Ohio
|
34-6647590
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification Number)
|
|
incorporation
or organization)
|
||
InnSuites
Hotels Centre
|
||
1615
E. Northern Ave., Suite 102
|
||
Phoenix,
AZ 85020
|
||
(Address
of principal executive offices)
|
||
Registrant’s
telephone number, including area code: (602)
944-1500
|
JULY
31, 2008
|
JANUARY 31,
2008
|
||||||
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and Cash Equivalents
|
$
|
64,821
|
$
|
299,698
|
|||
Restricted
Cash
|
147,262
|
142,495
|
|||||
Accounts
Receivable, including $312,544 and $194,491 from related parties, net
of Allowance for Doubtful Accounts of $62,000 and $29,000, as of July
31, and January 31, 2008, respectively
|
931,043
|
663,278
|
|||||
Prepaid Expenses and Other Current Assets |
585,074
|
486,438
|
|||||
Deferred Tax Asset |
209,606
|
—
|
|||||
Total
Current Assets
|
1,937,806
|
1,591,909
|
|||||
Property,
Plant and Equipment, net
|
219,326
|
211,958
|
|||||
Hotel
Properties Held for Sale, net
|
30,091,883
|
29,402,016
|
|||||
Long-Term
Portion of Deferred Finance Costs
|
99,907
|
113,618
|
|||||
Long-Term
Deposits
|
14,987
|
14,987
|
|||||
TOTAL
ASSETS
|
$
|
32,363,909
|
$
|
31,334,488
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
LIABILITIES
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
Payable and Accrued Expenses
|
$
|
2,137,693
|
$
|
2,408,087
|
|||
Current
Portion of Notes Payable to Banks
|
850,000
|
750,000
|
|||||
Current
Portion of Mortgage Notes Payable
|
986,497
|
967,289
|
|||||
Current
Portion of Other Notes Payable
|
59,025
|
74,582
|
|||||
Current
Portion of Notes Payable to Related Parties
|
32,876
|
33,336
|
|||||
Total
Current Liabilities
|
4,066,091
|
4,233,294
|
|||||
Mortgage
Notes Payable
|
18,317,869
|
18,807,123
|
|||||
Notes
Payable to Related Parties
|
5,381
|
21,297
|
|||||
Other
Notes Payable
|
78,534
|
108,362
|
|||||
TOTAL
LIABILITIES
|
22,467,875
|
23,170,076
|
|||||
MINORITY
INTEREST IN PARTNERSHIP
|
1,021,196
|
761,219
|
|||||
SHAREHOLDERS’
EQUITY
|
|||||||
Shares
of Beneficial Interest, without par value; unlimited
authorization; 9,081,108 and 9,163,378 shares issued and outstanding
at July 31, and January 31, 2008, respectively
|
19,608,916
|
18,010,184
|
|||||
Treasury
Stock, 7,705,640 and 7,536,970 shares held at July 31, and January 31,
2008, respectively
|
(10,734,078
|
)
|
(10,606,991
|
)
|
|||
TOTAL
SHAREHOLDERS’ EQUITY
|
8,874,838
|
7,403,193
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
32,363,909
|
$
|
31,334,488
|
FOR
THE SIX MONTHS ENDED
JULY
31,
|
||||||||
2008
|
2007
|
|||||||
REVENUE
|
||||||||
Room
|
$
|
9,027,550
|
$
|
8,904,328
|
||||
Food
and Beverage
|
778,813
|
568,310
|
||||||
Telecommunications
|
13,877
|
17,299
|
||||||
Other
|
178,471
|
193,587
|
||||||
Management
and Trademark Fees, including $245,638 and $198,381 from related parties,
for the six months ended July 31, 2008 and 2007,
respectively
|
252,335
|
207,353
|
||||||
Payroll
Reimbursements, including $1,520,195 and $1,552,761 from related parties,
for the six months ended July 31, 2008 and 2007,
respectively
|
1,520,195
|
1,552,761
|
||||||
TOTAL
REVENUE
|
11,771,241
|
11,443,638
|
||||||
OPERATING
EXPENSES
|
||||||||
Room
|
2,234,022
|
2,174,852
|
||||||
Food
and Beverage
|
575,439
|
544,746
|
||||||
Telecommunications
|
31,166
|
49,171
|
||||||
General
and Administrative
|
1,666,169
|
1,774,237
|
||||||
Sales
and Marketing
|
676,936
|
653,381
|
||||||
Repairs
and Maintenance
|
750,283
|
708,016
|
||||||
Hospitality
|
444,024
|
390,078
|
||||||
Utilities
|
606,848
|
593,204
|
||||||
Hotel
Property Depreciation
|
34,991
|
978,453
|
||||||
Real
Estate and Personal Property Taxes, Insurance and Ground
Rent
|
576,070
|
586,803
|
||||||
Other
|
6,320
|
22,616
|
||||||
Payroll
Expenses
|
1,520,195
|
1,552,761
|
||||||
TOTAL
OPERATING EXPENSES
|
9,122,463
|
10,028,318
|
||||||
OPERATING
INCOME
|
2,648,778
|
1,415,320
|
||||||
Interest
Income
|
484
|
679
|
||||||
TOTAL
OTHER INCOME
|
484
|
679
|
||||||
Interest
on Mortgage Notes Payable
|
742,096
|
812,885
|
||||||
Interest
on Notes Payable to Banks
|
10,218
|
60,778
|
||||||
Interest
on Notes Payable and Advances to Related Parties
|
1,675
|
15,350
|
||||||
Interest
on Other Notes Payable
|
6,094
|
7,495
|
||||||
TOTAL
INTEREST EXPENSE
|
760,083
|
896,508
|
||||||
INCOME
BEFORE MINORITY INTEREST AND INCOME TAXES
|
1,889,179
|
519,491
|
||||||
(LESS)
PLUS MINORITY INTEREST
|
(259,977
|
)
|
72,315
|
|||||
INCOME
ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST BEFORE INCOME
TAXES
|
1,629,202
|
591,806
|
||||||
INCOME
TAX PROVISION (Note 7)
|
—
|
(44,286
|
)
|
|||||
NET
INCOME ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST
|
$
|
1,629,202
|
$
|
547,520
|
||||
NET
INCOME PER SHARE - BASIC
|
$
|
0.18
|
$
|
0.06
|
||||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC
|
9,110,826
|
9,198,141
|
||||||
NET
INCOME PER SHARE - DILUTED
|
$
|
0.15
|
$
|
0.04
|
||||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED
|
12,987,273
|
13,147,977
|
FOR
THE THREE MONTHS ENDED
JULY
31,
|
||||||||
2008
|
2007
|
|||||||
REVENUE
|
||||||||
Room
|
$
|
3,655,251
|
$
|
3,707,418
|
||||
Food
and Beverage
|
364,109
|
234,538
|
||||||
Telecommunications
|
6,128
|
5,822
|
||||||
Other
|
82,108
|
99,524
|
||||||
Management
and Trademark Fees, including $119,769 and $89,269 from related parties,
for the three months ended July 31, 2008 and 2007,
respectively
|
124,038
|
98,242
|
||||||
Payroll
Reimbursements, including $767,129 and $792,751 from related parties, for
the three months ended July 31, 2008 and 2007,
respectively
|
767,129
|
792,751
|
||||||
TOTAL
REVENUE
|
4,998,763
|
4,938,295
|
||||||
OPERATING
EXPENSES
|
||||||||
Room
|
1,105,164
|
1,073,582
|
||||||
Food
and Beverage
|
294,888
|
245,707
|
||||||
Telecommunications
|
7,476
|
13,751
|
||||||
General
and Administrative
|
829,769
|
968,077
|
||||||
Sales
and Marketing
|
332,592
|
343,271
|
||||||
Repairs
and Maintenance
|
386,277
|
353,378
|
||||||
Hospitality
|
200,352
|
194,540
|
||||||
Utilities
|
336,992
|
326,903
|
||||||
Hotel
Property Depreciation
|
18,954
|
488,026
|
||||||
Real
Estate and Personal Property Taxes, Insurance and Ground
Rent
|
277,945
|
281,495
|
||||||
Other
|
3,668
|
15,935
|
||||||
Payroll
Expenses
|
767,129
|
792,751
|
||||||
TOTAL
OPERATING EXPENSES
|
4,561,206
|
5,097,416
|
||||||
OPERATING
INCOME (LOSS)
|
437,557
|
(159,121
|
)
|
|||||
Interest
Income
|
231
|
633
|
||||||
TOTAL
OTHER INCOME
|
231
|
633
|
||||||
Interest
on Mortgage Notes Payable
|
365,725
|
383,081
|
||||||
Interest
on Notes Payable to Banks
|
5,167
|
45,330
|
||||||
Interest
on Notes Payable and Advances to Related Parties
|
766
|
1,809
|
||||||
Interest
on Other Notes Payable
|
3,355
|
3,523
|
||||||
TOTAL
INTEREST EXPENSE
|
375,013
|
433,743
|
||||||
INCOME
(LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES
|
62,775
|
(592,231
|
)
|
|||||
PLUS
MINORITY INTEREST
|
60,017
|
206,813
|
||||||
INCOME
(LOSS) ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST BEFORE INCOME
TAXES
|
122,792
|
(385,418
|
)
|
|||||
INCOME
TAX BENEFIT (Note 7)
|
—
|
31,107
|
||||||
NET
INCOME (LOSS) ATTRIBUTABLE TO SHARES OF BENEFICIAL
INTEREST
|
$
|
122,792
|
$
|
(354,311
|
)
|
|||
NET
INCOME (LOSS) PER SHARE - BASIC
|
$
|
0.01
|
$
|
(0.04
|
)
|
|||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC
|
9,091,547
|
9,205,478
|
||||||
NET
INCOME (LOSS) PER SHARE - DILUTED
|
$
|
0.00
|
$
|
(0.04
|
)
|
|||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED
|
12,967,994
|
9,205,478
|
FOR
THE SIX MONTHS ENDED
JULY
31,
|
||||||||
2008
|
2007
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
Income Attributable to Shares of Beneficial Interest
|
$
|
1,629,202
|
$
|
547,520
|
||||
Adjustments
to Reconcile Net Income Attributable to Shares of Beneficial Interest to
Net Cash Provided By Operating Activities:
|
||||||||
Minority
Interest
|
259,977
|
(72,315
|
)
|
|||||
Provision
for Uncollectible Receivables
|
32,324
|
10,723
|
||||||
Stock
Compensation Expense
|
19,620
|
23,040
|
||||||
Depreciation
and Amortization
|
48,698
|
996,255
|
||||||
Deferred
Income Taxes
|
(209,606
|
)
|
—
|
|||||
(Gain)
Loss on Disposal of Hotel Properties
|
(33,813
|
)
|
773
|
|||||
Changes
in Assets and Liabilities:
|
||||||||
(Increase)
Decrease in Accounts Receivable
|
(300,089
|
)
|
139,509
|
|||||
(Increase) in
Prepaid Expenses and Other Assets
|
(98,632
|
)
|
(47,572
|
)
|
||||
(Decrease)
in Accounts Payable and Accrued Expenses
|
(270,394
|
)
|
(1,189,669
|
)
|
||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
1,077,287
|
408,264
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Change
in Restricted Cash
|
(4,767
|
)
|
25,148
|
|||||
Cash
Received from Sale of Hotel Properties
|
1,400
|
1,800
|
||||||
Improvements
and Additions to Hotel Properties
|
(699,813
|
)
|
(411,278
|
)
|
||||
NET
CASH USED IN INVESTING ACTIVITIES
|
(703,180
|
)
|
(384,330
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Principal
Payments on Mortgage Notes Payable
|
(470,046
|
)
|
(442,810
|
)
|
||||
Payments
on Notes Payable to Banks
|
(2,460,441
|
)
|
(2,431,640
|
)
|
||||
Borrowings
on Notes Payable to Banks
|
2,560,441
|
3,799,066
|
||||||
Repurchase
of Partnership Units
|
—
|
(650
|
)
|
|||||
Repurchase
of Treasury Stock
|
(177,177
|
)
|
(115,552
|
)
|
||||
Payments
on Notes and Advances Payable to Related Parties
|
(16,376
|
)
|
(1,015,273
|
)
|
||||
Borrowings
on Notes and Advances Payable to Related Parties
|
—
|
200,000
|
||||||
Payments
on Other Notes Payable
|
(45,385
|
)
|
(53,967
|
)
|
||||
NET
CASH USED IN FINANCING ACTIVITIES
|
(608,984
|
)
|
(60,826
|
)
|
||||
NET
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(234,877
|
)
|
(36,892
|
)
|
||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
299,698
|
202,691
|
||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
64,821
|
$
|
165,799
|
For
the six months ended
|
For
the three months ended
|
|||||||
July
31, 2008
|
July
31, 2007
|
July
31, 2008
|
||||||
Income
attributable to Shares of Beneficial Interest
|
$
|
1,629,202
|
$
|
547,520
|
$
|
122,792
|
||
Plus
(Minus): Income attributable to minority interest unit
holders
|
259,977
|
(72,315)
|
(60,017)
|
|||||
Income
attributable to Shares of Beneficial Interest after unit
|
$
|
475,205
|
$
|
|||||
conversion
|
$
|
1,889,179
|
62,775
|
|||||
Weighted
average common shares outstanding
|
9,110,826
|
9,198,141
|
9,091,547
|
|||||
Plus:
Weighted average incremental shares resulting from unit
|
||||||||
conversion
|
3,876,447
|
3,949,836
|
3,876,447
|
|||||
Weighted
average common shares outstanding after unit
|
||||||||
conversion
|
12,987,273
|
13,147,977
|
12,967,994
|
|||||
Basic
Income Per Share
|
$
|
0.18
|
$
|
0.06
|
$
|
0.01
|
||
Diluted
Income Per Share
|
$
|
0.15
|
$
|
0.04
|
$
|
0.00
|
Restricted
Shares
|
||
Shares
|
Weighted-Average
Grant Date Fair Value
|
|
Balance
at January 31, 2008
|
—
|
—
|
Granted
|
36,000
|
$1.09
|
Vested
|
(18,000)
|
$1.09
|
Forfeited
|
—
|
—
|
Balance
of unvested awards at July 31, 2008
|
18,000
|
$1.09
|
Restricted
Shares
|
||
Shares
|
Weighted-Average
Grant Date Fair Value
|
|
Balance
at January 31, 2007
|
—
|
—
|
Granted
|
36,000
|
$1.28
|
Vested
|
(36,000)
|
$1.28
|
Forfeited
|
—
|
—
|
Balance
of unvested awards at July 31, 2007
|
0
|
NA
|
July
31, 2008
|
January
31, 2008
|
||||
Note
payable to The Anderson Charitable Remainder Unitrust, an affiliate of
Mason Anderson, former Trustee of the Trust, bearing interest at 7% per
annum, and secured by Shares of Beneficial Interest in the Trust. Due in
monthly principal and interest payments of $1,365 through
November 2009.
|
$
|
20,793
|
$
|
28,105
|
|
|
|||||
Note
payable to Wayne Anderson, son of Mason Anderson, former Trustee of the
Trust, bearing interest at 7% per annum, and secured by Shares of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
6,104
|
9,271
|
|||
Note
payable to Karen Anderson, daughter of Mason Anderson, former Trustee of
the Trust, bearing interest at 7% per annum, and secured by Shares of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
6,101
|
9,268
|
|||
Note
payable to Kathy Anderson, daughter of Mason Anderson, former Trustee
of the Trust, bearing interest at 7% per annum, and secured by Shares of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $495 through June 2009.
|
5,259
|
7,989
|
|||
Totals
|
$
|
38,257
|
$
|
54,633
|
Hotel
Property Asset Values as of July 31, 2008
|
||||||||||||
Hotel
Property
|
Book
Value
|
Mortgage
Balance
|
Listed
Sales Price
|
|||||||||
Albuquerque
|
$ | 1,778,781 | $ | 1,006,414 | $ | 6,750,000 | ||||||
Ontario
|
7,107,000 | 8,046,600 | 23,500,000 | |||||||||
Tucson
Oracle
|
5,262,861 | 3,395,965 | 12,700,000 | |||||||||
Tucson
City Center
|
9,345,438 | 5,988,775 | 14,400,000 | |||||||||
Yuma
|
6,597,803 | 866,612 | 15,500,000 | |||||||||
$ | 30,091,883 | $ | 19,304,366 | $ | 72,850,000 |
FOR
THE SIX MONTHS ENDED
|
||||||||
July
31,
|
||||||||
2008
|
2007
|
|||||||
OCCUPANCY
|
69.9
|
%
|
74.6
|
%
|
||||
AVERAGE
DAILY RATE (ADR)
|
$
|
84.22
|
78.48
|
|||||
REVENUE
PER AVAILABLE ROOM (REVPAR)
|
$
|
58.84
|
58.56
|
2008
|
2007
|
Change
|
%
Change
|
|||||||||
Revenue
|
$
|
11,771,241
|
$
|
11,443,638
|
$
|
327,603
|
2.9
|
%
|
||||
Operating
Income
|
$
|
2,648,778
|
$
|
1,415,320
|
$
|
1,233,458
|
87.2
|
%
|
||||
Net
Income Attributable to Shares of Beneficial Interest
|
$
|
1,629,202
|
$
|
547,520
|
$
|
1,081,682
|
>100
|
%
|
||||
Net
Income Per Share - Basic
|
$
|
0.18
|
$
|
0.06
|
$
|
0.12
|
>100
|
%
|
||||
Net
Income Per Share - Diluted
|
$
|
0.15
|
$
|
0.04
|
$
|
0.11
|
>100
|
%
|
2008
|
2007
|
Change
|
%
Change
|
|||||||||
Revenue
|
$
|
4,998,763
|
$
|
4,938,295
|
$
|
60,468
|
1.2
|
%
|
||||
Operating
Income (Loss)
|
$
|
437,557
|
$
|
(159,121
|
)
|
$
|
596,678
|
>100
|
%
|
|||
Net
Loss Attributable to Shares of Beneficial Interest
|
$
|
122,792
|
$
|
(354,311
|
)
|
$
|
477,103
|
>100
|
%
|
|||
Net
Loss Per Share - Basic
|
$
|
0.01
|
$
|
(0.04
|
)
|
$
|
0.05
|
>100
|
%
|
|||
Net
Loss Per Share - Diluted
|
$
|
0.00
|
$
|
(0.04
|
)
|
$
|
0.04
|
>100
|
%
|
•
|
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;
|
•
|
interest rate
fluctuations;
|
•
|
changes in government
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 franchise
contracts;
|
•
|
real estate and hospitality
market conditions;
|
•
|
hospitality industry
factors;
|
•
|
our ability to meet present and
future debt service
obligations;
|
•
|
terrorist attacks or other acts
of war;
|
•
|
outbreaks of communicable
diseases;
|
•
|
natural
disasters;
|
•
|
loss of key personnel;
and
|
•
|
local or national economic and
business conditions, including, without limitation, conditions which may
affect public securities markets generally, the hospitality industry or
the markets in which we operate or will
operate.
|
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
|
||||||
May
1 – May 31, 2008
|
14,520
|
$
|
1.55
|
14,520
|
194,850
|
|||||
June
1 – June 30, 2008
|
16,450
|
$
|
1.51
|
16,450
|
178,400
|
|||||
July
1 – July 31, 2008
|
820
|
$
|
1.37
|
820
|
177,580
|
Name
|
For
|
Withheld
|
|||
Larry
Pelegrin
|
7,422,024 | 7,364 | |||
Steven
S. Robson
|
7,423,024
|
6,364
|
a)
|
Exhibits
|
31.1
|
Section 302
Certification By Chief Executive Officer
|
|
31.2
|
Section 302
Certification By Chief Financial Officer
|
|
32.1
|
Section 906
Certification of Principal Executive Officer and Principal Financial
Officer
|
INNSUITES
HOSPITALITY TRUST
|
||||
Dated:
|
September
22, 2008
|
/s/
James F. Wirth
|
||
James
F. Wirth
|
||||
Chairman,
President and Chief Executive Officer
|
||||
Dated:
|
September
22, 2008
|
/s/
Anthony B. Waters
|
||
Anthony
B. Waters
|
||||
Chief
Financial Officer
|