Discontinued Operations

9 Months Ended

Oct. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

16. DISCONTINUED OPERATIONS

Sale of IBC Hospitality Technologies; IBC Hotels LLC (IBC)

Discontinued operations for the nine months ended October 31, 2018 consist of the operations from the IBC Technology Segment (the “Company”). On August 15, 2018 the Trust entered into a final sale agreement for its subsidiary IBC Hotels LLC (IBC) with an effective sale date as of August 1, 2018 to an unrelated third party buyer (Buyer). The buyer hired IHT’s former Chief Operating Officer, who is a family member of IHT’s CEO. The sale price was $3,000,000, to be paid to IHT as follows:

1.

$250,000 at closing, which was received in cash on August 14, 2018;

2.

A secured promissory note receivable in the principal amount of $2,750,000 with interest to be accrued at 3.75% per annum, recorded in the accompanying condensed balance sheet in continuing operations. The note was amended after closing, so that interest shall accrue for the first 26 months (starting August 2018), thereafter for month 27 and 28 principal and interest payments of 50% ($25,632 per month), then the remaining amount to be amortized over 59 months (payments of $52,054 per month) with maturity in November 2025. Future receipts from this note are shown in the table below.

FISCAL YEAR
2020	$	-
2021		91,667
2022		550,000
2023		550,000
2024		550,000
Thereafter		1,008,333
	$	2,750,000

The note is secured by (1) pledge of the Buyer’s interest in IBC, and (2) a security interest in all assets of IBC provided IHT shall agree to subordinate such equity interest to commercially reasonable debt financing upon request.

If after effective date IBC closes an equity transaction with net proceeds to IBC in excess of $2,500,000, IBC/Buyer shall pay to IHT an amount equal to (a) 50% of the net proceeds received by IBC and (b) 50% of the sum of the unpaid balance of the note and accrued interest accrued but unpaid interest thereon, as the date of receipt of the net proceeds by IBC.

IHT has agreed to provide continuing working capital support for a period of nine months in the amount of approximately $100,000 over a six month period to IBC for transitional purposes. IHT has no managerial control nor does IHT have the ability to direct the operations or capital requirements of IBC as of August 1, 2018. IHT has no rights to any benefits or losses from IBC as of August 1, 2018. During the fiscal year ended January 31, 2019 IHT had provided $100,000 to IBC.

Default

If Buyer has not paid two or more payments on the note as scheduled, or if Buyer has not satisfied any other provisions in the note, IHT may give Buyer notice of default. If Buyer fails to cure the default within 30 days after notice (a) on or before February 5, 2021, then 75% of the issued and outstanding IBC interest shall be transferred to IHT, and (b) on or after February 5, 2021, then 51% of the issued and outstanding interest of the Company shall be transferred to IHT. Currently there has been no default.

Sale of Yuma Property

On October 31, 2018, IHT entered into a purchase and sale agreement to sell its InnSuites Yuma Hotel and Suites Best Western (Yuma), together with certain furniture, fixtures, equipment, operating supplies and other ancillary items pertaining to the daily operations to an unrelated third party. The sale was completed on October 24, 2018. The sales price, as revised, was approximately $16.05 million, of which the net proceeds (net of mortgage payoff, commissions and closing costs) received by the IHT was approximately $9.93 million

	FOR THE NINE MONTHS ENDED
	OCTOBER 31,
	2019		2018
REVENUE
Room	$	-	$	3,225,783
Food and Beverage		-		27,569
Reservation and Convention		-		265,282
Other		-		41,057
TOTAL REVENUE		-		3,559,691
OPERATING EXPENSES
Room		-		1,282,853
Food and Beverage		-		34,136
Telecommunications		-		21,803
General and Administrative		-		1,371,098
Sales and Marketing		-		636,120
Reservation Acquisition Costs		-		142,842
Repairs and Maintenance		-		180,112
Hospitality		-		167,095
Utilities		-		149,635
Depreciation		-		393,581
Intangible Amortization		-		-
Real Estate and Personal Property Taxes, Insurance and Ground Rent		-		88,344
Other		-		5,483
TOTAL OPERATING EXPENSES		-		4,473,102
OPERATING LOSS		-		(913,411	)
Interest Income		-		-
TOTAL OTHER INCOME		-		-
Interest on Mortgage Notes Payable		-		214,458
Interest on Notes Payable to Banks		-		4,901
Interest on Other Notes Payable		-		37,819
TOTAL INTEREST EXPENSE		-		257,178
CONSOLIDATED NET LOSS OF DISCONTINUED OPERATIONS	$	-	$	(1,170,589	)

	FOR THE THREE MONTHS ENDED
	OCTOBER 31,
	2019		2018
REVENUE
Room	$	-		971,476
Food and Beverage		-		5,920
Reservation and Convention		-		(399	)
Other		-		5,996
TOTAL REVENUE		-		982,993
OPERATING EXPENSES
Room		-		732,368
Food and Beverage		-		5,035
Telecommunications		-		5,421
General and Administrative		-		524,737
Sales and Marketing		-		91,473
Reservation Acquisition Costs		-		-
Repairs and Maintenance		-		61,232
Hospitality		-		49,986
Utilities		-		51,958
Depreciation		-		114,314
Intangible Amortization		-		-
Real Estate and Personal Property Taxes, Insurance and Ground Rent		-		46,278
Other		-		-
TOTAL OPERATING EXPENSES		-		1,682,802
OPERATING LOSS		-		(699,809	)
Interest Income		-		-
TOTAL OTHER INCOME		-		-
Interest on Mortgage Notes Payable		-		72,420
Interest on Notes Payable to Banks		-		12,075
Interest on Other Notes Payable		-		-
TOTAL INTEREST EXPENSE		-		84,495
CONSOLIDATED NET LOSS OF DISCONTINUED OPERATIONS	$	-	$	(784,304	)