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 24, 2018

 

 

 

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,

1730 E. Northern Avenue, Suite 122

    
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.

 

Effective October 24, 2018, the final closing occurred as provided for in the Purchase and Sale Agreement (“Agreement”) dated July 31, 2018 between Yuma Hospitality Properties LLLP (“Yuma”), a subsidiary of InnSuites Hospitality Trust (the “Trust”), and Palm Springs Inn, LLC (“Buyer”), an unrelated third party. Pursuant to the Agreement, as revised, the Buyer acquired the InnSuites Yuma Hotel and Suites Best Western for $16.050 million with an estimated basis of approximately $4.6 million, which will result in a recognition of a significant profit after transactional costs. Right, title and interest to the InnSuites Yuma Hotel and Suites Best Western hotel property and operating assets were transferred on October 24, 2018. The Trust has attached as Exhibit 99.1 unaudited pro forma condensed consolidated financial statements to illustrate the pro forma effects of this 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 expressly set forth by specific reference in such filing. The foregoing description is not intended to be complete and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the United States Securities and Exchange Commission on August 1, 2018 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/ James F. Wirth
    James F. Wirth
    Chairman and Chief Executive Officer

 

Date: October 29, 2018

 

 
 

 

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

 

Effective October 24, 2018, the final transaction provided for in the Purchase and Sale Agreement (“Agreement”) dated July 31, 2018 between Yuma Hospitality Properties LLLP (“Yuma”), a subsidiary of InnSuites Hospitality Trust (the “Trust”), and Palm Springs Inn, LLC (“Buyer”), an unrelated third party, were consummated. Pursuant to the Agreement, as revised, the Buyer acquired the InnSuites Yuma Hotel and Suites Best Western for $16.05 million with an estimated basis of approximately $4.6 million will result in a recognition of a significant profit after transactional costs. Right, title and interest to the InnSuites Yuma Hotel and Suites Best Western hotel property and operating assets were transferred on October 24, 2018.

 

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 following unaudited condensed consolidated financial statements are presented to illustrate the effects of the Transaction. The unaudited pro forma condensed consolidated balance sheet as of July 31, 2018 illustrates the estimated effects of the Transaction as if the sale had occurred on July 31, 2018 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, 2018 and the fiscal year ended January 31, 2018 sets forth the estimated effects of the 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 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, 2018, as filed with the SEC on May 16, 2018.

 

 
 

 

INNSUITES HOSPITALITY TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

   JULY 31, 2018   PROFORMA      PROFORMA 
   (UNAUDITED)   ADJUSTMENTS   NOTES  JULY 31, 2018 
ASSETS                  
Current Assets:                  
Cash and Cash Equivalents  $674,621   $9,735,000   (d)  $10,409,621 
Short-Term Investments – Available For Sale Securities   3,031,710    -       3,031,710 
Accounts Receivable, including approximately $36,000 and $15,000 from related parties and net of Allowance for Doubtful Accounts of approximately $6,000 and $29,000 as of July 31, 2018 and January 31, 2018, respectively   52,302    -       52,302 
Advances to Affiliates - Related Party   869,363    -       869,363 
Notes Receivable - Related Party   797,065    -       797,065 
Prepaid Expenses and Other Current Assets   199,632    -       199,632 
Current Assets of Discontinued Operations and Assets Held for Sale   426,257    (277,216)  (a)   149,041 
Total Current Assets   6,050,950    9,457,784       15,508,734 
Property, Plant and Equipment, net   9,644,419    -       9,644,419 
Noncurrent assets of Discontinued Operations and Assets Held for Sale   5,144,983    (4,665,764)  (a)   479,219 
TOTAL ASSETS  $20,840,352   $4,792,020      $25,632,372 
                   
LIABILITIES AND SHAREHOLDERS’ EQUITY                  
                   
LIABILITIES                  
Current Liabilities:                  
Accounts Payable and Accrued Expenses  $1,596,340   $-      $1,596,340 
Current Portion of Notes Payable - Related Party   301,530    -       301,530 
Current Portion of Mortgage Notes Payable, net of Discount   112,162    -       112,162 
Current Portion of Other Notes Payable   1,231,801    -       1,231,801 
Current Liabilities of Discontinued Operations and Assets Held for Sale   571,744    (370,865)  (a)   200,879 
Total Current Liabilities   3,813,577    (370,865)      3,442,712 
Notes Payable - Related Party   335,764    -       335,764 
Mortgage Notes Payable, net of discount   4,759,845    -       4,759,845 
Other Notes Payable   377,956    -       377,956 
Noncurrent Liabilities of Discontinued Operations and Assets Held for Sale   5,413,382    (5,413,382)   (a)   - 
TOTAL LIABILITIES   14,700,524    (5,784,247)      8,916,277 
                   
COMMITMENTS AND CONTINGENCIES                  
                   
SHAREHOLDERS’ EQUITY                  
Shares of Beneficial Interest, without par value, unlimited authorization;   20,993,689    1,990,434   (b),(d)   22,984,123 
                   
Treasury Stock,   (13,244,428)   -       (13,244,428)
TOTAL TRUST SHAREHOLDERS’ EQUITY   7,749,261    1,990,434       9,739,695 
NON-CONTROLLING INTEREST   (1,609,433)   8,585,833   (b),(d)   6,976,400 
TOTAL EQUITY   6,139,828    10,576,267       16,716,095 
TOTAL LIABILITIES AND EQUITY  $20,840,352   $4,792,020      $25,632,372 

 

 
 

 

INNSUITES HOSPITALITY TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

   REPORTED AT   PROFORMA       PROFORMA 
   JANUARY 31, 2018   ADJUSTMENTS   NOTES   JANUARY 31, 2018 
                 
REVENUE                    
Room  $9,281,199   $4,058,453    (c)   $5,222,746 
Food and Beverage   62,969    41,943    (c)    21,026 
Management and Trademark Fees   200,457    -         200,457 
Reservation and Convention   1,111,775    -         1,111,775 
Other   111,192    24,543    (c)    86,649 
TOTAL REVENUE   10,767,592    4,124,939         6,642,653 
                     
OPERATING EXPENSES                    
Room   2,732,908    1,008,884    (c)    1,724,024 
Food and Beverage   90,543    59,407    (c)    31,136 
Telecommunications   37,145    34,268    (c)    2,877 
General and Administrative   4,349,086    586,564    (c)    3,762,522 
Other   6,672,717    1,611,705         5,061,012 
TOTAL OPERATING EXPENSES   13,882,399    3,300,828         10,581,571 
OPERATING INCOME (LOSS)   (3,114,807)   824,111         (3,938,918)
Interest Income   11,641    -         11,641 
Interest income - related party   68,358    -         68,358 
TOTAL OTHER INCOME   79,999    -         79,999 
Interest Paid to Third Parties   656,810    303,656    (c)    353,154 
Interest on Advances to Affiliates - Related Party                    
TOTAL INTEREST EXPENSE   656,810    303,656         353,154 
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION AND DISCONTINUED OPERATIONS   (3,691,618)   520,455         (4,212,073)
Income Tax Provision   (341,000)   -         (341,000)
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS   (4,032,618)   520,455         (4,553,073)
Discontinued Operations, Net of Non-Controlling Interest   (605,360)   -         (605,360)
Gain on Disposal of Discontinued Operations   11,445,879    -         11,445,879 
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS AND GAIN ON SALE OF DISCONTINUED OPERATIONS   10,840,519    -         10,840,519 
CONSOLIDATED NET (LOSS) INCOME   6,807,901    520,455         6,287,446 
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST   5,410,300    379,508    (c)    5,030,792 
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS  $1,397,601   $140,947        $1,256,654 
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – BASIC  $(0.42)  $0.05        $0.01 
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – BASIC  $1.13   $-        $(0.44)
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – BASIC  $0.56   $0.04        $(0.47)
NET (LOSS) INCOME PER SHARE TOTAL - BASIC  $0.15   $0.01        $(0.06)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC   9,612,139    9,612,139         9,612,139 
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – DILUTED  $(0.31)  $0.04        $(0.35)
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – DILUTED  $0.83   $-        $0.83 
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – DILUTED  $0.41   $0.03        $0.38 
NET (LOSS) INCOME PER SHARE TOTAL - DILUTED  $0.11   $0.01        $0.10 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED   13,085,223    13,085,223         13,085,223 

 

 
 

 

INNSUITES HOSPITALITY TRUST

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

   JULY 31, 2018   PROFORMA       PROFORMA 
   (UNAUDITED)   ADJUSTMENTS   NOTES   JULY 31, 2018 
                 
REVENUE                    
Room  $5,401,044   $2,254,307    (c)   $3,146,737 
Food and Beverage   43,812    21,649    (c)    22,163 
Management and Trademark Fees   90,443    -    (c)    90,443 
Other   77,716    35,061    (c)    42,655 
TOTAL REVENUE   5,613,015    2,311,017         3,301,998 
                     
OPERATING EXPENSES                    
Room   1,500,513    533,105    (c)    967,408 
Food and Beverage   64,192    29,102    (c)    35,090 
Telecommunications   19,571    16,383    (c)    3,188 
General and Administrative   1,438,781    350,271    (c)    1,088,510 
Other   2,342,462    777,149         1,565,313 
TOTAL OPERATING EXPENSES   5,365,519    1,706,010         3,659,509 
OPERATING INCOME (LOSS)   247,496    605,007         (357,511)
Interest Income   60,879    -         60,879 
TOTAL OTHER INCOME   60,879    -         60,879 
Interest Paid to Third Parties   358,821    165,895    (c)    192,926 
Interest on Advances to Affiliates - Related Party                  - 
TOTAL INTEREST EXPENSE   358,821    165,895         192,926 
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION AND DISCONTINUED OPERATIONS   (50,446)   439,112         (489,558)
Income Tax Provision   (209,831)   -         (209,831)
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS  $(260,277)  $439,112        $(699,389)
Discontinued Operations, Net of Non-Controlling Interest  $(686,427)             (686,427)
Gain on Disposal of Discontinued Operations  $-              - 
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS AND GAIN ON SALE OF DISCONTINUED OPERATIONS  $(686,427)  $-        $(686,427)
CONSOLIDATED NET (LOSS) INCOME  $(946,704)  $439,112        $(1,385,816)
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST  $435,345    382,950    (c)    52,395 
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS  $(1,382,049)  $56,162        $(1,438,211)
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – BASIC  $(0.03)  $0.05        $(0.07)
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – BASIC  $(0.07)  $-        $(0.07)
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – BASIC  $0.05   $0.04        $0.01 
NET (LOSS) INCOME PER SHARE TOTAL - BASIC  $(0.15)  $0.01        $(0.15)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC   9,405,357    9,405,357         9,405,357 
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – DILUTED  $(0.03)  $0.05        $(0.07)
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – DILUTED  $(0.07)  $-        $(0.07)
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – DILUTED  $0.05   $0.04        $0.01 
NET (LOSS) INCOME PER SHARE TOTAL - DILUTED  $(0.15)  $0.01        $(0.15)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED   9,405,357    9,405,357         9,405,357 

 

 
 

 

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, 2018 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, 2018 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 fiscal year ending January 31, 2018 and for the six months ending July 31, 2018 to remove the revenues and expenses associated with the Hotel
   
(d) Adjustment represents the net proceeds the Trust expects to receive from the sale of the Yuma Hotel. The net proceeds were allocated between the Trust ownership of the Yuma Hotel of approximately 20% and the minority ownership percentage of approximately 80% within equity.