Attached files
| file | filename |
|---|---|
| 8-K - INNSUITES HOSPITALITY TRUST | form8-k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As disclosed in our Form 8-K filed with the SEC on May 12, 2017, on May 9, 2017, Ontario Hospitality Properties, LLLP, a subsidiary of InnSuites Hospitality Trust (the “Trust”), entered into a Purchase and Sale Agreement (“Agreement”) to sell its Best Western InnSuites Ontario Hotel and Suites property Minkum Investment Group, LLC, or Assignee (“Buyer”) an unrelated third party to the Trust for $17.50 million in cash. Right, title and interest to the Best Western InnSuites Ontario Hotel and Suites Property (“Hotel”) was transferred on June 2, 2017. 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 Transaction. The unaudited pro forma condensed consolidated balance sheet as of January 31, 2017 illustrates the estimated effects of the Transaction as if the sale had occurred on January 31, 2017 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 three months ended April 30, 2017 and the fiscal year ended January 31, 2017 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 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, 2017, as filed with the SEC on May 1, 2017.
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| PROPERTY SOLD | ||||||||||||||
| HISTORICAL | PRO FORMA | PRO FORMA | ||||||||||||
| APRIL 30, 2017 | ADJUSTMENT | NOTES | APRIL 30, 2017 | |||||||||||
| (UNAUDITED) | (UNAUDITED) | (UNAUDITED) | ||||||||||||
| ASSETS | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and Cash Equivalents | $ | 468,248 | $ | - | $ | 468,248 | ||||||||
| Accounts Receivable | 1,173,540 | - | 1,173,540 | |||||||||||
| Prepaid Expenses and Other Current Assets | 185,313 | - | 185,313 | |||||||||||
| Total Current Assets | 1,827,101 | - | 1,827,101 | |||||||||||
| Property, Plant and Equipment, net | 20,001,683 | (6,080,597 | ) | (a) | 13,921,086 | |||||||||
| Intangible Assets, net | 416,250 | - | 416,250 | |||||||||||
| Goodwill | 500,000 | - | 500,000 | |||||||||||
| TOTAL ASSETS | $ | 22,745,034 | $ | (6,080,597 | ) | $ | 16,664,437 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| LIABILITIES | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts Payable and Accrued Expenses | $ | 2,553,308 | $ | (445,084 | ) | (a) | $ | 2,108,224 | ||||||
| Notes Payable - Related Party | 2,384 | - | 2,384 | |||||||||||
| Lending From Affiliates - Related Party | 100,708 | - | 100,708 | |||||||||||
| Current Portion of Mortgage Notes Payable, net of Discount | 505,400 | (185,027 | ) | (a) | 320,373 | |||||||||
| Current Portion of Notes Payable to Banks, net of Discount | 296,376 | - | 296,376 | |||||||||||
| Current Portion of Other Notes Payable | 651,026 | - | 651,026 | |||||||||||
| Total Current Liabilities | 4,109,202 | (630,111 | ) | 3,479,091 | ||||||||||
| Mortgage Notes Payable, net of discount | 12,674,997 | (5,001,682 | ) | 7,673,315 | ||||||||||
| Notes Payable to Banks, net of discount | 827,028 | - | 827,028 | |||||||||||
| Other Notes Payable | 6,250 | - | 6,250 | |||||||||||
| TOTAL LIABILITIES | 17,617,477 | (5,631,793 | ) | 11,985,684 | ||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||
| Shares of Beneficial Interest, without par value, unlimited authorization | 18,314,109 | (230,371 | ) | (b) | 18,083,738 | |||||||||
| Treasury Stock | (12,381,053 | ) | (12,381,053 | ) | ||||||||||
| TOTAL TRUST SHAREHOLDERS’ EQUITY | 5,933,056 | (230,371 | ) | 5,702,685 | ||||||||||
| NON-CONTROLLING INTEREST | (805,499 | ) | (218,433 | ) | (b) | (1,023,932 | ) | |||||||
| TOTAL EQUITY | 5,127,557 | (448,804 | ) | (b) | 4,678,753 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 22,745,034 | $ | (6,080,597 | ) | $ | 16,664,437 | |||||||
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| PROPERTY SOLD | ||||||||||||||||
| HISTORICAL | PRO FORMA | PRO FORMA | ||||||||||||||
| JANUARY 31, 2017 | ADJUSTMENT | NOTES | JANUARY 31, 2017 | |||||||||||||
| (UNAUDITED) | (UNAUDITED) | |||||||||||||||
| REVENUE | ||||||||||||||||
| Room | $ | 11,952,385 | $ | (3,827,794 | ) | (c) | $ | 8,124,591 | ||||||||
| Food and Beverage | 196,262 | (164,326 | ) | (c) | 31,936 | |||||||||||
| Management and Trademark Fees | 296,177 | - | 296,177 | |||||||||||||
| Reservation and Convention | 628,624 | - | 628,624 | |||||||||||||
| Other | 142,185 | (26,333 | ) | (c) | 115,852 | |||||||||||
| TOTAL REVENUE | 13,215,633 | (4,018,453 | ) | 9,197,180 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Room | 3,679,725 | (1,267,571 | ) | (c) | 2,412,154 | |||||||||||
| Food and Beverage | 286,241 | (194,992 | ) | (c) | 91,249 | |||||||||||
| Telecommunications | 24,674 | (656 | ) | 24,018 | ||||||||||||
| General and Administrative | 4,346,820 | (651,808 | ) | (c) | 3,695,012 | |||||||||||
| Sales and Marketing | 1,578,144 | (298,072 | ) | (c) | 1,280,072 | |||||||||||
| Repairs and Maintenance | 980,874 | (290,487 | ) | (c) | 690,387 | |||||||||||
| Hospitality | 800,032 | (216,651 | ) | (c) | 583,381 | |||||||||||
| Utilities | 806,981 | (245,968 | ) | (c) | 561,013 | |||||||||||
| Depreciation | 2,094,401 | (703,874 | ) | (c) | 1,390,527 | |||||||||||
| Intangible Amortization | 67,000 | - | 67,000 | |||||||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | 639,251 | (129,898 | ) | (c) | 509,353 | |||||||||||
| Other | - | - | - | |||||||||||||
| TOTAL OPERATING EXPENSES | 15,304,143 | (3,999,977 | ) | 11,304,166 | ||||||||||||
| OPERATING LOSS | (2,088,510 | ) | (18,476 | ) | (2,106,986 | ) | ||||||||||
| Interest Income | 1,360 | - | 1,360 | |||||||||||||
| Interest Income on Advances to Affiliates - Related Party | - | - | - | |||||||||||||
| TOTAL OTHER INCOME | 1,360 | - | 1,360 | |||||||||||||
| Interest on Mortgage Notes Payable | 683,287 | (260,698 | ) | (c) | 422,589 | |||||||||||
| Interest on Notes Payable to Banks | 26,093 | (49,109 | ) | (c) | (23,016 | ) | ||||||||||
| Interest on Other Notes Payable | 21,765 | (4,518 | ) | (c) | 17,247 | |||||||||||
| Interest on Line of Credit - Related Party | - | - | - | |||||||||||||
| TOTAL INTEREST EXPENSE | 731,145 | (314,325 | ) | 416,820 | ||||||||||||
| CONSOLIDATED NET LOSS BEFORE INCOME TAX BENEFIT (PROVISION) | (2,818,295 | ) | 295,849 | (2,522,446 | ) | |||||||||||
| Income Tax Benefit (Provision) | 227,569 | - | 227,569 | |||||||||||||
| CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS | $ | (2,590,726 | ) | $ | 295,849 | $ | (2,294,877 | ) | ||||||||
| Discontinued Operations, Net of Non-Controlling Interest | $ | (36,028 | ) | $ | - | $ | (36,028 | ) | ||||||||
| Gain on Disposal of Discontinued Operations | $ | - | $ | - | $ | - | ||||||||||
| CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS | $ | (36,028 | ) | $ | - | $ | (36,028 | ) | ||||||||
| CONSOLIDATED NET (LOSS) INCOME | $ | (2,626,754 | ) | $ | 295,849 | $ | (2,330,905 | ) | ||||||||
| LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | (434,782 | ) | $ | 143,546 | (c) | $ | (291,236 | ) | |||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | (2,191,972 | ) | $ | 152,303 | $ | (2,039,669 | ) | ||||||||
| NET LOSS PER SHARE FROM CONTINUING OPERATIONS – BASIC | $ | (0.27 | ) | $ | - | $ | (0.27 | ) | ||||||||
| NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – BASIC | $ | - | $ | - | $ | - | ||||||||||
| NET (LOSS) INCOME PER SHARE PER SHARE TOTAL - BASIC | $ | (0.27 | ) | $ | - | $ | (0.27 | ) | ||||||||
| NET LOSS PER SHARE FROM CONTINUING OPERATIONS – DILUTED | $ | (0.27 | ) | $ | - | $ | (0.27 | ) | ||||||||
| NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – DILUTED | $ | - | $ | - | $ | - | ||||||||||
| NET (LOSS) INCOME PER SHARE PER SHARE TOTAL - DILUTED | $ | (0.27 | ) | $ | - | $ | (0.27 | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 9,682,668 | - | 9,682,668 | |||||||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 13,366,737 | - | 13,366,737 | |||||||||||||
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| PROPERTY SOLD | ||||||||||||||||
| HISTORICAL | PRO FORMA | PRO FORMA | ||||||||||||||
| APRIL 30, 2017 | ADJUSTMENT | NOTES | APRIL 30, 2017 | |||||||||||||
| (UNAUDITED) | (UNAUDITED) | (UNAUDITED) | ||||||||||||||
| REVENUE | ||||||||||||||||
| Room | $ | 3,754,913 | $ | (1,044,091 | ) | (c) | $ | 2,710,822 | ||||||||
| Food and Beverage | 59,785 | (48,817 | ) | (c) | 10,968 | |||||||||||
| Management and Trademark Fees | 80,284 | - | 80,284 | |||||||||||||
| Reservation and Convention | 229,247 | - | 229,247 | |||||||||||||
| Other | 27,955 | (5,475 | ) | (c) | 22,480 | |||||||||||
| TOTAL REVENUE | 4,152,184 | (1,098,383 | ) | 3,053,801 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Room | 973,718 | (295,995 | ) | (c) | 677,723 | |||||||||||
| Food and Beverage | 66,660 | (48,445 | ) | (c) | 18,215 | |||||||||||
| Telecommunications | 9,779 | - | 9,779 | |||||||||||||
| General and Administrative | 1,101,775 | (181,421 | ) | (c) | 920,354 | |||||||||||
| Sales and Marketing | 510,965 | (59,304 | ) | (c) | 451,661 | |||||||||||
| Repairs and Maintenance | 194,323 | (60,401 | ) | (c) | 133,922 | |||||||||||
| Hospitality | 210,546 | (49,801 | ) | (c) | 160,745 | |||||||||||
| Utilities | 174,372 | (53,868 | ) | (c) | 120,504 | |||||||||||
| Depreciation | 413,398 | (125,140 | ) | (c) | 288,258 | |||||||||||
| Intangible Amortization | 16,750 | - | 16,750 | |||||||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | 156,765 | (29,705 | ) | (c) | 127,060 | |||||||||||
| TOTAL OPERATING EXPENSES | 3,829,051 | (904,080 | ) | 2,924,971 | ||||||||||||
| OPERATING INCOME | 323,133 | (194,303 | ) | 128,830 | ||||||||||||
| Interest Income | 4 | - | 4 | |||||||||||||
| Interest Income on Advances to Affiliates - Related Party | - | - | - | |||||||||||||
| TOTAL OTHER INCOME | 4 | - | 4 | |||||||||||||
| Interest on Mortgage Notes Payable | 156,289 | (64,350 | ) | (c) | 91,939 | |||||||||||
| Interest on Notes Payable to Banks | 27,805 | - | 27,805 | |||||||||||||
| Interest on Other Notes Payable | 17,909 | - | 17,909 | |||||||||||||
| Interest on Advances to Affiliates - Related Party | 3,033 | - | 3,033 | |||||||||||||
| TOTAL INTEREST EXPENSE | 205,036 | (64,350 | ) | 140,686 | ||||||||||||
| CONSOLIDATED NET INCOME BEFORE INCOME TAX PROVISION | 118,101 | (129,953 | ) | (11,852 | ) | |||||||||||
| Income Tax Provision | (60,000 | ) | - | (60,000 | ) | |||||||||||
| CONSOLIDATED NET INCOME | $ | 58,101 | $ | (129,953 | ) | $ | (71,852 | ) | ||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | 297,870 | $ | (63,248 | ) | (c) | $ | 234,622 | ||||||||
| NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | (239,769 | ) | $ | (66,705 | ) | $ | (306,474 | ) | |||||||
| NET INCOME PER SHARE – BASIC AND DILUTED | $ | (0.02 | ) | $ | - | $ | (0.02 | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | 9,685,793 | - | 9,685,793 | |||||||||||||
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 April 30, 2017 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 April 30, 2017 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, 2017 and for the three months ending April 30, 2017 to remove the revenues and expenses associated with the Hotel. |