes Payable (Detail) (USD $)
|
12 Months Ended | |
---|---|---|
Jan. 31, 2013
|
Jan. 31, 2012
|
|
Stock Repurchased During Period, Shares | 85,131 | 140,455 |
Class A Limited Partnership Units [Member]
|
||
Stock Repurchased During Period, Shares | 145,564 | 174,844 |
Beneficial Interest [Member]
|
||
Stock Repurchased During Period, Shares | 384,727 | 439,431 |
Secured Promissory Notes [Member]
|
||
Notes Payable (in Dollars) | 348,696 | 550,652 |
Debt Instrument, Interest Rate, Stated Percentage | 7.00% | |
Secured by a Passenger Van [Member]
|
||
Notes Payable (in Dollars) | 3,560 |
Schedule III - Real Estate and Accumulated Depreciation (Detail) - Reconciliation of Real Estate (USD $)
|
12 Months Ended | |
---|---|---|
Jan. 31, 2013
|
Jan. 31, 2012
|
|
Balance | $ 37,467,448 | $ 37,199,045 |
Improvement to Hotel Properties | 447,289 | 301,629 |
Disposal of Property Improvements | (998,379) | (33,226) |
Balance | $ 36,916,358 | $ 37,467,448 |
Note 18 - Supplemental Cash Flow Disclosures
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow, Supplemental Disclosures [Text Block] |
18. SUPPLEMENTAL
CASH FLOW DISCLOSURES
|
Note 7 - Property, Plant, and Equipment, Hotel Properties (Detail) - Hotel Properties (USD $)
|
Jan. 31, 2013
|
Jan. 31, 2012
|
---|---|---|
Hotel properties, net | $ 112,977 | $ 149,377 |
Hotel Properties in Service, net | 112,977 | 149,377 |
Land [Member] | Hotel Properties [Member]
|
||
Property, plant and equipment | 2,817,515 | 2,817,515 |
Building and Building Improvements [Member] | Hotel Properties [Member]
|
||
Property, plant and equipment | 34,016,176 | 34,567,267 |
Furniture, Fixtures and Equipment [Member] | Hotel Properties [Member]
|
||
Property, plant and equipment | 4,990,808 | 5,337,765 |
Hotel Properties in Service, Net [Member] | Hotel Properties [Member]
|
||
Hotel properties, net | 24,594,397 | 25,141,748 |
Hotel Properties in Service, net | 24,594,397 | 25,141,748 |
Construction in Progress [Member] | Hotel Properties [Member]
|
||
Property, plant and equipment | 92,383 | |
Hotel Properties [Member]
|
||
Property, plant and equipment | 41,824,499 | 42,722,547 |
Hotel properties, net | 24,686,780 | 25,141,748 |
Less accumulated depreciation | (17,230,102) | (17,580,799) |
Hotel Properties in Service, net | $ 24,686,780 | $ 25,141,748 |
Note 15 - Federal Income Taxes (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
|
Note 9 - Accounts Payable and Accrued Liabilities (Detail) - Accounts Payable and Accrued Liabilities (USD $)
|
Jan. 31, 2013
|
Jan. 31, 2012
|
---|---|---|
Accounts Payable | $ 757,086 | $ 634,926 |
Accrued Salaries and Wages | 180,895 | 385,552 |
Accrued Vacation | 144,552 | 131,036 |
Sales Tax Payable | 314,605 | 212,813 |
Income Tax Payable | 25,355 | 27,000 |
Accrued Interest Payable | 49,579 | 293,511 |
Advanced Customer Deposits | 181,093 | 122,075 |
Accrued Property Taxes | 248,012 | 256,997 |
Accrued Land Lease | 108,437 | 92,840 |
Accrued Other | 288,883 | 258,013 |
Total Accounts Payable and Accrued Liabilities | $ 2,298,497 | $ 2,414,763 |
Note 19 - Commitments and Contingencies (Detail) - Future Minimum Lease Payments (USD $)
|
Jan. 31, 2013
|
---|---|
2014 | $ 253,321 |
2015 | 233,721 |
2016 | 212,121 |
2017 | 212,121 |
2018 | 212,121 |
Thereafter | 5,014,895 |
Total | $ 6,138,300 |
Note 15 - Federal Income Taxes (Detail) - Deferred Tax Assets (Liabilities) (USD $)
|
Jan. 31, 2013
|
Jan. 31, 2012
|
---|---|---|
Net operating loss carryforwards | $ 4,622,000 | $ 4,844,000 |
Bad debt allowance | (17,000) | (11,000) |
Accrued expenses | 1,496,000 | 1,018,000 |
Prepaid insurance | 13,000 | 13,000 |
Alternative minimum tax credit | 61,000 | 61,000 |
Total deferred income tax assets | 6,175,000 | 5,925,000 |
Deferred income tax liability associated with book/tax differences in hotel properties | (2,263,000) | (2,731,000) |
Net deferred income tax asset | 3,912,000 | 3,194,000 |
Valuation allowance | $ (3,912,000) | $ (3,194,000) |
Note 2 - Summary of Significant Accounting Policies
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Significant Accounting Policies [Text Block] |
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
USE
OF ESTIMATES
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United
States of America (“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 are stated at
cost and are depreciated using the straight-line method
over estimated lives ranging from 5 to 40 years for
buildings and improvements and 3 to 10 years for furniture
and equipment.
Management
applies guidance issued by the Financial Accounting
Standards Board ("FASB"), codified in ASC Topic 360-10-35,
to determine when it is required to test an asset for
recoverability of its carrying value. If the
carrying amount of an asset exceeds the estimated
undiscounted future cash flows over its estimated remaining
life, the Trust recognizes an impairment expense to reduce
the asset’s carrying value to its fair
value. 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. If the sum of the projected undiscounted
cash flows (excluding interest) is less than the carrying
value of the assets and the estimated fair value is less
than the carrying value, the assets will be written down to
the estimated fair value in the period in which the
determination is made. The Trust determines the
estimated useful lives of its assets based on the expected
future economic benefit of the asset and its ability to
hold such assets. In the decision-making process
to determine fair value of long-lived assets and to test an
asset for impairment, third party property appraisals are
used as one of the indicators (benchmarks) to determine the
necessity for testing for impairment. Other
indicators include a drop in the performance of a
long-lived asset, a decline in the hospitality industry and
a decline in the economy. Third party property
appraisals are useful because they consider historical
occupancy and average rate levels in determining fair
value. 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 exists during the
Trust’s fiscal years ended 2013 and 2012.
CASH
AND CASH EQUIVALENTS
The
Trust considers all highly liquid short-term investments
with maturities of three months or less at the time of
purchase to be cash equivalents. The Trust places its cash
and cash equivalents only with high credit quality
financial institutions.
RESTRICTED
CASH
Restricted
cash consists of amounts held in reserve by lenders to fund
capital improvements to the properties.
REVENUE
RECOGNITION
Room,
food and beverage, telecommunications, management and
licensing fees, and other revenue are recognized as earned
as services are provided and items are
sold. Payroll reimbursements for fiscal year
2012 are recorded as the Trust provides its personnel to
the hotels under management and are not netted with the
corresponding payroll expense. For fiscal year 2013,
no payroll reimbursements exist. Sales taxes
collected are excluded from gross revenue.
RECEIVABLES
AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts
receivable are carried at original amounts billed less an
estimate made for doubtful accounts based on a review of
outstanding amounts on a quarterly
basis. Management generally records an allowance
for doubtful accounts for 50% of balances over 90 days and
100% of balances over 120 days. Accounts
receivable are written off when deemed
uncollectible. Recoveries, if any, of
receivables previously written off are recorded when
received. The Trust does not charge interest on
accounts receivable balances and these receivables are
unsecured.
Information
on the allowance for doubtful accounts is as follows for
the fiscal years ended January 31:
STOCK-BASED
COMPENSATION
We
have an employee equity incentive plan, which is described
more fully in Note 20 - “Share-Based
Payments.” Restricted shares granted from
the plan are measured based on the fair value of the
underlying shares on the date of grant. We use
the straight-line attribution method to recognize
share-based compensation over the service period of the
award.
For
fiscal year 2013, the Trust has paid the annual fees due to
its Trustees using newly created Shares of Beneficial
Interest. For fiscal year 2012, the payments
were issued from treasury stock. Upon issuance,
the Trust recognizes the shares as
outstanding. The Trust recognizes expense
related to the issuance based on the fair value of the
shares upon the date of the restricted share grant and
amortizes the expense equally over the period during which
the shares vest to the Trustees.
During
fiscal year 2013, the Trust granted restricted stock awards
of 18,000 Shares to members of the Board of Trustees, all
of which vested in fiscal year 2013 resulting in
stock-based compensation of $39,600. During fiscal year
2012, the Trust granted restricted stock awards of 36,000
Shares to members of the Board of Trustees, all of which
vested in fiscal year 2012 resulting in stock-based
compensation of $51,840.
The
following table summarizes restricted share activity during
fiscal years 2013 and 2012.
TREASURY
STOCK
Treasury
stock is carried at cost, including any brokerage
commissions paid to repurchase the shares. Any
shares issued from treasury stock are removed at cost, with
the difference between cost and fair value at the time of
issuance recorded against common stock.
INCOME
TAXES
The
Trust is subject to federal and state corporate income
taxes, and accounts for deferred taxes utilizing a
liability method whereby deferred tax assets are recognized
for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary
differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a
valuation allowance when it is determined to be more likely
than not that some portion, or all of the deferred tax
assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
DIVIDENDS
AND DISTRIBUTIONS
In
fiscal years 2013 and 2012, the Trust paid dividends of
$0.01 per share in the fourth quarter of each year, or
total dividends of $83,846 and $84,430,
respectively. The Trust’s ability to pay
dividends is largely dependent upon the operations of the
Hotels.
NON-CONTROLLING
INTEREST
Non-controlling
interest in the Partnership represents the limited
partners’ proportionate share of the capital and
earnings of the Partnership. Income or loss is
allocated to the non-controlling interest based on a
weighted average ownership percentage in the Partnership
throughout the period, and capital is allocated based on
the ownership percentage at year-end. Any
difference between the weighted average and point-in-time
allocations is presented as a reallocation of
non-controlling interest as a component of
shareholders’ equity.
INCOME
(LOSS) PER SHARE
Basic
and diluted income (loss) 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 3,693,972
shares of the Beneficial Interest, as discussed in Note
1.
For
the fiscal years ended January 31, 2013 and 2012, there
were Class A and Class B Partnership units outstanding,
which are convertible into Shares of Beneficial Interest of
the Trust. Assuming conversion at the beginning
of each period, the aggregate weighted-average of these
Shares of Beneficial Interest would have been 3,694,431 and
3,735,457 in addition to the basic shares outstanding for
fiscal year 2013 and 2012, respectively. These
Shares of Beneficial Interest issuable upon conversion of
the Class A and Class B Partnership units were
anti-dilutive during both fiscal year 2013 and 2012 and are
excluded from the calculation of diluted earnings per share
for those years due to the Trust’s losses, and
accordingly, no reconciliation is provided of basic
earnings per share to diluted earnings per share.
ASSETS
HELD FOR SALE
The trust
considered assets held for sale when management approves
and commits to a formal plan to actively market a property
or group of properties for sale and a signed sales contract
and significant non-refundable deposit or contract break-up
fee exists. Upon designation as an asset held for sale, we
record the carrying value of each property or group of
properties at the lower of its carrying value or its
estimated fair value, less estimated costs to sell, and we
cease the recognition of depreciation expense. Any gain
realized in connection with the sale of a property for
which we have significant continued involvement (such as
through a long-term management agreement) is deferred and
recognized over the initial term of the related agreement.
The operations of the properties held for sale prior to the
sale date are recorded in discontinued operations unless we
will have continuing involvement (such as through a
management agreement) after the sale. No assets were deemed
held for sale as of January 31, 2013 or 2012.
SEGMENT
REPORTING
The
Trust views its operations as one operating business
segment, a hospitality company that has ownership interest
in five hotel properties with an aggregate of 843 suites in
Arizona, southern California and New Mexico. The Trust has
a concentration of assets in the southwest United States,
and the southern Arizona market.
ADVERTISING
COSTS
Amounts
incurred for advertising costs are expensed as
incurred. Advertising expense totaled
approximately $559,000 and $749,000 for the years ended
January 31, 2013 and 2012, respectively.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
For
disclosure purposes, fair value is determined by using
available market information and appropriate valuation
methodologies. Fair value is defined as the
price that would be received from the sale of an asset or
paid to transfer a liability (an exit price) in an orderly
transaction between market participants in the principal or
most advantageous market for the asset or
liability. The fair value framework specifies a
hierarchy of valuation techniques, which is based on
whether the inputs into the valuation technique are
observable or unobservable. The fair value
hierarchy levels are as follows:
The
Trust has no assets or liabilities that are carried at fair
value on a recurring basis and had no fair value
re-measurements during the years ended January 31, 2013 and
2012. The Trust’s financial instruments
utilize level 3 inputs in the determination of fair value
and consist of cash and cash equivalents, restricted cash,
accounts receivable, accounts payable, advances to related
parties and debt.
Due
to their short maturities, cash and cash equivalents,
restricted cash, accounts receivable, accounts payable and
notes payable to banks are carried at cost, which
reasonably approximates fair value. The fair value of
mortgage notes payable, notes payable to banks and notes
and advances payable to related parties is estimated by
using the current rates which would be available for
similar loans having the same remaining maturities and are
based on level 3 inputs. The carrying value of
accounts payable and accrued expenses and other notes
payable approximates fair value, due to their short-term
nature. See Note 17 – “Fair Value of
Financial Instruments.”
RECENT
ACCOUNTING PRONOUCEMENTS
In
January of 2011, the FASB released NO 2011-01- Receivables
(Topic 310) Deferral of the Effective Date of Disclosures
about Troubled Debt Restructurings in Update No
2010-20. The amendments in
this Update temporarily delay the effective date of the
disclosures about troubled debt restructurings in Update
2010-20 for public entities. The delay is intended to allow
the Board time to complete its deliberations on what
constitutes a troubled debt restructuring. The effective
date of the new disclosures about troubled debt
restructurings for public entities and the guidance for
determining what constitutes a troubled debt restructuring
will then be coordinated. Currently, that guidance is
anticipated to be effective for interim and annual periods
ending after June 15, 2011.
In May of
2011, the FASB released No 2011-04 Fair Value Measurements
(Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and
IFRS. ASU 2011-04 is intended to improve the
comparability of fair value measurements presented and
disclosed in financial statements prepared in accordance
with U.S. GAAP and International Financial Reporting
Standards. The amendments in ASU 2011-04 clarify the intent
of the Financial Accounting Standards Board
(“FASB”) with regard to the application of
existing fair value measurement requirements and change
some requirements for measuring or disclosing information
about fair value measurements. The provisions of ASU
2011-04 became effective for public companies in the first
reporting period beginning after December 15, 2011.
The adoption of ASU 2011-04 enhanced the disclosure of the
fair value of certain financial assets and liabilities that
are not required to be recorded at fair value within our
financial statements.
|
Note 15 - Federal Income Taxes (Detail) - Differences Between Statutory and Effective Tax Rates (USD $)
|
12 Months Ended | |
---|---|---|
Jan. 31, 2013
|
Jan. 31, 2012
|
|
Federal statutory rates (in Dollars) | $ (406,000) | $ (428,000) |
Federal statutory rates | (34.00%) | (34.00%) |
State income taxes (in Dollars) | (88,000) | (89,000) |
State income taxes | (7.00%) | (7.00%) |
Change in valuation allowance (in Dollars) | 718,000 | 1,137,000 |
Change in valuation allowance | 60.00% | 90.00% |
True-ups to prior year return (in Dollars) | (237,000) | (620,000) |
True-ups to prior year return | (20.00%) | (49.00%) |
Other (in Dollars) | 13,000 | 0 |
Other | 1.00% | 0.00% |
Effective rate (in Dollars) | $ 0 | $ 0 |
Effective rate | 0.00% | 0.00% |