UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 14, 2015
INNSUITES HOSPITALITY TRUST
(Exact Name of Registrant as Specified in Charter)
| Ohio | 001-07062 | 34-6647590 | ||
| (State
or Other Jurisdiction of Incorporation) |
(Commission
File Number) |
(IRS
Employer Identification No.) |
| InnSuites
Hotels Centre, 1625 E. Northern Avenue, |
||
| Suite 105, Phoenix, AZ | 85020 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (602) 944-1500
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 14, 2015, the final transaction provided for in the Real Estate Purchase Agreement (“Sale Agreement”) dated July 1, 2015 between Tucson Saint Mary’s Suite Hospitality LLC, a subsidiary of InnSuites Hospitality Trust (the “Trust”) and Lee & J Hospitality, Inc. (“Buyer”) were consummated. Pursuant to the Sale Agreement, the Buyer acquired the Hotel Tucson City Center InnSuites hotel property for a cash purchase price of $9.65 million. Right, title and interest to the Hotel Tucson City Center InnSuites hotel property was transferred on October 14, 2015. The Trust has attached as Exhibit 99.1 unaudited pro forma condensed consolidated financial statements to illustrate the pro forma effects of this significant disposition of assets.
The information in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The foregoing description is not intended to be complete and is qualified in its entirety by reference to the full text of the Sale Agreement, which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed on July 8, 2015 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Unaudited pro forma condensed consolidated financial statements of the Trust.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| InnSuites Hospitality Trust | ||
| By: | /s/ Adam B. Remis | |
| Adam B. Remis | ||
| Chief Financial Officer | ||
Date: October 20, 2015
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Unaudited pro forma condensed consolidated financial statements of the Trust. |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As disclosed in our Form 8-K filed with the SEC on July 8, 2015, on July 1, 2015, Tucson Saint Mary’s Suite Hospitality LLC, a subsidiary of InnSuites Hospitality Trust (the “Trust”), entered into a Real Estate Purchase Agreement (“Sale Agreement”) to sell its Hotel Tucson City Center InnSuites property to Lee & J Hospitality, Inc, (“Buyer”) an unrelated third party to the Trust for $9.65 million in cash. Right, title and interest to the Hotel Tucson City Center InnSuites hotel property (“Hotel”) was transferred on October 14, 2015. The transfer of these assets constituted the disposition of a significant amount of assets of the Trust.
The following unaudited condensed consolidated financial statements are presented to illustrate the effects of the Sale Transaction. The unaudited pro forma condensed consolidated balance sheet as of July 31, 2015 illustrates the estimated effects of the Sale Transaction as if the sale had occurred on July 31, 2015 and as if all income from the sale had been earned as of that date. The unaudited pro forma condensed consolidated income statement for the six months ended July 31, 2015 and the year ended January 31, 2015 sets forth the estimated effects of the Sale Transaction on the Trust’s condensed consolidated statements of income as if the sale had occurred in its entirety at the beginning of each those periods.
The unaudited pro forma condensed consolidated financial statements presented herein are for informational purposes only and do not purport to present what the Trust’s actual results would have been had the Sale Transaction occurred on the date assumed, or to project our results of operations or financial position for any future period. The pro forma financial statements include assumptions that are believed to be reasonable and represent all material information that is necessary to fairly present pro forma financial statements.
The unaudited pro forma condensed consolidated financial statement, including the notes thereto, should be read in conjunction with Trust’s audited consolidated financial statements and the notes in the Trust’s Annual Report on Form 10-K as for the fiscal year ended January 31, 2015, as filed with the SEC on April 30, 2015.
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| HISTORICAL | PROPERTY SOLD PRO FORMA | PRO FORMA | ||||||||||||||
| JULY 31, 2015 | ADJUSTMENT | NOTES | JULY 31, 2015 | |||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets: | ||||||||||||||||
| Cash and Cash Equivalents | $ | 300,950 | $ | - | $ | 300,950 | ||||||||||
| Accounts Receivable | 312,024 | - | 312,024 | |||||||||||||
| Advances to Affiliates - Related Party | - | - | - | |||||||||||||
| Prepaid Expenses and Other Current Assets | 160,294 | - | 160,294 | |||||||||||||
| Total Current Assets | 773,268 | - | 773,268 | |||||||||||||
| Hotel Properties, net | 25,680,396 | (7,283,041 | ) | (a) | 18,397,355 | |||||||||||
| Property, Plant and Equipment, net | 142,303 | - | 142,303 | |||||||||||||
| TOTAL ASSETS | $ | 26,595,967 | $ | (7,283,041 | ) | $ | 19,312,926 | |||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||
| LIABILITIES | ||||||||||||||||
| Current Liabilities: | ||||||||||||||||
| Accounts Payable and Accrued Expenses | $ | 2,338,480 | $ | (451,576 | ) | (a) | $ | 1,886,904 | ||||||||
| Current Portion of Mortgage Notes Payable | 5,190,898 | (4,745,649 | ) | (a) | 445,249 | |||||||||||
| Current Portion of Notes Payable to Banks | 692,530 | - | 692,530 | |||||||||||||
| Line of Credit - Related Party | 108,270 | - | 108,270 | |||||||||||||
| Current Portion of Other Notes Payable | 217,209 | - | 217,209 | |||||||||||||
| Total Current Liabilities | 8,547,387 | (5,197,225 | ) | 3,350,162 | ||||||||||||
| Mortgage Notes Payable | 13,578,243 | - | 13,578,243 | |||||||||||||
| Other Notes Payable | 21,448 | - | 21,448 | |||||||||||||
| TOTAL LIABILITIES | 22,147,078 | (5,197,225 | ) | 16,949,853 | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||
| Shares of Beneficial Interest, without par value, unlimited authorization | 14,827,601 | (1,420,232 | ) | (b) | 13,407,369 | |||||||||||
| Treasury Stock | (12,252,277 | ) | - | (12,252,277 | ) | |||||||||||
| TOTAL TRUST SHAREHOLDERS’ EQUITY | 2,575,324 | (1,420,232 | ) | 1,155,092 | ||||||||||||
| NON-CONTROLLING INTEREST | 1,873,565 | (665,584 | ) | (b) | 1,207,981 | |||||||||||
| TOTAL EQUITY | 4,448,889 | (2,085,816 | ) | (b) | 2,363,073 | |||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 26,595,967 | $ | (7,283,041 | ) | $ | 19,312,926 | |||||||||
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| PROPERTY SOLD | ||||||||||||||
| HISTORICAL | PRO FORMA | PRO FORMA | ||||||||||||
| JANUARY 31, 2015 | ADJUSTMENT | NOTES | JANUARY 31, 2015 | |||||||||||
| REVENUE | ||||||||||||||
| Room | $ | 13,186,396 | $ | (2,972,731 | ) | $ | 10,213,665 | |||||||
| Food and Beverage | 954,432 | (792,368 | ) | (c) | 162,064 | |||||||||
| Management and Trademark Fees | 278,210 | - | 278,210 | |||||||||||
| Other | 253,834 | (67,989 | ) | (c) | 185,845 | |||||||||
| TOTAL REVENUE | 14,672,872 | (3,833,088 | ) | 10,839,784 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||
| Room | 3,957,611 | (926,322 | ) | (c) | 3,031,289 | |||||||||
| Food and Beverage | 903,848 | (627,794 | ) | (c) | 276,054 | |||||||||
| Telecommunications | 30,420 | (2,469 | ) | (c) | 27,951 | |||||||||
| General and Administrative | 3,450,220 | (400,877 | ) | (c) | 3,049,343 | |||||||||
| Sales and Marketing | 1,316,857 | (157,489 | ) | (c) | 1,159,368 | |||||||||
| Repairs and Maintenance | 1,243,273 | (333,167 | ) | (c) | 910,106 | |||||||||
| Hospitality | 870,065 | (190,608 | ) | (c) | 679,457 | |||||||||
| Utilities | 1,314,514 | (547,580 | ) | (c) | 766,934 | |||||||||
| Hotel Property Depreciation | 1,782,421 | (461,856 | ) | (c) | 1,320,565 | |||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | 943,914 | (124,695 | ) | (c) | 819,219 | |||||||||
| Other | 31,104 | (442 | ) | (c) | 30,662 | |||||||||
| TOTAL OPERATING EXPENSES | 15,844,247 | (3,773,299 | ) | 12,070,948 | ||||||||||
| OPERATING LOSS | (1,171,375 | ) | (59,789 | ) | (1,231,164 | ) | ||||||||
| Interest Income | 197 | - | 197 | |||||||||||
| Interest Income on Advances to Affiliates - Related Party | 8,971 | - | 8,971 | |||||||||||
| TOTAL OTHER INCOME | 9,168 | - | 9,168 | |||||||||||
| Interest on Mortgage Notes Payable | 705,198 | (182,199 | ) | 522,999 | ||||||||||
| Interest on Notes Payable to Banks | 101,924 | - | 101,924 | |||||||||||
| Interest on Other Notes Payable | 29,486 | (729 | ) | (c) | 28,757 | |||||||||
| Interest on Line of Credit - Related Party | 43,461 | - | 43,461 | |||||||||||
| TOTAL INTEREST EXPENSE | 880,069 | (182,928 | ) | 697,141 | ||||||||||
| CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION | (2,042,276 | ) | 123,139 | (1,919,137 | ) | |||||||||
| Income Tax Provision | (198,648 | ) | - | (198,648 | ) | |||||||||
| CONSOLIDATED NET LOSS | $ | (2,240,924 | ) | $ | 123,139 | $ | (2,117,785 | ) | ||||||
| LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | (137,287 | ) | $ | - | $ | (137,287 | ) | ||||||
| NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | (2,103,637 | ) | $ | 123,139 | $ | (1,980,498 | ) | ||||||
| NET LOSS PER SHARE – BASIC AND DILUTED | $ | (0.25 | ) | $ | - | $ | (0.25 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | 8,313,093 | - | 8,313,093 | |||||||||||
| CASH DIVIDENDS PER SHARE | $ | 0.01 | $ | - | $ | 0.01 | ||||||||
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| PROPERTY SOLD | ||||||||||||||
| HISTORICAL | PRO FORMA | PRO FORMA | ||||||||||||
| JULY 31, 2015 | ADJUSTMENT | NOTES | JULY 31, 2015 | |||||||||||
| REVENUE | ||||||||||||||
| Room | $ | 7,561,396 | $ | (1,757,135 | ) | $ | 5,804,261 | |||||||
| Food and Beverage | 626,600 | (536,620 | ) | (c) | 89,980 | |||||||||
| Management and Trademark Fees | 128,144 | - | 128,144 | |||||||||||
| Other | 225,879 | (17,822 | ) | (c) | 208,057 | |||||||||
| TOTAL REVENUE | 8,542,019 | (2,311,577 | ) | 6,230,442 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||
| Room | 2,269,162 | (542,685 | ) | (c) | 1,726,477 | |||||||||
| Food and Beverage | 557,413 | (412,462 | ) | (c) | 144,951 | |||||||||
| Telecommunications | 13,199 | (1,867 | ) | (c) | 11,332 | |||||||||
| General and Administrative | 1,847,716 | (186,977 | ) | (c) | 1,660,739 | |||||||||
| Sales and Marketing | 660,419 | (112,073 | ) | (c) | 548,346 | |||||||||
| Repairs and Maintenance | 706,696 | (173,491 | ) | (c) | 533,205 | |||||||||
| Hospitality | 508,900 | (146,333 | ) | (c) | 362,567 | |||||||||
| Utilities | 645,877 | (274,427 | ) | (c) | 371,450 | |||||||||
| Hotel Property Depreciation | 913,751 | (232,661 | ) | (c) | 681,090 | |||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | 381,721 | (64,620 | ) | (c) | 317,101 | |||||||||
| Other | 13,830 | (1,332 | ) | (c) | 12,498 | |||||||||
| TOTAL OPERATING EXPENSES | 8,518,684 | (2,148,928 | ) | 6,369,756 | ||||||||||
| OPERATING INCOME (LOSS) | 23,335 | (162,649 | ) | (139,314 | ) | |||||||||
| Interest Income | 7 | - | 7 | |||||||||||
| Interest Income on Advances to Affiliates - Related Party | - | - | - | |||||||||||
| TOTAL OTHER INCOME | 7 | - | 7 | |||||||||||
| Interest on Mortgage Notes Payable | 422,376 | (91,082 | ) | (c) | 331,294 | |||||||||
| Interest on Notes Payable to Banks | 88,361 | (15,038 | ) | (c) | 73,323 | |||||||||
| Interest on Other Notes Payable | 3,852 | - | 3,852 | |||||||||||
| Interest on Line of Credit - Related Party | 8,090 | - | 8,090 | |||||||||||
| TOTAL INTEREST EXPENSE | 522,679 | (106,120 | ) | 416,559 | ||||||||||
| CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION | (499,337 | ) | (56,529 | ) | (555,866 | ) | ||||||||
| Income Tax Provision | (71,571 | ) | - | (71,571 | ) | |||||||||
| CONSOLIDATED NET LOSS | $ | (570,908 | ) | $ | (56,529 | ) | $ | (627,437 | ) | |||||
| LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | (16,540 | ) | $ | (5,461 | ) | $ | (22,001 | ) | |||||
| NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | (554,368 | ) | $ | (51,068 | ) | $ | (605,436 | ) | |||||
| NET LOSS PER SHARE – BASIC AND DILUTED | $ | (0.07 | ) | $ | - | $ | (0.07 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | 8,274,317 | - | 8,274,317 | |||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
| 1. | NOTES TO UNAUDITED PRO FORMA ADJUSTMENT |
| (a) | The pro forma adjustment to Hotel Properties, net, Accounts Payable and Accrued Expenses and Current Portion of Mortgage Notes Payable that was on our balance sheet as of July 31, 2015 related to the removal of the net assets and liabilities of the Hotel. |
| (b) | The pro forma adjustment to Shares of Beneficial Interest and Non-Controlling Interest that was on the balance sheet as of July 31, 2015 related to the removal of the Shareholders Equity of the Hotel. |
| (c) | Revenues and Expenses have been adjusted on the pro forma income statements for the year ending January 31, 2015 and for the six months ending July 31, 2105 to remove the revenues and expenses associated with the Hotel. |