Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019March 31, 2020
OR 
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-13957 
 
RED LION HOTELS CORPORATIONCORPORATION
(Exact name of registrant as specified in its charter)
Washington91-103218791-1032187
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1550 Market St. #350#425DenverColorado80202
(Address of Principal Executive Offices)(Zip Code)

(509) (509) 459-6100
Registrant's telephone number, including area code
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockRLHNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer," "accelerated filer,” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒
As of NovemberMay 4, 2019,2020, there were 25,147,38225,341,649 shares of the registrant’s common stock outstanding.



TABLE OF CONTENTS
 
Item No.DescriptionPage No.
Item No.DescriptionPage No.
PART I – FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Comprehensive Income (Loss)
4
Condensed Consolidated Statements of Stockholders' Equity
5
Condensed Consolidated Statements of Cash Flows
6
Notes to Condensed Consolidated Financial Statements
7
Item 2
2421
Item 3
3331
Item 4
3431
PART II – OTHER INFORMATION
Item 1
3531
Item 1A
3532
Item 2
3534
Item 3
3534
Item 4
3534
Item 5
3534
Item 6
3635
3736



2

PART I – FINANCIAL INFORMATION
Item 1.Financial Statements

Item 1.Financial Statements

RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 September 30,
2019		 December 31,
2018		March 31,
2020		December 31,
2019
 (In thousands, except share data) (In thousands, except share data)
ASSETS    ASSETS
Current assets:    Current assets:
Cash and cash equivalents ($4,363 and $4,564 attributable to VIEs) $18,267
 $17,034
Restricted cash ($2,930 and $2,652 attributable to VIEs) 2,930
 2,755
Accounts receivable ($1,405 and $1,064 attributable to VIEs), net of an allowance for doubtful accounts of $3,377 and $2,345, respectively 19,496
 18,575
Cash and cash equivalents ($1,914 and $1,819 attributable to VIEs)Cash and cash equivalents ($1,914 and $1,819 attributable to VIEs)$37,775  $29,497  
Restricted cash ($100 and $2,311 attributable to VIEs)Restricted cash ($100 and $2,311 attributable to VIEs)100  2,311  
Accounts receivable ($718 and $1,033 attributable to VIEs), net of an allowance for doubtful accounts of $8,125 and $4,589, respectivelyAccounts receivable ($718 and $1,033 attributable to VIEs), net of an allowance for doubtful accounts of $8,125 and $4,589, respectively10,701  15,143  
Notes receivable, net 4,188
 2,103
Notes receivable, net286  5,709  
Other current assets ($716 and $680 attributable to VIEs) 4,961
 6,218
Other current assets ($144 and $311 attributable to VIEs)Other current assets ($144 and $311 attributable to VIEs)5,156  5,849  
Total current assets 49,842
 46,685
Total current assets54,018  58,509  
Property and equipment, net ($67,514 and $74,250 attributable to VIEs) 107,554
 115,522
Operating lease right-of-use assets ($10,855 and $0 attributable to VIEs) 48,553
 —
Property and equipment, net ($11,520 and $29,848 attributable to VIEs)Property and equipment, net ($11,520 and $29,848 attributable to VIEs)36,071  68,668  
Operating lease right-of-use assets ($— and $10,810 attributable to VIEs)Operating lease right-of-use assets ($— and $10,810 attributable to VIEs)5,552  48,283  
Goodwill 18,595
 18,595
Goodwill18,595  18,595  
Intangible assets, net 58,233
 60,910
Intangible assets, net47,845  48,612  
Other assets, net ($703 and $705 attributable to VIEs) 5,085
 8,075
Other assets, net ($— and $703 attributable to VIEs)Other assets, net ($— and $703 attributable to VIEs)2,427  3,851  
Total assets $287,862
 $249,787
Total assets$164,508  $246,518  
    
LIABILITIES    LIABILITIES
Current liabilities:    Current liabilities:
Accounts payable ($890 and $650 attributable to VIEs) $5,176
 $5,322
Accrued payroll and related benefits ($342 and $369 attributable to VIEs) 1,868
 5,402
Other accrued liabilities ($895 and $1,092 attributable to VIEs) 5,519
 4,960
Long-term debt, due within one year ($24,628 and $25,056 attributable to VIEs) 24,628
 25,056
Operating lease liabilities, due within one year ($966 and $0 attributable to VIEs) 4,801
 —
Accounts payable ($543 and $589 attributable to VIEs)Accounts payable ($543 and $589 attributable to VIEs)$6,251  $5,510  
Accrued payroll and related benefits ($68 and $349 attributable to VIEs)Accrued payroll and related benefits ($68 and $349 attributable to VIEs)1,184  2,709  
Other accrued liabilities ($176 and $455 attributable to VIEs)Other accrued liabilities ($176 and $455 attributable to VIEs)4,915  5,469  
Long-term debt, due within one year ($5,576 and $16,984 attributable to VIEs)Long-term debt, due within one year ($5,576 and $16,984 attributable to VIEs)5,576  16,984  
Operating lease liabilities, due within one year ($— and $966 attributable to VIEs)Operating lease liabilities, due within one year ($— and $966 attributable to VIEs)1,519  4,809  
Total current liabilities 41,992
 40,740
Total current liabilities19,445  35,481  
Long-term debt, due after one year, net of debt issuance costs ($16,468 and $0 attributable to VIEs) 20,496
 9,114
Long-term debt, due after one year, net of debt issuance costs ($— and $5,576 attributable to VIEs)Long-term debt, due after one year, net of debt issuance costs ($— and $5,576 attributable to VIEs)—  5,576  
Line of credit, due after one year 10,000
 10,000
Line of credit, due after one year—  10,000  
Operating lease liabilities, due after one year ($11,941 and $0 attributable to VIEs) 46,871
 —
Deferred income and other long-term liabilities ($330 and $480 attributable to VIEs) 1,541
 2,245
Operating lease liabilities, due after one year ($— and $11,938 attributable to VIEs)Operating lease liabilities, due after one year ($— and $11,938 attributable to VIEs)5,339  46,592  
Deferred income and other long-term liabilities ($3 and $28 attributable to VIEs)Deferred income and other long-term liabilities ($3 and $28 attributable to VIEs)941  1,105  
Deferred income taxes 1,217
 772
Deferred income taxes678  743  
Total liabilities 122,117
 62,871
Total liabilities26,403  99,497  
    
Commitments and contingencies (Note 10) 


 


Commitments and contingencies (Note 10)
    
STOCKHOLDERS’ EQUITY    STOCKHOLDERS’ EQUITY
RLH Corporation stockholders' equity:    RLH Corporation stockholders' equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding —
 —
Common stock - 50,000,000 shares authorized; $0.01 par value; 25,118,512 and 24,570,158 shares issued and outstanding 252
 246
Preferred stock - 5,000,000 shares authorized; $0.01 par value; 0 shares issued or outstandingPreferred stock - 5,000,000 shares authorized; $0.01 par value; 0 shares issued or outstanding—  —  
Common stock - 50,000,000 shares authorized; $0.01 par value; 25,208,983 and 25,148,005 shares issued and outstandingCommon stock - 50,000,000 shares authorized; $0.01 par value; 25,208,983 and 25,148,005 shares issued and outstanding253  251  
Additional paid-in capital, common stock 182,723
 182,018
Additional paid-in capital, common stock179,568  181,608  
Accumulated deficit (26,923) (16,512)Accumulated deficit(44,974) (36,875) 
Total RLH Corporation stockholders' equity 156,052
 165,752
Total RLH Corporation stockholders' equity134,847  144,984  
Noncontrolling interest 9,693
 21,164
Noncontrolling interest3,258  2,037  
Total stockholders' equity 165,745
 186,916
Total stockholders' equity138,105  147,021  
Total liabilities and stockholders’ equity $287,862
 $249,787
Total liabilities and stockholders’ equity$164,508  $246,518  
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 Three Months Ended
March 31,
 20202019
(In thousands, except per share data)
Revenue:
Royalty$4,357  $5,740  
Marketing, reservations and reimbursables5,805  6,729  
Other franchise774  542  
Company operated hotels6,329  12,970  
Other—  3  
Total revenues17,265  25,984  
Operating expenses:
Selling, general, administrative and other expenses16,265  7,391  
Company operated hotels6,678  11,545  
Marketing, reservations and reimbursables5,758  7,161  
Depreciation and amortization2,537  3,447  
Asset impairment1,760  —  
Loss (gain) on asset dispositions, net(7,892) 6  
Transaction and integration costs398  62  
Total operating expenses25,504  29,612  
Operating income (loss)(8,239) (3,628) 
Other income (expense):
Interest expense(506) (882) 
Loss on early retirement of debt(1,309) —  
Other income (loss), net48  33  
Total other income (expense)(1,767) (849) 
Income (loss) before taxes(10,006) (4,477) 
Income tax expense (benefit)(752) 82  
Net income (loss)(9,254) (4,559) 
Net (income) loss attributable to noncontrolling interest1,155  286  
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation$(8,099) $(4,273) 
Earnings (loss) per share - basic$(0.32) $(0.17) 
Earnings (loss) per share - diluted$(0.32) $(0.17) 
Weighted average shares - basic25,199  24,603  
Weighted average shares - diluted25,199  24,603  
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2019 2018 2019 2018
  (In thousands, except per share data)
Revenue:        
Royalty $5,909
 $6,530
 $17,516
 $16,575
Other franchise 2,016
 1,016
 3,772
 2,412
Company operated hotels 16,633
 20,857
 43,839
 68,758
Marketing, reservations and reimbursables 8,300
 7,591
 22,632
 19,874
Other 5
 6
 13
 32
Total revenues 32,863
 36,000
 87,772
 107,651
Operating expenses:        
Selling, general, administrative and other expenses 8,196
 8,112
 21,921
 23,590
Company operated hotels 12,673
 16,051
 36,750
 54,924
Marketing, reservations and reimbursables 7,080
 7,453
 22,088
 20,226
Depreciation and amortization 3,636
 3,621
 11,192
 12,714
Asset impairment 5,382
 7,100
 5,382
 7,100
Loss (gain) on asset dispositions, net 1
 (26,196) 45
 (42,094)
Transaction and integration costs 201
 95
 436
 2,196
Total operating expenses 37,169
 16,236
 97,814
 78,656
Operating income (loss) (4,306) 19,764
 (10,042) 28,995
Other income (expense):        
Interest expense (1,699) (1,417) (3,690) (5,366)
Loss on early retirement of debt —
 (794) (164) (794)
Other income (loss), net 44
 34
 121
 214
Total other income (expense) (1,655) (2,177) (3,733) (5,946)
Income (loss) before taxes (5,961) 17,587
 (13,775) 23,049
Income tax expense (benefit) 486
 (26) 676
 (239)
Net income (loss) (6,447) 17,613
 (14,451) 23,288
Net (income) loss attributable to noncontrolling interest 2,980
 (8,670) 4,040
 (14,079)
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation $(3,467) $8,943
 $(10,411) $9,209
         
Earnings (loss) per share - basic $(0.14) $0.36
 $(0.42) $0.38
Earnings (loss) per share - diluted $(0.14) $0.35
 $(0.42) $0.36
         
Weighted average shares - basic 25,112
 24,545
 24,859
 24,334
Weighted average shares - diluted 25,112
 25,729
 24,859
 25,437

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Red Lion Hotels Corporation Stockholders' Equity
Common StockRetained
Earnings (Accumulated Deficit)		RLH Corporation Total EquityEquity Attributable to Noncontrolling Interest
SharesAmountAdditional
Paid-In Capital		Total
Equity
(In thousands, except share data)
Balances, December 31, 201824,570,158  $246  $182,018  $(17,846) $164,418  $21,164  $185,582  
Net income (loss)—  —  —  (4,273) (4,273) (286) (4,559) 
Shared based payment activity56,301  1  685  —  686  —  686  
Distributions to noncontrolling interests—  —  —  —  —  (7,431) (7,431) 
Balances, March 31, 201924,626,459  247  182,703  (22,119) 160,831  13,447  174,278  
Net income (loss)—  —  —  (2,997) (2,997) (774) (3,771) 
Shared based payment activity449,453  4  (1,034) —  (1,030) —  (1,030) 
Balances, June 30, 201925,075,912  251  181,669  (25,116) 156,804  12,673  169,477  
Net income (loss)—  —  —  (3,672) (3,672) (2,980) (6,652) 
Shared based payment activity42,600  1  1,054  —  1,055  —  1,055  
Balances, September 30, 201925,118,512  252  182,723  (28,788) 154,187  9,693  163,880  
Net income (loss)—  —  —  (8,087) (8,087) 2,096  (5,991) 
Shared based payment activity29,493  (1) (739) —  (740) —  (740) 
Reclassification of noncontrolling interest—  —  (376) —  (376) 376  —  
Distributions to noncontrolling interests—  —  —  —  —  (10,128) (10,128) 
Balances, December 31, 201925,148,005  251  181,608  (36,875) 144,984  2,037  147,021  
Net income (loss)—  —  —  (8,099) (8,099) (1,155) (9,254) 
Shared based payment activity60,978  2  336  —  338  —  338  
Reclassification of noncontrolling interest—  —  (2,376) —  (2,376) 2,376  —  
Balances, March 31, 202025,208,983  $253  $179,568  $(44,974) $134,847  $3,258  $138,105  
  Red Lion Hotels Corporation Stockholders' Equity    
  Common Stock Retained
Earnings (Accumulated Deficit)		 RLH Corporation Total Equity Equity Attributable to Noncontrolling Interest  
  Shares Amount Additional
Paid-In Capital		    Total
Equity
  (In thousands, except share data)
Balances, January 1, 201823,651,212
 $237
 $178,028
 $(18,042) $160,223
 $27,381
 $187,604
 Net income (loss)—
 —
 —
 2,588
 2,588
 4,750
 7,338
 Cumulative effect of adopting ASC Topic 606—
 —
 —
 (427) (427) —
 (427)
 Shared based payment activity60,388
 —
 294
 —
 294
 —
 294
 Vantage contingent consideration settled414,000
 4
 (4) —
 —
 —
 —
Balances, March 31, 201824,125,600
 241
 178,318
 (15,881) 162,678
 32,131
 194,809
 Net income (loss)—
 —
 —
 (2,322) (2,322) 659
 (1,663)
 Shared based payment activity120,918
 1
 1,004
 —
 1,005
 —
 1,005
 Vantage contingent consideration settled—
 —
 2,870
 —
 2,870
 —
 2,870
 Distributions to noncontrolling interests—
 —
 —
 —
 —
 (4,081) (4,081)
Balances, June 30, 201824,246,518
 242
 182,192
 (18,203) 164,231
 28,709
 192,940
 Net income (loss)—
 —
 —
 8,943
 8,943
 8,670
 17,613
 Shared based payment activity28,080
 —
 1,219
 —
 1,219
 —
 1,219
 Distributions to noncontrolling interests—
 —
 —
 —
 —
 (16,891) (16,891)
Balances, September 30, 201824,274,598
 242
 183,411

(9,260) 174,393
 20,488
 194,881
 Net income (loss)—
 —
 —
 (7,252) (7,252) (950) (8,202)
 Shared based payment activity19,560
 —
 1,018
 —
 1,018
 —
 1,018
 Vantage contingent consideration settled276,000
 4
 4
 —
 8
 —
 8
 Buyout of noncontrolling interest—
 —
 (2,415) —
 (2,415) 2,111
 (304)
 Distributions to noncontrolling interests—
 —
 —
 —
 —
 (485) (485)
Balances, December 31, 201824,570,158
 246
 182,018
 (16,512) 165,752
 21,164
 186,916
 Net income (loss)—
 —
 —
 (4,110) (4,110) (286) (4,396)
 Shared based payment activity56,301
 1
 685
 —
 686
 —
 686
 Distributions to noncontrolling interests—
 —
 —
 —
 —
 (7,431) (7,431)
Balances, March 31, 201924,626,459
 247
 182,703
 (20,622) 162,328
 13,447
 175,775
 Net income (loss)—
 —
 —
 (2,834) (2,834) (774) (3,608)
 Shared based payment activity449,453
 4
 (1,034) —
 (1,030) —
 (1,030)
Balances, June 30, 201925,075,912
 251
 181,669
 (23,456) 158,464
 12,673
 171,137
 Net income (loss)—
 —
 —
 (3,467) (3,467) (2,980) (6,447)
 Shared based payment activity42,600
 1
 1,054
 —
 1,055
 —
 1,055
Balances, September 30, 201925,118,512
 $252
 $182,723
 $(26,923) $156,052
 $9,693
 $165,745

The accompanying notes are an integral part of these condensed consolidated financial statements.


5

RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended
March 31,
 20202019
 (In thousands)
Operating activities:
Net income (loss)$(9,254) $(4,559) 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization2,537  3,447  
Noncash PIK interest and amortization of debt issuance costs182  47  
Amortization of key money and contract costs264  206  
Amortization of contract liabilities(165) (197) 
Loss (gain) on asset dispositions, net(7,892) 6  
Noncash loss on early retirement of debt750  —  
Asset impairment1,760  —  
Deferred income taxes(65) 52  
Stock-based compensation expense373  916  
Provision for doubtful accounts9,739  245  
Change in operating assets and liabilities:
Accounts receivable501  (1,009) 
Key money disbursements(129) (236) 
Other current assets504  (616) 
Accounts payable459  1,383  
Other accrued liabilities(1,858) (1,717) 
Net cash provided by (used in) operating activities(2,294) (2,032) 
Investing activities:
Capital expenditures(782) (1,500) 
Net proceeds from disposition of property and equipment36,896  —  
Collection of notes receivable—  21  
Advances on notes receivable—  (90) 
Net cash provided by (used in) investing activities36,114  (1,569) 
Financing activities:
Borrowings on long-term debt, net of discounts—  16,513  
Repayment of long-term debt and finance leases(17,717) (170) 
Repayment of line of credit borrowing(10,000) —  
Distributions to noncontrolling interest—  (7,431) 
Stock-based compensation awards canceled to settle employee tax withholding(81) (342) 
Stock option and stock purchase plan issuances, net and other45  112  
Net cash provided by (used in) financing activities(27,753) 8,682  
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash6,067  5,081  
Cash, cash equivalents and restricted cash at beginning of period31,808  19,789  
Cash, cash equivalents and restricted cash at end of period$37,875  $24,870  
  Nine Months Ended
  September 30,
  2019 2018
  (In thousands)
Operating activities:    
Net income (loss) $(14,451) $23,288
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization 11,192
 12,714
Noncash PIK interest and amortization of debt issuance costs 929
 892
Amortization of key money and contract costs 997
 535
Amortization of contract liabilities (994) (563)
Loss (gain) on asset dispositions, net 45
 (42,094)
Noncash loss on early retirement of debt 67
 794
Asset impairment 5,382
 7,100
Deferred income taxes 445
 (1,445)
Stock-based compensation expense 2,503
 2,896
Provision for doubtful accounts 1,780
 651
Fair value adjustments to contingent consideration —
 581
Change in operating assets and liabilities, net of business acquired:    
Accounts receivable (2,148) (7,293)
Notes receivable (16) (7)
Key money disbursements (665) (5,420)
Other current assets 1,014
 (1,740)
Accounts payable 45
 1,405
Other accrued liabilities (1,170) 79
Net cash provided by (used in) operating activities 4,955
 (7,627)
Investing activities:    
Capital expenditures (4,104) (6,190)
Acquisition of Knights Inn —
 (26,888)
Net proceeds from disposition of property and equipment —
 113,838
Collection of notes receivable 262
 —
Advances on notes receivable (90) (537)
Net cash provided by (used in) investing activities (3,932) 80,223
Financing activities:    
Borrowings on long-term debt, net of discounts 32,935
 30,000
Repayment of long-term debt and finance leases (22,510) (107,899)
Proceeds from line of credit borrowing —
 10,000
Debt issuance costs (692) (1,317)
Distributions to noncontrolling interest (7,430) (20,972)
Contingent consideration paid for Vantage Hospitality acquisition —
 (4,000)
Stock-based compensation awards canceled to settle employee tax withholding (2,135) (615)
Stock option and stock purchase plan issuances, net and other 217
 238
Net cash provided by (used in) financing activities 385
 (94,565)
     
Change in cash, cash equivalents and restricted cash:    
Net increase (decrease) in cash, cash equivalents and restricted cash 1,408
 (21,969)
Cash, cash equivalents and restricted cash at beginning of period 19,789
 44,858
Cash, cash equivalents and restricted cash at end of period $21,197
 $22,889

The accompanying notes are an integral part of these condensed consolidated financial statements.


6

RED LION HOTELS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Organization
1.Organization

Red Lion Hotels Corporation ("RLH Corporation," "RLHC," "we," "our," "us," or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and primarily engaged in the franchising and ownership of hotels under the following proprietary brands: Hotel RL, Red Lion Hotels, Red Lion Inn & Suites, GuestHouse, Settle Inn, Americas Best Value Inn, Canadas Best Value Inn, Signature and Signature Inn, Knights Inn, and Country Hearth Inns & Suites.

A summary of our properties as of September 30, 2019, including the approximate number of available rooms, is provided below:
  Upscale Service Brand ("USB") Select Service Brand ("SSB") Total
  Hotels Total Available Rooms Hotels Total Available Rooms Hotels Total Available Rooms
Beginning quantity, January 1, 2019 112
 15,900
 1,215
 69,800
 1,327
 85,700
Newly opened / acquired properties 7
 600
 28
 1,400
 35
 2,000
Change in brand (1) (100) 1
 100
 —
 —
Terminated properties (17) (1,900) (159) (10,100) (176) (12,000)
Ending quantity, September 30, 2019 101
 14,500
 1,085
 61,200
 1,186
 75,700


2.Summary of Significant Accounting Policies
2.Summary of Significant Accounting Policies

The unaudited condensed consolidated financial statements included herein were prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations.

The Consolidated Balance Sheet as of December 31, 20182019 was derived from the audited balance sheet as of such date. We believe the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018,2019, filed with the SEC in our annual report on Form 10-K on March 8, 2019.February 27, 2020.

In the opinion of management, these unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly our Condensed Consolidated Balance Sheets, the Condensed Consolidated Statements of Comprehensive Income (Loss), the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows. The results of operations for the periods presented may not be indicative of that which may be expected for a full year or for any other fiscal period.

Leases

We determine if an arrangement is a lease or contains a lease at inception. If an arrangement is a lease or contains a lease, we then determine whether the lease meets the criteria of a finance lease or an operating lease. Finance leases are included in Property and equipment, net, Other accrued liabilities, and Deferred income and other long-term liabilities in our Condensed Consolidated Balance Sheets. Operating leases are included in Operating lease right-of-use assets, Operating lease liabilities, due within one year, and Operating lease liabilities, due after one year, in our Condensed Consolidated Balance Sheets. We reassess if an arrangement is or contains a lease upon modification of the arrangement.

At the commencement date of a lease, we recognize a lease liability for contractual fixed lease payments and a corresponding right-of-use asset representing our right to use the underlying asset during the lease term. The lease liability is measured initially as the present value of the contractual fixed lease payments during the lease term. The lease term additionally includes renewal periods only if it is reasonably certain that we will exercise the options. Contractual fixed lease payments are discounted at the rate implicit in the lease when readily determinable. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date. For the adoption of Accounting Standards Update ("ASU") 2016-02, we measured our lease liabilities using our incremental borrowing rate as of January 1, 2019. Additionally, we

elected not to recognize leases with lease terms of 12 months or less at the commencement date in our Condensed Consolidated Balance Sheets. The right-of-use asset is recognized at the amount of the lease liability with certain adjustments, if applicable. These adjustments include lease incentives, prepaid rent, and initial direct costs.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, as amended by multiple subsequent ASUs, which will change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In October 2019, an update was issued to the standard that deferred the effective date of the guidance to the first quarter of 2023 for smaller reporting companies such as us. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

In August 2018,December 2019, the FASB issued ASU 2018-13,2019-12, Fair Value Measurement (Topic 820): Disclosure Framework – Changes toSimplifying the Disclosure RequirementsAccounting for Fair Value MeasurementIncome Taxes, which provides modificationsamends the existing guidance related to the disclosure requirements over fair value measurements.accounting for income taxes. The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU is effective in the first quarter of 2020,2021, with early adoption permitted. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

We have assessed the potential impact of other recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us or are not anticipated to have a material impact on our consolidated financial statements.

New Accounting Pronouncements Adopted
7

3. Business Segments
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842), which we adopted on January 1, 2019. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification effecting the pattern of expense recognition in the income statement. Upon adoption, we applied the package of practical expedients included therein, which allows us to carry forward our historical assessments of whether contracts are leases or contain leases, the lease classification of each existing lease, and recognition of initial direct costs. The standard was adopted using the modified retrospective transition method and we did not apply the standard to the comparative periods presented in the year of adoption.

Due to the existence of certain operating lease obligations as of January 1, 2019, we recognized $51.1 million of ROU assets and corresponding lease liabilities of $52.2 million, with reductions of other accrued liabilities and deferred income and other long-term liabilities of $1.1 million. However, there was no impact to accumulated deficit and the future recognition of lease related expenses will not differ from the previous methodology in the Condensed Consolidated Statements of Comprehensive Income (Loss) for leases that existed at the adoption date.

3.Business Segments

We have 2 operating segments: franchised hotels and company operated hotels. The "other" segment consists of miscellaneous revenues and expenses, cash and cash equivalents, certain receivables, certain property and equipment and general and administrative expenses, which are not specifically associated with an operating segment. Management reviews and evaluates the operating segments exclusive of interest expense, income taxes and certain corporate expenses; therefore, they have not been allocated to the operating segments. We allocate selling, general, administrative and other expenses to our operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.


Selected financial information is provided below (in thousands):
Three Months Ended March 31, 2020Franchised HotelsCompany Operated HotelsOtherTotal
Revenue$10,936  $6,329  $—  $17,265  
Operating expenses:
Segment and other operating expenses17,540  7,030  4,131  28,701  
Depreciation and amortization882  866  789  2,537  
Asset impairment—  1,760  —  1,760  
Transaction and integration costs—  32  366  398  
Loss (gain) on asset dispositions, net—  (7,892) —  (7,892) 
Operating income (loss)$(7,486) $4,533  $(5,286) $(8,239) 
Identifiable assets as of March 31, 2020$82,199  $65,523  $16,786  $164,508  
Three Months Ended September 30, 2019 Franchised Hotels Company Operated Hotels Other Total
Revenue $16,225
 $16,633
 $5
 $32,863
Operating expenses:        
Segment and other operating expenses 10,758
 13,007
 4,184
 27,949
Depreciation and amortization 1,015
 1,777
 844
 3,636
Asset impairment —
 5,382
 —
 5,382
Loss (gain) on asset dispositions, net —
 2
 (1) 1
Transaction and integration costs (6) 164
 43
 201
Operating income (loss) $4,458
 $(3,699) $(5,065)
$(4,306)

Three Months Ended September 30, 2018 Franchised Hotels Company Operated Hotels Other Total
Revenue $15,137
 $20,857
 $6
 $36,000
Operating expenses:        
Segment and other operating expenses 9,220
 16,999
 5,397
 31,616
Depreciation and amortization 986
 2,170
 465
 3,621
Asset impairment —
 7,100
 —
 7,100
Loss (gain) on asset dispositions, net —
 (26,143) (53) (26,196)
Transaction and integration costs 95
 —
 —
 95
Operating income (loss) $4,836
 $20,731
 $(5,803)
$19,764


Three Months Ended March 31, 2019Franchised HotelsCompany Operated HotelsOtherTotal
Revenue$13,011  $12,970  $3  $25,984  
Operating expenses:
Segment and other operating expenses9,622  12,461  4,014  26,097  
Depreciation and amortization914  1,956  577  3,447  
Transaction and integration costs62  —  —  62  
Loss (gain) on asset dispositions, net—  6  —  6  
Operating income (loss)$2,413  $(1,453) $(4,588) $(3,628) 
Identifiable assets as of December 31, 2019$91,832  $138,477  $16,209  $246,518  
Nine Months Ended September 30, 2019 Franchised Hotels Company Operated Hotels Other Total
Revenue $43,920
 $43,839
 $13
 $87,772
Operating expenses:        
Segment and other operating expenses 30,138
 38,331
 12,290
 80,759
Depreciation and amortization 3,039
 5,650
 2,503
 11,192
Asset impairment —
 5,382
 —
 5,382
Loss (gain) on asset dispositions, net (1) 45
 1
 45
Transaction and integration costs 90
 164
 182
 436
Operating income (loss) $10,654
 $(5,733) $(14,963) $(10,042)

Nine Months Ended September 30, 2018 Franchised Hotels Company Operated Hotels Other Total
Revenue $38,861
 $68,758
 $32
 $107,651
Operating expenses:        
Segment and other operating expenses 26,486
 57,667
 14,587
 98,740
Depreciation and amortization 3,044
 8,328
 1,342
 12,714
Asset impairment —
 7,100
 —
 7,100
Loss (gain) on asset dispositions, net —
 (41,994) (100) (42,094)
Transaction and integration costs 2,196
 —
 —
 2,196
Operating income (loss) $7,135
 $37,657
 $(15,797) $28,995


8

4.Variable Interest Entities

4.  Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs") because our voting rights are not proportional to our financial interest and substantially all of each joint venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over two of the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with our joint venture partners, which do not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate the assets, liabilities, and results of operations of (1) RL Venture LLC ("RL Venture"), (2) RLS Atla Venture LLC ("RLS Atla Venture"), and (3) RLS DC Venture LLC ("RLS DC Venture"). The equity interests owned by our joint venture partners are reflected as a noncontrolling interest in the condensed consolidated financial statements.

In October 2018, we purchasedNovember 2019, RLH Atlanta LLC, which is wholly owned by RLS Atla Venture, sold the Red Lion Hotel Atlanta International Airport Hotel. Upon completion of the sale, no remaining 27% ownership interest in RLS Balt Venture LLC ("RLS Balt Venture") fromdistributions to our joint venture partner, which dissolvedShelbourne Falcon Big Peach Investors, LLC, were required and the joint venture relationship, thus makingremaining noncontrolling interest for the entity a wholly owned subsidiary and no longer a variable interest entity.was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets.

The following table includes the ownership percentages for each of our joint ventures as of September 30, 2019 and December 31, 2018:
  RLH Corporation Joint Venture Partner
RL Venture 55% 45%
RLS Atla Venture 55% 45%
RLS DC Venture 55% 45%


There were 0 cash contributions or distributions by partners to any of the joint venture entities during the three and nine months ended September 30,March 31, 2020 or 2019 or 2018 except as otherwise described below.

RL Venture

In February 2018, 5For all periods presented, RLH Corporation owns 55% of the RL Venture properties were sold for an aggregate sales price of $47.2 million. In April 2018, 1 RL Venture property sold for $5.5 million, in May 2018, 1 RL Venture property sold for $9.3 million, and in July 2018 2 additional RL Venture properties sold for $54.5 million. As of September 30, 2019, RL Venture has 2 remaining properties.

our JV Partner owns 45%. In March 2019, secured loans with an aggregate principal of $16.6 million were entered into for the 2 remaining properties.two RL Venture properties, Hotel RL Salt Lake City and Hotel RL Olympia. Shortly thereafter the net loan proceeds were distributed to us and our joint venture partner in accordance with our respective ownership percentages. In December 2019, the Hotel RL Salt Lake City sold for $33.0 million. Proceeds from the sale were used to repay in full the secured loan entered into in 2019 for the Hotel RL Salt Lake City property. As of March 31, 2020, RL Venture has 1 remaining property, the Hotel RL Olympia.

Cash distributions may also be made periodically based on calculated distributable income. There were no distributions made during the three months ended March 31, 2020. During the ninethree months ended September 30,March 31, 2019, and 2018, cash distributions totaled $16.5 million and $46.5 million, of which RLH Corporation received $9.1 million and $25.6 million, respectively.million.

RLS Atla Venture

In March 2019, $2.8 million of cash previously contributed to RLS Atla Venture by RLH Corporation was classified as preferred capital and will be repaid only when the Atlanta hotel property is sold or when RLS Atla Venture is liquidated. Upon such event, RLH Corporation will receive the $2.8 million plus a preferred return of 9%, compounded annually, prior to any liquidation proceeds being returned to members.

RLS DC Venture

As of December 31, 2019, RLH Corporation owned 55% of RLS DC Venture and our Joint Venture Partner owned 45%. In May 2019, a secured loan with principal and accrued exit fee of $17.4 million was executed by RLS DC Venture. The net loan proceeds were used to pay off the previous debt with a principal balance of approximately $15.9 million. There were no cash distributions resulting from the refinancing. In February 2020, the Hotel RL in Washington DC, which was wholly-owned by RLS DC Venture, was sold for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the secured loan agreement. The $2.4 million balance remaining in non-controlling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets as no remaining distributions to the joint venture partner are required.


9
5.Property and Equipment

5. Property and Equipment

Property and equipment is summarized as follows (in thousands):
March 31,
2020		December 31,
2019
Buildings and equipment$47,186  $101,619  
Furniture and fixtures6,718  12,407  
Landscaping and land improvements493  2,038  
54,397  116,064  
Less accumulated depreciation(29,099) (57,491) 
25,298  58,573  
Land6,871  6,871  
Construction in progress3,902  3,224  
Property and equipment, net$36,071  $68,668  
  September 30,
2019		 December 31,
2018
Buildings and equipment $148,100
 $150,072
Furniture and fixtures 20,071
 19,746
Landscaping and land improvements 2,732
 2,713
  170,903
 172,531
Less accumulated depreciation (86,343) (82,240)
  84,560
 90,291
Land 19,372
 19,372
Construction in progress 3,622
 5,859
Property and equipment, net $107,554
 $115,522


DuringA novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the three months ended September 30, 2019, we entered into individual non-binding sales agreements with third parties for 4World Health Organization on March 11, 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the carrying value of our company operated hotels. Due to the potential for disposition within 12 months,long-lived assets might not be recoverable. Accordingly, we performed a test for recoverability using probability-weighted undiscounted cash flows on eachour long-lived assets as of these fourMarch 31, 2020.

Only the Red Lion Hotel Seattle Airport, one of our company operated hotel properties noting only our Hotel RL Washington DC joint venture propertyunder a lease through February 2024, did not recover the carrying value of the long-lived asset group.group in the test for recoverability, due to the short useful life and lack of terminal value. After calculating the fair value of the Red Lion Hotel RL Washington DC joint ventureSeattle Airport property long-lived asset group, we recognized an impairment loss of $5.4$1.8 million. The fair value was determined based on the contractual selling price less expected costs to sell,a discounted cash flow analysis, which is a Level 3 fair value measurement. The impairment loss was allocated to the assets within the long-lived asset group on a pro rata basis, with $3.4$1.5 million applied against the hotel building leasehold interest, included within Property and equipment, netand $2.0$0.3 million applied against the Operating lease right-of-use asset on the Condensed Consolidated Balance Sheets. There were no other impairments at the other three properties.of our long-lived assets.

During the three months ended September 30, 2018,March 31, 2020, we recognized a $7.1 million impairment on oursold the Hotel RL Baltimore Inner HarborWashington DC joint venture property. The default during the third quarter of 2018 on the RL Baltimore loan coupled with challenging cash flow results for the asset gave rise to the impairment. The fair value of the asset was determined by a third-party valuation that included an analysis of selling prices for similar assets as well as a discounted cash flow analysis, which are Level 3 fair value measurements. Key inputs to the fair value measurement for these assets included forecast revenues expected to be generated by the hotel factoringproperty, and our leasehold interest in the market it serves as well as forecast operating costs and capital expenditure needs based upon our planning and budgeting process. Other inputs included sales dataRed Lion Anaheim for similarly situated hotels in the market, adjusted to reflect known differences in the assets.

Duringa combined net gain of $7.9 million. There were 0 properties sold during the three months ended September 30, 2018,March 31, 2019.

6.  Goodwill and Intangible Assets

Interim Impairment Assessment

We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the fair value of our goodwill and indefinite-lived intangible assets might be less than their carrying amounts. Accordingly, we sold 2 hotel propertiesperformed quantitative assessments to measure the fair values of these assets as of March 31, 2020. No impairments were identified based on the quantitative impairment calculations of our goodwill and during the nine months ended September 30, 2018, we sold 9 hotel properties, for a total gain of $26.0 million and $41.6 million, respectively. There were 0 hotels sold during the three and nine months ended September 30, 2019.other indefinite-lived intangible assets.

10
6.Goodwill and Intangible Assets

The following table summarizes the balances of goodwill and other intangible assets (in thousands):
March 31,
2020		December 31,
2019
Goodwill$18,595  $18,595  
Intangible assets
Brand name - indefinite lived$32,532  $32,532  
Trademarks - indefinite lived128  128  
Brand name - finite lived, net3,376  3,554  
Customer contracts - finite lived, net11,809  12,398  
Total intangible assets, net$47,845  $48,612  
 September 30,
2019		 December 31,
2018
Goodwill$18,595
 $18,595
    
Intangible assets   
Brand name - indefinite lived$41,278
 $41,278
Trademarks - indefinite lived128
 128
Brand name - finite lived, net3,735
 4,326
Customer contracts - finite lived, net13,092
 15,178
Total intangible assets, net$58,233
 $60,910


The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):
March 31,
2020		December 31,
2019
Customer contracts$20,773  $20,773  
Brand name - finite lived5,395  5,395  
Accumulated amortization(10,983) (10,216) 
Net carrying amount$15,185  $15,952  
 September 30,
2019		 December 31,
2018
Customer contracts$20,773
 $20,773
Brand name - finite lived5,395
 5,395
Accumulated amortization(9,341) (6,664)
Net carrying amount$16,827
 $19,504


7.  Revenue from Contracts with Customers
7.Revenue from Contracts with Customers

Inner Circle
In July 2019, the parent entities for eight Inner Circle franchisees and the operating entities for two other Inner Circle franchisees all filed for voluntary bankruptcy protection under Chapter 11 of the United Stated Bankruptcy Code.
As of the date of this filing, three of the Inner Circle franchisees whose parent entities entered bankruptcy transferred control of their leasehold interests on their hotel properties to their lenders, and three of the Inner Circle franchisees whose parent entities entered bankruptcy ceased operations until further notice. Those six Inner Circle franchise agreements have been terminated, while the remaining four Inner Circle franchise agreements continue to be in full effect. Additionally, three replacement franchise agreements have been executed with lenders who have taken control of the properties and continue to operate them pending sale proceedings.
As of September 30, 2019, the ten Inner Circle franchisees described above in aggregate owe us the following balances:

Approximately $1.8March 31, 2020 there was approximately $7.1 million in trade receivables, of which $0.5 million is included in pre-petition filings of Chapter 11 bankruptcies.

Approximately $3.1 million in various collateralizedaccounts receivable and notes receivables and loans, of which $0.6 million is included in pre-petition filings of Chapter 11 bankruptcies. This balance includes $2.3 million of previouslyreceivable balances related to these franchisees, including unamortized key money that was converted to notes receivable upon termination of the related franchise agreements.

Approximately $2.3 million in unamortized key money contract assets,contracts, of which $0.9$0.8 million included in pre-petition filings of Chapter 11 bankruptcies.had been previously allowed for. The remaining $2.3 million of unamortized key money could also be converted to notes receivable if the related agreements are terminated.

The collateralized loans are secured by thebalances were supported through a security interest in property purchased with their proceeds. All outstanding receivables, loans,improvements and key money assets are collateralized by an equity interest in one of the leaseholds, as well as a personal guarantee of the owner. Given a portionHowever, during the first quarter of 2020, the franchises continuefirst lienholder for the collateral property indicated its desire to have active franchise license agreementsexercise its right to foreclose on the leasehold interest and liquidate the property. Due to the timing of this action in conjunction with us and given the estimateddecline in fair value of the associated collateral property due to the economic impacts of the COVID-19 pandemic, we have concluded that $6.5 millionthe fair value of the total $7.2 millioncollateral no longer supports any of contract relatedthe remaining balances continue to be supported. Asand as such we have recognized an allowance of $0.7 million of pre-petition contract balances. These include $0.2 million of accounts receivable, $0.1 million of collateralized notes receivables and loan, and $0.4 million of unamortized key money. The $0.7 million allowance was recognized through bad debt expense included in Selling, general, administrative and other expensesof $6.3 million on the Condensed Consolidated Statementspreviously unreserved balances.
We recognized $0.1 million and $0.3 million of Comprehensive Income (Loss). We will continue to monitorroyalty income from these franchisees during the factsthree months ended March 31, 2020 and circumstances surrounding this matter. If more2019, respectively.

Other Allowances
As of March 31, 2020, we evaluated the economic impacts of the COVID-19 pandemic and historical collection information becomes available in subsequent periods, it could impact our conclusion on the collectabilitycollectibility of theseour accounts receivable and notes receivable balances. We determined it was appropriate to recognize additional bad debt expense of $3.4 million, primarily related to large balances and on the Company’s future results of operations.under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections.










11

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
Financial Statement Line Item(s)March 31,
2020		December 31,
2019
Accounts receivableAccounts receivable, net$10,701  $15,143  
Key money disbursedOther current assets and Other assets, net1,875  2,228  
Capitalized contract costsOther current assets and Other assets, net833  941  
Contract liabilitiesOther accrued liabilities and Deferred income and other long-term liabilities1,397  1,448  
  Financial Statement Line Item(s) September 30,
2019		 December 31,
2018
Accounts receivable Accounts receivable, net $19,496
 $18,575
Key money disbursed Other current assets and Other assets, net 4,212
 6,409
Capitalized contract costs Other current assets and Other assets, net 797
 1,172
Contract liabilities Other accrued liabilities and Deferred income and other long-term liabilities 1,415
 1,981

Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):
Key Money DisbursedCapitalized Contract CostsContract Liabilities
Balance as of January 1, 2020$2,228  $941  $1,448  
Key money disbursed129  —  —  
Key money converted from accounts receivable247  —  —  
Key money converted to notes receivable(639) —  —  
Costs incurred to acquire contracts—  66  —  
Cash received in advance—  —  114  
Revenue or expense recognized that was included in the January 1, 2020 balance(83) (172) (162) 
Revenue or expense recognized in the period for the period(7) (2) (3) 
Balance as of March 31, 2020$1,875  $833  $1,397  
  Key Money Disbursed Capitalized Contract Costs Contract Liabilities
Balance as of January 1, 2019 $6,409
 $1,172
 $1,981
Key money disbursed 665
 —
 —
Key money converted to notes receivable (2,442) —
 —
Costs incurred to acquire contracts —
 202
 —
Cash received in advance —
 —
 428
Revenue or expense recognized that was included in the January 1, 2019 balance (388) (533) (905)
Revenue or expense recognized in the period for the period (32) (44) (89)
Balance as of September 30, 2019 $4,212
 $797
 $1,415


Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of September 30, 2019,March 31, 2020, including revenues related to application, initiation and other fees were as follows (in thousands):
Year Ending December 31, Contra Revenue Expense Revenue
2019 (remainder) $96
 $67
 $153
2020 409
 220
 474
2021 361
 154
 309
2022 336
 126
 223
2023 310
 87
 130
Thereafter 2,700
 143
 126
Total $4,212
 $797
 $1,415

Year Ending December 31,Contra RevenueExpenseRevenue
2020 (remainder)$254  $263  $413  
2021267  183  361  
2022235  154  269  
2023197  113  170  
2024161  67  99  
Thereafter761  53  85  
Total$1,875  $833  $1,397  
We did not estimate revenues expected to be recognized related to our unsatisfied performance obligations for our: (i) royalty fees, as they are considered sales-based royalty fees recognized as hotel room sales occur in exchange for licenses of our brand names over the terms of the franchise contracts; and (ii) hotel management fees, since they are allocated entirely to the wholly unsatisfied promise to transfer management services, which form part of a single performance obligation in a series, over the term of the management contract. Therefore, there are no amounts included in the table above related to these revenues.


12
8.Debt and Line of Credit

8.  Debt and Line of Credit

The current and noncurrent portions of our debt as of September 30, 2019March 31, 2020 and December 31, 20182019 are as follows (in thousands):
 March 31, 2020December 31, 2019
 CurrentNoncurrentCurrentNoncurrent
Line of Credit$—  $—  $—  $10,000  
RL Venture - Olympia5,600  —  —  5,600  
RLH DC Venture—  —  17,648  —  
Total debt5,600  —  17,648  15,600  
Unamortized debt issuance costs(24) —  (664) (24) 
Debt net of debt issuance costs$5,576  $—  $16,984  $15,576  
  September 30, 2019 December 31, 2018
  Current Noncurrent Current Noncurrent
Line of Credit $—
 $10,000
 $—
 $10,000
Senior Secured Term Loan —
 4,189
 —
 9,355
RL Venture - Salt Lake City —
 11,000
 —
 —
RL Venture - Olympia —
 5,600
 —
 —
RLH Atla Venture 8,171
 —
 9,225
 —
RLH DC Venture (PWB) —
 —
 15,943
 —
RLH DC Venture (CPBF) 17,520
 —
 —
 —
Total debt 25,691
 30,789
 25,168
 19,355
Unamortized debt issuance costs (1,063) (293) (112) (241)
Debt net of debt issuance costs $24,628
 $30,496
 $25,056
 $19,114


Each of our debt agreements contain customary reporting, financial and operating covenants. We were in compliance with all the financial covenants of our debt agreements at September 30, 2019.March 31, 2020.

RL Venture - Salt Lake City

In March 2019, RL Salt Lake, LLC, a subsidiary of RL Venture, executed a secured debt agreement with Umpqua Bank for a term loan with a principal balance of $11.0 million. The loan is fully secured by the Hotel RL Salt Lake City property. The loan has a maturity date of March 18, 2021 and a variable interest rate of LIBOR plus 2.25%, payable monthly. The borrower has the option to exercise 2 six-month extensions upon maturity of the loan. There are 0 principal repayment requirements prior to the maturity date and the loan includes a financial covenant to be calculated semi-annually in which the property must maintain a minimum debt service coverage ratio of not less than 1.6 to 1.0. We incurred approximately $54,000 of debt discounts and debt issuance costs in connection with the issuance of the loan.

RL Venture - Olympia

In March 2019, RL Olympia, LLC, a subsidiary of RL Venture, executed a secured debt agreement with Umpqua Bank for a term loan with a principal balance of $5.6 million. We incurred approximately $33,000 of debt discounts and debt issuance costs in connection with the issuance of the loan. The loan is fully secured by the Hotel RL Olympia property. The loan has a maturity date of March 18, 2021 and a variable interest rate of LIBOR plus 2.25%, payable monthly. The borrower has the option to exercise 2 six-month extensions upon maturity of the loan. There are no principal repayment requirements prior to the maturity date and the loan includes a financial covenant to be calculated semi-annually in which the property must maintain a minimum debt service coverage ratio of not less than 1.6 to 1.0. We incurred approximately $33,000 of debt discounts and debt issuance costs in connection withDue to the issuanceimpact of the loan.

Senior Secured Term Loan

In March 2019,COVID-19 pandemic, we transferred approximately $4.2 million, which comprises a portionhave determined the property is unlikely to meet the required minimum financial covenants as of the net proceeds received from the RL Venture loans, as calculated andnext required by the provisionssemi-annual calculation of June 30, 2020. As a violation of the Senior Secured Term Loan, intofinancial covenant would result in an acceleration of the maturity date of the loan, we have classified this debt as current in our Condensed Consolidated Balance Sheets as of March 31, 2020, despite the previously discussed extensions available to us under the loan agreement. We are engaged in ongoing discussions with our lenders regarding potential remedies for the anticipated covenant violation.

Line of Credit

In August 2018, we drew the full $10.0 million available to us on the Line of Credit under a cash collateral account. The account is controlled bycredit agreement with Deutsche Bank AG New York Branch on behalf of the(DB), Capital One, National Association and Raymond James Bank, N.A., as lenders and DB as the balance is required byadministrative agent. In the debt agreement to be applied againstfirst quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim for $21.5 million. Using proceeds from the sale, we repaid the outstanding principalLine of Credit balance of $10.0 million. This debt is no longer outstanding as of March 31, 2020 and as the Senior Secured Term Loan atcredit agreement has been terminated we no longer have access to this Line of Credit. Due to the lender's discretion. This balance was applied against the outstanding principal balance in April 2019.early extinguishment of this debt, we recognized a Loss on early retirement of debt of$0.2 million.

In September 2019 we made a voluntary prepayment on the Senior Secured Term Loan of $1.0 million. We anticipate the remainder of the outstanding principal balance will be paid off using proceeds from hotel sales.

RLH DC Venture

In May 2019, RLHthe first quarter of 2020, we sold the Hotel RL Washington DC executed a new mortgage loan agreementfor $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, ("RLH DC Venture - CPBF"), secured byrepaid the Hotel RL Washington DCremaining outstanding principal balance and a $10.5 million principal guarantee by RLH Corporation. The initial principal amount ofaccrued exit fee under the loan was $16.5 million. The proceeds from the loan were immediately used to pay off the existing mortgage loan on the

property held by Pacific Western Bank ("RLH DC Venture - PWB"), which had anloan agreement of $17.7 million. This debt is no longer outstanding principal balanceas of $15.9March 31, 2020. Due to the early extinguishment of this debt, we recognized a Loss on early retirement of debt of $1.1 million, at the time of closing.

The RLH DC Venture - CPBF loan had an initial maturity date of June 21, 2019, with a first extension option through May 31, 2020 that was exercised in June 2019, and a second extension option through May 31, 2021. The RLH DC Venture - CPBF loan has a cash interest rate of 7.0% in addition to PIK interest of 3.0% through May 31, 2020, which increases to 7.0% if the second extension option is exercised.

There was a fee of $330,000 to exercise the first extension option and there is a fee of $825,000 plus a required $2.0 million principal pay down to exercise the second extension option. The RLH DC Venture - CPBF loan may be paid off in full prior to maturity at any point. The RLH DC Venture - CPBF loan contains an exit fee equal to 5.0% of the outstanding principal balance if the loan is paid off prior to or at May 31, 2020, or an exit fee equal to 4.0% of the outstanding principal balance if the loan is paid off between June 1, 2020 and May 31, 2021. Additionally, if the loan is paid down prior to May 31, 2020,including a prepayment premium must be paid. The prepayment premium is equal to the remaining cash and PIK interest that would have been payable from the prepayment date through May 31, 2020.penalty of $0.6 million.

As the exit fee is payable regardless of loan repayment prior to or at maturity, we have accrued the projected exit fee of $851,000 as part of the outstanding debt balance with an offsetting debt discount. Inclusive of the accrued exit fee, we have incurred cumulative debt discounts and debt issuance costs of $1.4 million, which will be amortized to interest expense through the first extended maturity date of May 31, 2020.

9. Leases
The loan agreement contains customary requirements for lender approval of annual operating and capital budgets, under certain conditions. In also includes customary events of default as well as financial covenants for maintaining a minimum property EBITDA, a minimum consolidated fixed coverage ratio for RLH, a maximum consolidated total net leverage ratio for RLH, and a cross default provision with our Line of Credit and Senior Secured Term Loan.

CP Business Finance I, LP, the lender of the RLH DC - CPBF loan, is an affiliate of Columbia Pacific Opportunity Fund, LP, who currently holds 500,000 shares of RLH common stock. Additionally, Alexander B. Washburn, who served as a member of our Board of Directors from May 2015 to April 2019, is one of the managing members of Columbia Pacific Advisor, LLC, which serves as the investment manager of Columbia Pacific Opportunity Fund, LP.

RLH Atla Venture

In September 2019, RLH Atlanta executed an amendment to the existing mortgage loan with PFP Holding Company IV LLC, an affiliate of Prime Finance, which extended the maturity date from September 9, 2019 to November 9, 2019. In connection with the amendment, we paid $1.0 million of principal balance and incurred approximately $81,000 of debt discounts and debt issuance costs. As the amendment represents a modification to the original debt, these costs will be amortized to interest expense through the extended maturity date of November 9, 2019.

On November 7, 2019, RLH Atlanta executed an additional amendment, which extended the maturity date from November 9, 2019 to January 9, 2020. In connection with the amendment, we paid $0.5 million of principal balance and incurred approximately $40,000 of debt discounts and debt issuance costs, and pledged the net proceeds (after required payments on our Senior Secured Term Loan) of our unlevered wholly owned Red Lion Anaheim property to pay down the debt should that sale occur before completion of a sale of the Red Lion Hotel Atlanta.

9.Leases

We lease equipment and land and/or property at certain company operated hotel properties as well as office space for our headquarters through operating leases. We have elected the practical expedient so that leases with an initial term of 12 months or less are not recorded on the balance sheet.

We are obligated under finance leases for certain hotel equipment at our company operated hotel locations. The finance leases typically have a five year term.

13

During the first quarter of 2020, we sold the Hotel RL Washington DC joint venture property, which had a ground lease with a term through 2080. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $10.8 million, and total operating lease liabilities of $12.9 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Also in the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim, which had a ground lease with a term through 2021 with renewal options through 2106 that were reasonably assured to be exercised. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $31.4 million, with corresponding operating lease liabilities of $31.4 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Balance sheet information related to our leases is included in the following table (in thousands):

Operating LeasesMarch 31, 2020December 31, 2019
Operating lease right-of-use assets$5,552  $48,283  
Operating lease liabilities, due within one year$1,519  $4,809  
Operating lease liabilities, due after one year5,339  46,592  
     Total operating lease liabilities$6,858  $51,401  
Operating Leases September 30, 2019
Operating lease right-of-use assets $48,553
   
Operating lease liabilities, due within one year $4,801
Operating lease liabilities, due after one year 46,871
     Total operating lease liabilities $51,672
Finance Leases September 30, 2019
Property and equipment $660
Less accumulated depreciation (402)
Property and equipment, net $258
   
Other accrued liabilities $154
Deferred income and other long-term liabilities 123
Total finance lease liabilities $277

Finance LeasesMarch 31, 2020December 31, 2019
Property and equipment$135  $298  
Less accumulated depreciation(106) (168) 
Property and equipment, net$29  $130  
Other accrued liabilities$27  $74  
Deferred income and other long-term liabilities6  76  
Total finance lease liabilities$33  $150  

The components of lease expense during the three and nine months ended September 30,March 31, 2020 and 2019 are included in the following table (in thousands):
Financial Statement Line Item(s)Three Months Ended March 31, 2020Three months ended March 31, 2019
Operating lease expenseSelling, general, administrative and other expenses, and Company operated hotels$816  $1,133  
Short-term lease expenseSelling, general, administrative and other expenses, and Company operated hotels98  247  
Sublease incomeSelling, general, administrative and other expenses(18) —  
Finance lease expense
     Amortization of finance right-of-use assetsDepreciation and amortization8  35  
     Interest on lease liabilitiesInterest expense3  8  
Total finance lease expense11  43  
Total lease expense$907  $1,423  
  Financial Statement Line Item(s) Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating lease expense Selling, general, administrative and other expenses, and Company operated hotels $1,168
 $3,444
Short-term lease expense Selling, general, administrative and other expenses, and Company operated hotels 167
 572
Finance lease expense      
     Amortization of finance right-of-use assets Depreciation and amortization 35
 104
     Interest on lease liabilities Interest expense 7
 23
Total finance lease expense   42
 127
       
Total lease expense   $1,377
 $4,143


Supplemental cash flow information for our leases is included in the following table (in thousands):
Cash paid for amounts included in the measurement of lease liabilities: Nine Months Ended September 30, 2019
Cash used in operating activities for operating leases $3,547
Cash used in operating activities for finance leases 23
Cash used in financing activities for finance leases 104
14

Cash paid for amounts included in the measurement of lease liabilities:Three Months Ended March 31, 2020Three Months Ended March 31, 2019
Cash used in operating activities for operating leases$848  $1,169  
Cash used in operating activities for finance leases3  8  
Cash used in financing activities for finance leases13  34  


During the second quarter of 2019, we recognized ROU assets of $181,000 and associated operating lease liabilities of $202,000 upon commencement of leases for space in our Spokane office. There were 0 new finance lease assets or associated liabilities during the three and nine months ended September 30,March 31, 2020 and 2019.

Information related to the weighted average remaining lease terms and discount rates for our leases as of September 30,March 31, 2020 and December 31, 2019 is included in the following table:
March 31, 2020December 31, 2019
Weighted average remaining lease term (in years)
     Operating leases669
     Finance leases13
Weighted average discount rate
     Operating leases5.8 %7.2 %
     Finance leases5.7 %11.9 %
September 30, 2019
Weighted average remaining lease term (in years)
     Operating leases69
     Finance leases2
Weighted average discount rate
     Operating leases7.2%
     Finance leases9.5%


The future maturities of lease liabilities at September 30, 2019,March 31, 2020, are as indicated below (in thousands):
Years Ending December 31,Operating LeasesFinance Leases
2020 (remainder)$1,141  $20  
20211,522  14  
20221,486  —  
20231,449  —  
2024595  —  
Thereafter1,984  —  
Total lease payments8,177  34  
Less: imputed interest1,319  1  
$6,858  $33  
Years Ending December 31, Operating Leases Finance Leases
2019 (remainder) $1,197
 $43
2020 4,809
 149
2021 4,813
 75
2022 4,776
 38
2023 4,739
 11
Thereafter 248,844
 —
Total lease payments 269,178
 316
Less: imputed interest 217,506
 39
  $51,672
 $277


The future maturities of lease liabilities in the table above do not differ materially from future minimum rental payments under the previous leasing standard.

NaN leases comprise $246.3 million of future operating lease maturities beyond 2023. One is a ground lease for our Hotel RL Washington DC property with a term through 2080 and the other is a ground lease for our Red Lion Anaheim property with a lease term through 2021 but includes renewal options through 2106 that are reasonably assured to be exercised.

10.10. Commitments and Contingencies


At any given time we are subject to claims and actions incidental to the operations of our business. InDuring the second quarter of 2019, we accrued approximately $952,000 for a settlement over a wage dispute with former hotel employees related to the calculation of pay for certain rest, break, meal, and other periods that are required under California laws. The related expense has been recognized during the second quarterlaw. Based on information currently available, we do not expect that any other sums we may receive or have to pay in connection with any legal proceeding would have a material effect on our consolidated financial position or net cash flow.
Company operated hotels expense in the Condensed Consolidated Statements of Comprehensive Income (Loss).

See Item 1. Legal Proceedings within Part 2. Other Information for additional detail.


11.Stock Based Compensation
11. Stock Based Compensation

Stock Incentive Plans

The 2015 Stock Incentive Plan, as amended, ("2015 Plan") authorizes the grant or issuance of various stock-based awards, including stock options, including restricted stock units, and other stock-based compensation. The 2015 Plan was approved by our shareholders in 2015, and amended in 2017, and as amended provides for awards of 2.9 million shares, subject to adjustments for stock splits, stock dividends and similar events. As of September 30, 2019,March 31, 2020, there were 451,1401.2 million shares of common stock available for issuance pursuant to future stock option grants or other awards under the 2015 Plan, as amended.
15


Stock based compensation expense reflects the fair value of stock-based awards measured at grant date, including an estimated forfeiture rate, and is recognized over the relevant service period. For the three and nine months ended September 30,March 31, 2020 and 2019 and 2018 stock-based compensation expense is as follows (in thousands):
Three Months Ended March 31,
20202019
Restricted stock units$238  $612  
Unrestricted stock awards112  129  
Performance stock units15  147  
Stock options—  22  
Employee stock purchase plan8  6  
Total stock-based compensation$373  $916  
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Restricted stock units $581
 $841
 $1,871
 $2,033
Unrestricted stock awards 158
 105
 417
 334
Performance stock units 172
 184
 123
 445
Stock options 22
 17
 65
 51
Employee stock purchase plan 8
 13
 27
 33
Total stock-based compensation $941
 $1,160
 $2,503
 $2,896


Restricted Stock Units

Restricted stock units (RSUs") granted to executive officers and other key employees typically vest 25% each year for four years on each anniversary of the grant date. Under the terms of the plans2015 Plan, upon issuance, we deliver a net settlement of distributable shares to employees after consideration of individual employees' tax withholding obligations, at the election of each employee. The fair value of restricted stock that vested during the ninethree months ended September 30,March 31, 2020 and 2019 and 2018 was approximately $5.8$0.2 million and $2.1$1.2 million, respectively. We expect to recognize an additional $4.3For RSUs outstanding as of March 31, 2020, there was $1.8 million in compensation expense remaining to be recognized over the remaining weighted average vesting periods of 2223 months.However, in connection with a reduction in force in April 2020, 73,613 outstanding RSUs were forfeited, leaving $1.4 million in remaining compensation expense to be recognized over the remaining weighted average vesting periods of 24 months as of April 30, 2020.

A summary of restricted stock unit activity for the ninethree months ended September 30, 2019,March 31, 2020, is as follows:
Number
of Shares		Weighted
Average
Grant Date
Fair Value
January 1, 2020459,070  $9.03  
Vested(120,017) $8.51  
Forfeited(51,393) $8.45  
March 31, 2020287,660  $9.36  
  
Number
of Shares
 
Weighted
Average
Grant Date
Fair Value
January 1, 2019 1,288,714
 $8.47
Granted 361,360
 $8.24
Vested (728,014) $7.49
Forfeited (183,516) $8.96
September 30, 2019 738,544
 $9.22


Performance Stock Units, Shares Issued as Compensation

We grant performancePerformance stock units ("PSUs") are granted to certain of our executives under the 2015 Plan, as amended.Plan. These PSUs include both performance and service vesting conditions. Each performance condition has a minimum, a target and a maximum share amount based on the level of attainment of the performance condition. Compensation expense, net of estimated forfeitures, is calculated based on the estimated attainment of the performance conditions during the performance period and recognized on a straight-line basis over the performance and service periods. No PSUs were granted during the three months ended March 31, 2020.

During the three months ended March 31, 2020, 25,796 PSUs vested at a weighted average grant date fair value of $6.45. The fair value of PSUs that vested during the three months ended March 31, 2020 was approximately $38,000. No PSUs vested during the three months ended March 31, 2019. There are no PSUs outstanding and no remaining compensation expense to be recognized related to PSUs as of approximately $1.3 million will be recognized over the next 28 months.March 31, 2020.


A summary of performance stock unit activity for the nine months ended September 30, 2019, is as follows:
  
Number
of Shares
 
Weighted
Average
Grant Date
Fair Value
January 1, 2019 209,201
 $8.23
Granted 218,437
 $8.08
Forfeited (112,954) $9.75
September 30, 2019 314,684
 $7.58

16

Unrestricted Stock Awards

Unrestricted stock awards are granted to members of our Board of Directors as part of their compensation. Awards are fully vested, and expense is recognized when granted. The fair value of unrestricted stock awards is the market close price of our common stock on the date of the grant.

The following table summarizes unrestricted stock award activity for the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019:
Three Months Ended March 31,
20202019
Shares of unrestricted stock granted  30,883  15,355  
Weighted average grant date fair value per share$3.63  $8.44  
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Shares of unrestricted stock granted 22,075
 9,210
 52,986
 32,961
Weighted average grant date fair value per share $7.19
 $11.40
 $7.89
 $10.14


12. Earnings (Loss) Per Share
12.Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three and nine months ended September 30,March 31, 2020 and 2019 and 2018 (in thousands, except per share data):
 Three Months Ended March 31,
 20202019
Numerator - basic and diluted:
Net income (loss)$(9,254) $(4,559) 
Net (income) loss attributable to noncontrolling interest1,155  286  
Net income (loss) attributable to RLH Corporation$(8,099) $(4,273) 
Denominator:
Weighted average shares - basic25,199  24,603  
Weighted average shares - diluted25,199  24,603  
Earnings (loss) per share - basic$(0.32) $(0.17) 
Earnings (loss) per share - diluted$(0.32) $(0.17) 
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Numerator - basic and diluted:        
Net income (loss) $(6,447) $17,613
 $(14,451) $23,288
Net (income) loss attributable to noncontrolling interest 2,980
 (8,670) 4,040
 (14,079)
Net income (loss) attributable to RLH Corporation $(3,467) $8,943
 $(10,411) $9,209
         
Denominator:        
Weighted average shares - basic 25,112
 24,545
 24,859
 24,334
Weighted average shares - diluted 25,112
 25,729
 24,859
 25,437
         
Earnings (loss) per share - basic $(0.14) $0.36
 $(0.42) $0.38
Earnings (loss) per share - diluted $(0.14) $0.35
 $(0.42) $0.36


The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, and warrants to purchase common shares included in the earnings per share calculation, as well as the amount excluded from the dilutive earnings per share calculation if they were considered antidilutive, for the three and nine months ended September 30, 2019March 31, 2020 and 2018.

2019.
17

 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended March 31,
 2019 2018 2019 2018 20202019
Stock Options(1)
        
Stock Options(1)
Dilutive awards outstanding —
 20,504
 —
 12,097
Dilutive awards outstanding—  —  
Antidilutive awards outstanding 81,130
 60,626
 81,130
 69,033
Antidilutive awards outstanding—  81,130  
Total awards outstanding 81,130
 81,130
 81,130
 81,130
Total awards outstanding—  81,130  
        
Restricted Stock Units(2)
        
Restricted Stock Units(2)
Dilutive awards outstanding —
 854,604
 —
 808,934
Dilutive awards outstanding—  —  
Antidilutive awards outstanding 738,544
 521,348
 738,544
 567,018
Antidilutive awards outstanding287,660  1,395,881  
Total awards outstanding 738,544
 1,375,952
 738,544
 1,375,952
Total awards outstanding287,660  1,395,881  
        
Performance Stock Units(3)
        
Performance Stock Units(3)
Dilutive awards outstanding —
 101,793
 —
 106,743
Dilutive awards outstanding—  —  
Antidilutive awards outstanding 314,684
 196,728
 314,684
 191,778
Antidilutive awards outstanding—  427,638  
Total awards outstanding 314,684
 298,521
 314,684
 298,521
Total awards outstanding—  427,638  
        
Warrants(4)
        
Warrants(4)
Dilutive awards outstanding —
 207,444
 —
 174,846
Dilutive awards outstanding—  —  
Antidilutive awards outstanding 442,533

235,089

442,533

267,687
Antidilutive awards outstanding—  442,533  
Total awards outstanding 442,533
 442,533
 442,533
 442,533
Total awards outstanding—  442,533  
(1) All stock options for the three and nine months ended September 30,March 31, 2020 and 2019 were anti-dilutive as a result of the net loss attributable to RLH Corporation for these periods. If we had reported net income for the threeperiods, and nine months ended September 30, 2019, 0 stock options would have been dilutive as a result of the RLH Corporation weighted average share price during the reporting periods.period.
(2) Restricted stock units were anti-dilutive for the three and nine months ended September 30,March 31, 2020 and 2019 due to our net loss in the reporting periods. If we had reported net income for the three and nine months ended September 30,March 31, 2020 and 2019, then 12,7717,733 and 337,035697,494 weighted average restricted stock units respectively, would have been dilutive.dilutive, respectively.
(3) Performance stock units are not included in the weighted average diluted shares outstanding until the performance targets are met. PSU’s were anti-dilutive for the three and nine months ended September 30,March 31, 2020 and 2019 as no performance targetsdue to the net loss attributable to RLH Corporation in the reporting period. If we had been achieved during those periods. Had performance targets been metreported net income for the three and nine months ended September 30,March 31, 2020 and 2019, then 96,14110,180 and 92,90797,406 weighted average performance stock units respectively, would have been dilutive.dilutive, respectively.
(4) All warrants expired without being exercised in January 2020. All warrants for the three and nine months ended September 30,March 31, 2019 were anti-dilutive due to the net loss attributable to RLH in each reporting period. If we had reported net income for the three and nine months ended September 30,March 31, 2019, 0 and 47,83190,674 warrants respectively, would have been dilutive.
13.Income Taxes

13. Income Taxes

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic security Act” (CARES Act) which generally allows for unlimited use of NOLS generated in 2019 and 2020 as well as a five year carryback provision and shortening the recovery period for qualified improvement property. We recognized an income tax provision (benefit) expense of $486,000$(752,000) and $(26,000)$82,000 for the three months ended September 30,March 31, 2020 and 2019, and 2018, respectively. For the nine months ended September 30, 2019 and 2018 we recognized an income tax provision (benefit) of $676,000 and $(239,000), respectively. The income tax provisionbenefit recognized for the three months ended March 31, 2020 is principally related to the provisions of the CARES Act. The income tax expense recognized for the three months ended March 31, 2019 varies from the statutory rate primarily due to a partial valuation allowance against our deferred tax assets, as well as deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for GAAP purposes.

We have state operating loss carryforwards, which expire beginning in 2019,2020, and both federal and state tax credit carryforwards, which begin to expire in 2024.

18
14.Fair Value

14. Fair Value

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the Level 1, Level 2 and Level 3 of the fair value hierarchy.


Cash, Restricted cash and Accounts receivable carrying values approximate fair value due to the short-term nature of these items. We estimate the fair value of our Notes receivable using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. We estimate the fair value of our long-term debtLong-term debt and Operatingcapital lease obligations using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. The fair values provided below are not necessarily indicative of the amounts we or the debt holders could realize in a current market exchange. In addition, potential income tax ramifications related to the realization of gains and losses that would be incurred in an actual sale or settlement have not been taken into consideration. Estimated fair values of financial instruments are shown in the table below (in thousands).
 March 31, 2020December 31, 2019
 Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Financial assets:
Notes receivable$286  $286  $5,709  $5,709  
Financial liabilities:
Debt$5,600  $5,535  $33,248  $32,737  
Total finance lease obligations33  33  150  150  
  September 30, 2019 December 31, 2018
  Carrying
Amount		 Fair
Value		 Carrying
Amount		 Fair
Value
Financial assets:        
Notes receivable $4,188
 $4,188
 $2,103
 $2,103
Financial liabilities:        
Debt $56,480
 $55,063
 $44,523
 $43,880
Total finance lease obligations 277
 277
 378
 378


15.15. Related Party Transactions

All 3 of our current joint ventures - RL Venture, RLS Atla Venture, and RLS DC Venture, and our former joint venture RLS Balt Venture, which was dissolved in October 2018 - have agreed to pay to Shelbourne Capital, LLC ("Shelbourne Capital") an investor relations fee each month equal to 0.50% of its total aggregate revenue. Shelbourne Capital is the entity that leads Shelbourne Falcon, Shelbourne Falcon II, Shelbourne Falcon III and Shelbourne Falcon IV, the noncontrolling interest holder in these joint ventures. The amount Shelbourne Capital earned from all 4 joint ventures during the three months ended September 30, 2019 and 2018 totaled $14,000 and $40,000, respectively. The amount Shelbourne Capital earned from all 4 joint ventures during the nine months ended September 30, 2019 and 2018 totaled $68,000 and $187,000, respectively. Columbia Pacific Opportunity Fund, LP ("CP"), previously one of our largest shareholders, is an investor in Shelbourne Falcon, our joint venture partner in RL Venture. During the three months ended September 30, 2019 and 2018, Shelbourne Capital earned $8,000 and $28,000, respectively, from RL Venture. During the nine months ended September 30, 2019 and 2018, Shelbourne Capital earned $50,000 and $145,000, respectively, from RL Venture. We did not pay any investor relations fees to Shelbourne Capital related to the RLS Balt Venture after October 2018.

Effective March 2016, our wholly owned subsidiary, RL Management, entered into a one-year contract to manage the Hudson Valley Resort and Spa, a hotel located in Kerhonkson, New York. Following the initial one-year term, we continued to manage the property on a month-to-month basis until October 2018. The hotel is owned by HNA Hudson Valley Resort & Training Center LLC, an affiliate of HNA RLH Investments LLC ("HNA"), previously one of our largest shareholders. Under that contract, our subsidiary is entitled to a monthly management fee equal to $8,333 or 3% of the hotel’s gross operating revenues, whichever is greater. During the three and nine months ended September 30, 2018, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $25,000 and $75,000, respectively. On June 12, 2018, HNA sold their common shares in RLH to a third party, no longer making them a related party.

On September 30, 2016, we acquired the operating assets and assumed certain liabilities relating to specified hotel brands and brand extensions from Thirty-Eight Street, Inc. ("TESI") and Vantage Hospitality Group, Inc. From the date of the acquisition, our board appointed Bernard T. Moyle, as our Executive Vice President and Chief Operating Officer and Roger J. Bloss as our Executive Vice President and President of Global Development. Messrs. Moyle and Bloss are shareholders of TESI and Vantage Hospitality.

Effective May 31, 2018, Messrs. Moyle and Bloss entered into consulting agreements through December 31, 2020, ending their employment with the Company and no longer making them a related party after the effective date. On May 21, 2018, the Company entered into a letter agreement (Letter Agreement) and a First Amendment (First Amendment) to the TESI and Vantage Hospitality purchase agreement. In accordance with the Letter Agreement and First Amendment, after the first anniversary of the closing date, we issued $4.0 million in cash and 414,000 shares of the Company’s common stock to TESI in January 2018. The Company understands that Mr. Bloss and Mr. Moyle each own 50% of the outstanding shares of TESI.

Messrs. Bloss and Moyle each additionally indirectly own a 5.7% equity interest in a limited liability company that owns the Lexington Hotel and Conference Center in Jacksonville, Florida. During the period ended May 31, 2018, the Company billed the property approximately $161,000 for franchise fees and related services, including royalty and marketing. This hotel, along with the Lexington Inn & Suites, Daytona Beach and the ABVI Las Vegas, are managed by Cal-Vegas, Ltd. ("Cal-Vegas"), of which

TESI (owned by Messrs. Bloss and Moyle) is the General Partner and holds a 2% general partner interest, and Mr. Moyle serves as the Chief Operating Officer and Chief Financial Officer. The Company and Cal-Vegas are not parties to any agreement with respect to these properties, as the management contracts are between Cal-Vegas and the Company’s franchisees, who are unrelated third parties. Cal-Vegas is also the lessee of the ABVI Las Vegas hotel. Franchise fees billed by the Company to each of these properties for the period ended May 31, 2018 were as follows: Lexington Inn & Suites, Daytona Beach, $35,000, and ABVI Las Vegas, $1,000.

During the fourth quarter of 2018, we transitioned management of our company operated Hotel RL Baltimore Inner Harbor and Hotel RL Washington DC from RL Management, Inc., to HEI Hotels and Resorts, of which one of the members of our Board of Directors, Ted Darnall, is currently the Chief Executive Officer. Additionally, during the first quarter of 2019, management of our company operated hotel Red Lion Hotel Seattle Airport was also transitioned from RL Management, Inc. to HEI Hotels and Resorts. During the three and nine months ended September 30,March 31, 2020, and 2019 we paid $307,000$197,000 and $847,000,$228,000, respectively, in management fees to HEI Hotels and Resorts for management of these properties.

On January 14, 2019, the Company announced the appointment of Julie Shiflett as Chief Financial Officer of RLH. Prior to this appointment, the Company paid consulting fees to NorthWest CFO, a consulting firm of which Ms. Shiflett is a Principal. Payments made to NorthWest CFO for consulting fees during the three months ended September 30, 2019 and 2018 totaled $0 and $59,000, respectively and during the nine months ended September 30, 2019 and 2018 totaled $49,000 and $289,000, respectively. The payments made during 2019 were for services rendered by NorthWest CFO in 2018. No services have been performed by NorthWest CFO on behalf of RLH subsequent to Ms. Shiflett being appointed Chief Financial Officer.

As noted in Note 8 Debt and Line of Credit, on May 31, 2019 we executed a mortgage loan with a principal and accrued exit fee of $17.5$17.4 million with CP Business Finance I, LP, an affiliate of Columbia Pacific Opportunity Fund, LP, who currently holds 500,000 shares of RLHRLHC common stock. Additionally, Alexander B. Washburn, who served as a member of our Board of Directors from May 2015 to April 2019, is one of the managing members of Columbia Pacific Advisor, LLC, which serves as the investment manager of Columbia Pacific Opportunity Fund, LP. This debt is no longer outstanding as of March 31, 2020.


16.Acquisitions

16. Dispositions
Knights Inn Acquisition
In the first quarter of 2020, we continued the execution of a hotel asset sales initiative consistent with our previously stated business strategy to focus on moving towards operations as primarily a franchise company, and disposed of two hotels from our company operated hotels segment. These dispositions resulted in a combined net gain of $7.9 million

The following summarizes the result of operations for the two properties sold during the first quarter of 2020 (in thousands):
Three Months Ended March 31,
20202019
Pre-tax income (loss)$6,088  $(121) 
Net (income) loss attributable to noncontrolling interest1,134  240  
Net income (loss) attributable to RLHC$7,222  $119  


17. Subsequent Events

As a result of the COVID-19 pandemic, economic uncertainties have arisen which RLHC expects to negatively impact our business, operations and financial results. The impact has continued to evolve subsequent to the quarter ended March 31, 2020
19

and as of the date of these unaudited consolidated financial statements. The duration of the pandemic and the resulting economic uncertainties, and the impacts on RLHC’s financial condition, results of operations and cash flows, will depend on numerous evolving factors that cannot be accurately predicted at this time. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on its financial condition, results of operations or cash flows for the foreseeable future. However, it is expected to have a material, adverse impact on future revenue growth as well as overall profitability.

On May 14, 2018, Red Lion Hotels Franchising, Inc. completedApril 2, 2020, RLHC announced a significant reduction in force in response to the purchase of allanticipated impact of the issuedCOVID-19 pandemic, reducing our corporate workforce by approximately 40%. Total severance expense of approximately $0.6 million will be recognized in conjunction with the severance, with $0.2 million recognized during the first quarter of 2020 and outstanding shares$0.4 million recognized during the second quarter of capital stock of Knights Franchise Systems, Inc. ("KFS"), and the purchase of certain operating assets from, and assumption of certain liabilities relating to the business of franchising Knights Inn branded hotels to hotel owners from Wyndham Hotel Group Canada, ULC and Wyndham Hotel Group Europe Limited,2020.

On April 21, 2020, RLHC received $4.2 million in loan proceeds issued pursuant to the AmendedPaycheck Protection Program (the “PPP”) of the CARES Act. In accordance with the CARES Act, RLHC planned to use proceeds from the Loan primarily for payroll costs, rent, and Restated Purchase Agreement, dated May 1, 2018, for an aggregate purchase priceutilities as we concluded we met the certification criteria under the initial requirements of $27.2 million.the PPP. However, on April 24, 2020, the U.S. government published additional guidance regarding PPP eligibility. As a result of this new guidance the Company determined it was no longer clear that we met the eligibility requirements and accordingly we determined we would repay the full amount of the loan in May.

The following reflects our purchase price allocation (in thousands):
  Fair Value
Current assets $1,288
Intangible assets 16,800
Goodwill 9,191
Total assets acquired 27,279
  
Current liabilities 30
Total liabilities acquired 30
  
Total net assets acquired $27,249

20

Current assets are comprised of $4.6 million in contractual value of acquired receivables, less a fair value adjustment of $3.3 million based on expected collectability.

Intangible assets acquired are as follows (in thousands):

 Fair Value Useful Life
Brand names$7,700
 Indefinite
Customer contracts9,100
 15 years
Total intangible assets$16,800
  


We recognized $9.2 million in goodwill as the result of the acquisition, recorded within our franchise reporting segment. The goodwill is deductible for income tax purposes. The factors that make up the goodwill are primarily expected synergies from combining the operations of Knights Inn with our own.

The following supplemental pro forma results are based on the individual historical results of RLH Corporation and KFS, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2018 (in thousands, except per share data) (unaudited):
   Nine Months Ended September 30, 2018
Revenue  $110,280
Net income (loss)  25,219
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation  11,140
Earnings (loss) per share attributable to RLH Corporation - basic  $0.46
Earnings (loss) per share attributable to RLH Corporation - diluted  $0.44



17.Subsequent Events

Subsequent to the balance sheet date, the due diligence periods for the sales agreement on our Red Lion Hotel Atlanta property concluded, making the agreement binding. The closing for the sale of the hotel is expected before the end of the year.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q includes forward-looking statements.statements, including statements concerning operational and financial impacts of the COVID-19 pandemic. We have based these statements on our current expectations, assumptions, and projections about future events. When words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and similar expressions or their negatives are used in this quarterly report, these are forward-looking statements. Many possible events or factors, including the effects of the COVID-19 pandemic and those discussed in “Risk Factors” under Item 1A below and under Item 1A of our annual report on Form 10-K for the year ended December 31, 2018,2019, which we filed with the Securities and Exchange Commission on March 8, 2019,February 27, 2020, could affect our future financial results and performance, and could cause actual results or performance to differ materially from those expressed. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report. We undertake no obligation to update or revise any forward-looking statements except as required by law.

In this report, "we," "our," "us," "our company," "RLHC," and "RLH Corporation" refer to Red Lion Hotels Corporation, doing business as RLH Corporation, and as the context requires all, of its consolidated subsidiaries as follows:

Wholly owned subsidiaries:
•Red Lion Hotels Holdings, Inc.
•Red Lion Hotels Franchising, Inc.
•Red Lion Hotels Canada Franchising, Inc.
•Red Lion Hotels Management, Inc. ("RL Management")
•Red Lion Hotels Limited Partnership
•RL Baltimore LLC ("RL Baltimore")
•WestCoast Hotel Properties, Inc.
•Red Lion Anaheim, LLC
•RLabs, Inc.

Joint venture entities:
•RL Venture LLC ("RL Venture") in which we hold a 55% member interest
•RLS Atla Venture LLC ("RLS Atla Venture") in which we hold a 55% member interest
•RLS DC Venture LLC ("RLS DC Venture") in which we hold a 55% member interest

The terms "the network," "systemwide hotels," "system of hotels," or "network of hotels" refer to our entire group of owned, managed and franchised hotels.

The following discussion and analysis should be read in connection with our unaudited condensed consolidated financial statements and the condensed notes thereto and other financial information included elsewhere in this quarterly report, as well as in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018,2019, which are included in our annual report on Form 10-K for the year ended December 31, 2018.2019.

COVID-19 Update

COVID-19 was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. The measures enacted by most governments to combat the pandemic have included intensive restrictions on travel, required closure of businesses deemed non-essential, and shelter in place orders for civilians.

We have undertaken a series of organizational changes and cost cutting measures including changes to senior management, a reduction in force and the consolidation of office space to mitigate the impact of the COVID-19 pandemic on our operating results. As our business is reliant in part on the financial success and cooperation of our franchisees, we have also implemented policy changes to address the impact of the pandemic on their financial condition, including the implementation of a fee deferral program to certain of our franchisees in which billings related to fees for March through May of 2020 could be deferred for up to 12 months, temporary fee reductions for review responses, guest relations fees, and certain other fees, and a delay in implementation of capital intensive brand standards. These changes are expected to reduce cash flow, as our franchisees defer paying royalty fees to future periods.

21

While we did experience some impact from the COVID-19 pandemic on our operations in March of 2020, the impact of the pandemic is ongoing, and the extent to which the COVID-19 pandemic further impacts our business, operations and financial results will depend on numerous evolving factors that we are not able to accurately predict, including the length of travel restrictions and government-mandated stay-at-home orders, the duration and spread of the virus, and the extent to which people are willing to resume travel and hotel stays, as well as the financial condition and recovery of our franchisees. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows for the foreseeable future. However, we expect it will have a material, adverse impact on future revenue growth as well as overall profitability.

Introduction

We are a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and primarily engaged in the franchising and ownership of hotels under the following proprietary brands: Hotel RL, Red Lion Hotels, Red Lion Inn & Suites, GuestHouse, Settle Inn, Americas Best Value Inn ("ABVI"), Canadas Best Value Inn ("CBVI"), Signature and Signature Inn, Knights Inn, and Country Hearth Inn & Suites ("Country Hearth").

We operate in two reportable segments:

•
•The franchised hotels segment is engaged primarily in licensing our brands to franchisees. This segment generates revenue from royalty, marketing, and other fees that are primarily based on a percentage of room revenue or on room count or on transaction count and are charged to hotel owners in exchange for the use of our brand and access to our marketing and central services programs. These central services and marketing programs include our reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards. Additionally, this segment includes our initial contracts for Canvas Integrated Systems.

•The company operated hotel segment derives revenues primarily from guest room rentals and food and beverage offerings at owned and leased hotels for which we consolidate results. Revenues have also been derived from management tools, quality inspections, advertising and brand standards. Additionally, this segment includes our initial contracts for Canvas Integrated Systems, discussed further below, as we begin to grow this new offering.

•
The company operated hotel segment derives revenues primarily from guest room rentals and food and beverage offerings at owned and leased hotels for which we consolidate results. Revenues have also been derived from management

fees and related charges for hotels with which we contract to perform management services, however our last management agreement terminated in February 2019.

Our remaining activities, none of which constitutes a reportable segment, are aggregated into "other."

A summary of activity relating to our owned or franchised properties by typeopen franchise and company operated hotels from January 1, 20192020 through September 30, 2019,March 31, 2020, including the approximate number of available rooms, is provided below:
Midscale BrandEconomy BrandTotal
HotelsTotal Available RoomsHotelsTotal Available RoomsHotelsTotal Available Rooms
Beginning quantity, January 1, 202096  13,500  966  54,200  1,062  67,700  
Newly opened—  —  6  300  6  300  
Terminated properties(1) (300) (43) (2,800) (44) (3,100) 
Ending quantity, March 31, 202095  13,200  929  51,700  1,024  64,900  
  USB SSB Total
  Hotels Total Available Rooms Hotels Total Available Rooms Hotels Total Available Rooms
Beginning quantity, January 1, 2019 112
 15,900
 1,215
 69,800
 1,327
 85,700
Newly opened / acquired properties 7
 600
 28
 1,400
 35
 2,000
Change in brand (1) (100) 1
 100
 —
 —
Terminated properties (17) (1,900) (159) (10,100) (176) (12,000)
Ending quantity, September 30, 2019 101
 14,500
 1,085
 61,200
 1,186
 75,700

A summary of activity relating to our USBopen midscale franchise and company operated hotels by brand from January 1, 20192020 through September 30, 2019March 31, 2020 is provided below:
Midscale Brand HotelsHotel RLRed Lion HotelsRed Lion Inn and SuitesSignatureOtherTotal
Beginning quantity, January 1, 20209  39  40  4  4  96  
Terminated properties—  (1) —  —  —  (1) 
Ending quantity, March 31, 20209  38  40  4  4  95  
Ending rooms, March 31, 20201,400  7,700  3,300  300  500  13,200  

22
USB Brand Hotels Hotel RL Red Lion Hotels Red Lion Inn and Suites Signature Other Total
Beginning quantity, January 1, 2019 8
 46
 43
 2
 13
 112
Newly opened / acquired properties —
 —
 5
 2
 —
 7
Change in brand 1
 —
 —
 —
 (2) (1)
Terminated properties —
 (5) (7) —
 (5) (17)
Ending quantity, September 30, 2019 9
 41
 41
 4
 6
 101
             
Ending rooms, September 30, 2019 1,800
 8,400
 3,400
 200
 700
 14,500


A summary of activity relating to our SSBopen economy franchise hotels by brand from January 1, 20192020 through September 30, 2019March 31, 2020 is provided below:
Economy Brand HotelsABVI and CBVIKnights InnCountry HearthGuest HouseOtherTotal
Beginning quantity, January 1, 2020657  232  47  19  11  966  
Newly opened3  3  —  —  —  6  
Terminated properties(28) (11) (2) (1) (1) (43) 
Ending quantity, March 31, 2020632  224  45  18  10  929  
Ending rooms, March 31, 202033,500  13,500  2,200  1,200  1,300  51,700  
SSB Brand Hotels ABVI and CBVI Knights Inn Country Hearth Guest House Signature Inn Other Total
Beginning quantity, January 1, 2019 777
 332
 53
 27
 2
 24
 1,215
Newly opened / acquired properties 24
 2
 1
 1
 —
 —
 28
Change in brand 1
 (1) 5
 —
 —
 (4) 1
Terminated properties (89) (49) (6) (6) (2) (7) (159)
Ending quantity, September 30, 2019 713
 284
 53
 22
 —
 13
 1,085
               
Ending rooms, September 30, 2019 38,100
 16,900
 2,500
 1,500
 —
 2,200
 61,200

A summary of our executed franchise agreements for the ninethree months ended September 30, 2019March 31, 2020 is provided below:
Midscale BrandEconomy BrandTotal
Executed franchise license agreements, three months ended March 31, 2020:
New locations2  14  16  
New contracts for existing locations4  50  54  
Total executed franchise license agreements, three months ended March 31, 20206  64  70  
  USB SSB Total
Executed franchise license agreements, nine months ended September 30, 2019:      
New locations 14
 26
 40
New contracts for existing locations 9
 94
 103
Total executed franchise license agreements, nine months ended September 30, 2019 23
 120
 143

Overview

During 2018Consistent with our previously stated business strategy to move towards operating as primarily a franchise company, in the first quarter of 2020, we continued the growthsold two of our franchise segment by acquiring approximately 350 franchise agreements through our acquisition of the Knights Inn franchise.

During 2019, we announced the creation of RLabs, a travel technology-based innovator that houses and builds on the groundbreaking technology platform the company has created, including RevPak. RLabs focuses on new revenue verticals, and on developing unique technology and system offerings for the hospitality industry including software, robotics, and artificial intelligence. The first offering from RLabs is Canvas Integrated Systems, an all-in-one cloud-based hospitality management suite featuring a collection of seamlessly integrated tools designed to drive revenue, secure more revenue opportunities, automate channel management and reduce cost and friction for independent hotel owners. Revenues from these agreements are included in Marketing, reservations and reimbursables revenue and associated expenses are included in Marketing, reservations, and reimbursables expense and Selling, general, administrative and otherexpenses in the Condensed Consolidated Statements of Comprehensive Income (Loss).

During the three months ended September 30, 2019, we entered into individual non-binding sales agreements with third parties for four of ourremaining company operated hotels. The salesOn February 7, 2020, we sold the only hotel in our consolidated joint venture, RLS DC Venture, for $16.4 million. Using proceeds from the sale, together with the release of all four hotels$2.3 million in restricted cash held by our lender CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the RLH DC Venture loan agreement of $17.7 million.

On February 27, 2020, we sold our leasehold interest in the Red Lion Anaheim for $21.5 million. Using net proceeds from the sale, the Company repaid the $10.0 million outstanding principal balance owing under the revolving line of credit with Deutsche Bank AG New York Branch, and other lenders party thereto. Upon repayment of the outstanding balance, the Line of Credit was terminated and these funds are expected by the end of Q1 2020.no longer available to us.


23

Results of Operations

A summary of our Condensed Consolidated Statements of Comprehensive Income (Loss) is provided below (in thousands):
 Three Months Ended March 31,
 20202019
Total revenues$17,265  $25,984  
Total operating expenses25,504  29,612  
Operating income (loss)(8,239) (3,628) 
Other income (expense):
Interest expense(506) (882) 
Loss on early retirement of debt(1,309) —  
Other income (loss), net48  33  
Income (loss) before taxes(10,006) (4,477) 
Income tax expense (benefit)(752) 82  
Net income (loss)(9,254) (4,559) 
Net (income) loss attributable to noncontrolling interest1,155  286  
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation$(8,099) $(4,273) 
Non-GAAP Financial Measures (1)
EBITDA$(6,963) $(148) 
Adjusted EBITDA$(10,315) $999  
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Total revenues $32,863
 $36,000
 $87,772
 $107,651
Total operating expenses 37,169
 16,236
 97,814
 78,656
Operating income (loss) (4,306) 19,764
 (10,042) 28,995
Other income (expense):        
Interest expense (1,699) (1,417) (3,690) (5,366)
Loss on early retirement of debt —
 (794) (164) (794)
Other income (loss), net 44
 34
 121
 214
Income (loss) before taxes (5,961) 17,587
 (13,775) 23,049
Income tax expense (benefit) 486
 (26) 676
 (239)
Net income (loss) (6,447) 17,613
 (14,451) 23,288
Net (income) loss attributable to noncontrolling interest 2,980
 (8,670) 4,040
 (14,079)
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation $(3,467) $8,943
 $(10,411) $9,209
         
Non-GAAP Financial Measures (1)
        
EBITDA $(626) $22,625
 $1,107
 $41,129
Adjusted EBITDA$5,899
 $5,751
 $10,624
 $13,458
(1) The definitions of "EBITDA," and "Adjusted EBITDA" and how those measures relate to net income (loss) are discussed and reconciled under Non-GAAP Financial Measures below.

For the three months ended September 30,March 31, 2020, we reported a net loss of $9.3 million, which includes $9.7 million of bad debt expense related to reserves recognized for accounts receivable, key money, and notes receivable for certain Inner Circle franchisees and other customer balances determined to be uncollectible as of March 31, 2020, a $1.8 million asset impairment on our Red Lion Hotel Seattle Airport as a result of the impact of the COVID-19 pandemic on the operating results of that hotel, a $1.3 million loss on early retirement of debt, $0.5 million of employee separation costs, $0.4 million of stock based compensation, $0.4 million of transaction and integration costs, and $0.2 million of expense related to a non-income tax assessment, partially offset by $7.9 million in gains from the disposal of two hotel properties

For the three months ended March 31, 2019, we reported a net loss of $6.4$4.6 million, which included a $5.4 million asset impairment on our Hotel RL Washington DC joint venture property, $0.9 million of stock based compensation, $0.2 million of transaction and integration costs, and $0.8 million of bad debt expense and associated legal fees related to a reserve recognized in the third quarter of 2019 for certain amounts of accounts receivable, key money, and notes receivable outstanding for a large franchise customer in bankruptcy.

For the three months ended September 30, 2018, we reported net income of $17.6 million, which included a $26.0 million gain on asset dispositions related to the sale of two hotels, a $7.1 million asset impairment on our Hotel RL Baltimore Inner Harbor joint venture property, $1.2 million of stock based compensation, a $0.8 million loss on early retirement of debt resulting from an early payment on our Senior Secured Term Loan using proceeds from an RL Venture distribution following two hotel sales,non-income tax expense assessment and $0.1 million of transaction and integration costs.

For the nine months ended September 30, 2019, we reported a net loss of $14.5 million, which included $2.5 million of stock based compensation, a $5.4 million asset impairment on our Hotel RL Washington DC joint venture property, $1.0 million related to a legal settlement, $0.4 million of transaction and integration costs, a $0.2 million loss on early retirement of debt resulting

from the replacement of a mortgage loan at RLS DC Venture, and $0.8 million of bad debt expense and associated legal fees related to a reserve recognized in the third quarter of 2019 for certain amounts of accounts receivable, key money, and notes receivable outstanding for a large franchise customer in bankruptcy.

For the nine months ended September 30, 2018, we reported net income of $23.3 million, which included a $41.6 million gain on asset dispositions related to the sale of nine hotels, a $7.1 million asset impairment on our Hotel RL Baltimore Inner Harbor joint venture property, $2.9 million of stock based compensation, a $0.8 million loss on early retirement of debt resulting from an early payment on our Senior Secured Term Loan using proceeds from an RL Venture distribution following two hotel sales, $2.2 million of transaction and integration costs, and $1.0 million of employee separation costs.

For the three months ended September 30, 2019,March 31, 2020, Adjusted EBITDA was $5.9$(10.3) million compared with $5.8$1.0 million in 2018.2019. This increasedecrease was primarily due to reductions in operating costs, and overall compensation expense including payroll, variable compensation and stock compensation, partially offset by the aforementioned increase in$9.7 million of bad debt expense arising from a large franchise customer bankruptcy as well as a decrease in profits resulting from hotels disposed ofrecognized in the thirdfirst quarter of 2018.2020 to establish reserves for certain Inner Circle franchisees in bankruptcy and other customer balances determined to be uncollectible as of March 31, 2020.

For the nine months ended September 30, 2019, Adjusted EBITDA was $10.6 million compared with $13.5 million in 2018. The decrease is primarily due to the sale of nine hotels and expiration of a lease on a hotel in 2018 and the aforementioned increase in bad debt expense arising from a large franchise customer bankruptcy, partially offset by additional profits from the acquisition of Knights Inn franchised hotels in May 2018, along with reductions in operating costs and overall compensation expense including payroll, variable compensation and stock compensation.

Non-GAAP Financial Measures

EBITDA is defined as net income (loss), before interest, taxes, depreciation and amortization. We believe it is a useful financial performance measure due to the significance of our long-lived assets and level of indebtedness.

Adjusted EBITDA is an additional measure of financial performance. We believe that the inclusion or exclusion of certain special items, such as gains and losses on asset dispositions and impairments and discontinued operations, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results.

During the fourth quarter of 2018, we modified the definition of Adjusted EBITDA as used in prior periods to excludealso excludes the effect of non-cash stock compensation expense. We believe that the exclusion of this item is consistent with the purposes of the measure described below and we have applied this modification to all prior periods presented.below.

EBITDA and Adjusted EBITDA are commonly used measures of performance in our industry. We utilize these measures because management finds them a useful tool to calculate more meaningful comparisons of past, present and future operating
24

results and as a means to evaluate the results of core, ongoing operations. Our board of directors and executive management team consider Adjusted EBITDA to be a key performance metric and compensation measure. We believe they are a complement to reported operating results. EBITDA and Adjusted EBITDA are not intended to represent net income (loss) defined by generally accepted accounting principles in the United States of America ("GAAP"), and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP. In addition, other companies in our industry may calculate EBITDA and, in particular, Adjusted EBITDA differently than we do or may not calculate them at all, limiting the usefulness of EBITDA and Adjusted EBITDA as comparative measures.


The following is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) for the periods presented (in thousands):
Three Months Ended March 31,
20202019
Net income (loss)$(9,254) $(4,559) 
Depreciation and amortization2,537  3,447  
Interest expense506  882  
Income tax expense (benefit)(752) 82  
EBITDA(6,963) (148) 
Stock-based compensation (1)
373  916  
Asset impairment (2)
1,760  —  
Transaction and integration costs (3)
398  62  
Employee separation and transition costs (4)
528  —  
Loss on early retirement of debt (5)
1,309  —  
Loss (gain) on asset dispositions (6)
(7,892) 6  
Non-income tax expense assessment (7)
172  163  
Adjusted EBITDA(10,315) 999  
Adjusted EBITDA attributable to noncontrolling interests(78) (547) 
Adjusted EBITDA attributable to RLH Corporation$(10,393) $452  
(1) Costs represent total stock-based compensation for each period. These costs are included within Selling, general, administrative and other expenses and Marketing, reservations and reimbursables on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(2) In the three months ended March 31, 2020, we recognized an impairment on our Red Lion Hotel Seattle Airport leased property.
(3) Transaction and integration costs include incremental expenses incurred for potential and executed acquisitions and dispositions of assets.
(4) The costs recognized relate to severance payments due to our Chief Financial Officer upon her departure in March 2020, along with a reduction in force that was implemented in the first quarter of 2020. These costs are included within Selling, general, administrative and other expenses and Marketing, reservations and reimbursables on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(5) The Loss on early retirement of debt relates to unamortized deferred debt issuance costs and prepayment fees incurred related to the payoff of a secured debt agreement at RL Venture - Olympia and the outstanding balance on our Line of Credit.
(6) The gains relate to the sale of two properties during the first quarter of 2020. There was no comparable activity during the three months ended March 31, 2019.
(7) Costs relate to estimated non-income taxes we have concluded we are probable of being assessed. These estimated taxes have been accrued in Selling, general, administrative and other expenses on the Condensed Consolidated Statements of Comprehensive Income (Loss).


  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Net income (loss) $(6,447) $17,613
 $(14,451) $23,288
Depreciation and amortization 3,636
 3,621
 11,192
 12,714
Interest expense 1,699
 1,417
 3,690
 5,366
Income tax expense (benefit) 486
 (26) 676
 (239)
EBITDA (626) 22,625
 1,107
 41,129
Stock-based compensation (1)
 941
 1,160
 2,503
 2,896
Asset impairment (2)
 5,382
 7,100
 5,382
 7,100
Transaction and integration costs (3)
 201
 95
 436
 2,196
Employee separation and transition costs (4)
 —
 —
 35
 975
Loss on early retirement of debt (5)
 —
 794
 164
 794
Loss (gain) on asset dispositions (6)
 1
 (26,023) 45
 (41,632)
Legal settlement expense (7)
 —
 —
 952
 —
Adjusted EBITDA 5,899
 5,751
 10,624
 13,458
Adjusted EBITDA attributable to noncontrolling interests (660) (53) (1,665) (1,915)
Adjusted EBITDA attributable to RLH Corporation$5,239
 $5,698
 $8,959
 $11,543
         
(1)  Costs represent total stock-based compensation for each period. These costs are included within Selling, general, administrative and other expenses, Company operated hotels and Marketing, reservations and reimbursables on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(2) In the three months ended September 30, 2019 we recognized an impairment on our Hotel RL Washington DC joint venture property. In the three months ended September 30, 2018 we recognized an impairment on our Hotel RL Baltimore Inner Harbor joint venture property.
(3)  Transaction and integration costs include incremental expenses incurred for potential and executed acquisitions and dispositions of assets.
(4) The costs recognized in 2019 relate to a reduction in force that was implemented in the second quarter of 2019. The costs recognized in 2018 relate to employee separation, primarily for severance agreements with our Chief Operating Officer, and President of Global Development in May 2018. These costs are included within Selling, general, administrative and other expenses on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(5)  In 2019, the Loss on early retirement of debt relates to unamortized deferred debt issuance costs and prepayment fees incurred related to the payoff of a mortgage loan at RLS DC Venture, which was replaced through a new mortgage loan with a different lender. In 2018, the Loss on early retirement of debt arose primarily on a $20.6 million early payment of our Senior Secured Term Loan. The debt was repaid using proceeds from a distribution from RL Venture after the sales of our Red Lion Hotel Port Angeles and Hotel RL Spokane.
(6)  The gains relate to the sale of nine properties during the nine months ended September 30, 2018, two of which were sold during the three months ended September 30, 2018. There is no comparable activity during the nine months ended September 30, 2019.
(7)  Legal settlement expense relates to a settlement agreement with former hotel workers regarding a wage dispute in California. This expense is included in Company operated hotels expense on the Condensed Consolidated Statements of Comprehensive Income (Loss).


25

Franchise and Marketing, Reservations and Reimbursables Revenues
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
  (in thousands)
Royalty $5,909
 $6,530
 $17,516
 $16,575
Other franchise 2,016
 1,016
 3,772
 2,412
Marketing, reservations and reimbursables 8,300
 7,591
 22,632
 19,874

Three Months Ended March 31,
20202019
(in thousands)
Royalty$4,357  $5,740  
Marketing, reservations and reimbursables5,805  6,729  
Other franchise774  542  

Three months ended September 30,March 31, 2020 and 2019 and 2018

Royalty revenue decreased $0.6$1.4 million or 10%. This decrease is primarily due to terminated agreements in our SSB brand hotels. Revenues24% and revenues from Marketing, reservations, and reimbursables revenue increaseddecreased by $0.7$0.9 million or 9%,14%. These decreases were primarily due to terminated franchise agreements in 2019 and the first quarter of 2020, along with the impact of COVID-19 on our midscale brand hotels who generally pay royalties and marketing fees as a percentage of gross rooms revenue. Other franchise revenues increased $1.0$0.2 million or 98% for the three months ended September 30, 2019 compared with the same period in 201843% primarily due to an increase in various other fees, partially offset by the impact of terminated agreements.

Nine months ended September 30, 2019 and 2018

Royalty revenue increased $0.9 million or 6%, revenues from Marketing, reservations and reimbursables increased $2.8 million or 14%, and Other franchise revenues increased $1.4 million or 56% for the nine months ended September 30, 2019 compared with the same period in 2018. These increases are primarily due to additional revenues from the acquisition of Knights Inn franchised hotels in May 2018 plus an increase in reservation and other miscellaneous fees, partially offset by the impact from terminated agreements.

Company Operated Hotels Revenues
  Three Months Ended September 30, Nine Months Ended September 30,
  (in thousands)
  2019 2018 2019 2018
Company operated hotels $16,633
 $20,857
 $43,839
 $68,758

Three Months Ended March 31,
(in thousands)
20202019
Company operated hotels revenues$6,329  $12,970  

Three months ended September 30,March 31, 2020 and 2019 and 2018

During the three months ended September 30, 2019,March 31, 2020, revenue from our Company operated hotels segment decreased $4.2$6.6 million or 20%51% compared with the same period in 2018. The decrease was driven primarily by the expiration of a company operated hotel property lease in the fourth quarter of 2018, along with the disposal of two hotel properties during the third quarter of 2018. There were no hotel properties sold during the three months ended September 30, 2019.

Nine months ended September 30, 2019 and 2018

During the nine months ended September 30, 2019, revenue from our Company operated hotels segment decreased $24.9 million or 36% compared with the same period in 2018. The decrease was driven primarily by the disposal of nine hotel properties during 2018, along with the expiration of atwo company operated hotel property leaseproperties in the fourth quarter of 2018. There were no2019 and two additional company operated hotel properties soldin the first quarter of 2020.

Revenues for the four company operated hotels held during the nine months ended September 30,entirety of both periods decreased by $1.0 million, to $3.9 million in the first quarter of 2020 compared to $4.9 million in the first quarter of 2019. This decrease was primarily due to the negative impact of the COVID-19 pandemic on hotel occupancy during March of 2020.


Operating Expenses

Selling, General, Administrative and Other Expenses


Three Months Ended March 31,
(in thousands)
20202019
Franchise development and operations, including labor$1,936  $2,005  
General and administrative labor and labor-related costs1,983  1,877  
Stock-based compensation160  474  
Non-income tax expense assessment172  163  
Bad debt expense9,720  211  
Legal fees528  588  
Professional fees and outside services568  417  
Facility lease213  278  
Information technology costs201  217  
Other784  1,161  
Total Selling, general, administrative and other expenses$16,265  $7,391  
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Three months ended March 31, 2020 and 2019

Selling, general, administrative and other expenses increased by $8.9 million for the three months ended March 31, 2020 compared with the three months ended March 31, 2019.

Bad debt expense increased primarily due to $6.3 million of expense arising from a reserve recognized for accounts receivable, key money, and notes receivable for certain Inner Circle franchisees. The remaining increase relates primarily to reserves recognized for accounts and notes receivable related to large balances under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections. See Note 7. Revenue from Contracts with Customers within Item 8. Financial Statements for additional detail.

Labor and labor-related costs increased primarily due to accrued severance costs related to the departure of our Chief Financial Officer in March 2020, partially offset by a decrease in headcount compared to the prior period. Stock-based compensation decreased primarily due to executive terminations in the fourth quarter of 2019 and a reduction in force in the first quarter of 2020.

Other expenses decreased primarily due to various efficiencies and cost cutting initiatives implemented by management.

Company Operated Hotels Expenses

 Three Months Ended March 31,
(in thousands)
 20202019
Company operated hotels expenses$6,678  $11,545  

Three months ended March 31, 2020 and 2019

Company operated hotels expenses decreased by $4.9 million or 42% in the first three months of 2020. The decrease was driven primarily by the disposal of two company operated hotel properties in the fourth quarter of 2019 and two additional company operated hotel properties in the first quarter of 2020.

Operating expenses generally include direct operating expenses for each of the operating segments, selling, general, administrative and expenses, depreciation and amortization, asset impairment, gain or loss on asset dispositions and acquisition and integration costs.

Our operating expenses for the threefour company operated hotels held during the entirety of both periods decreased by $0.8 million, to $4.2 million in the first quarter of 2020 compared to $5.0 million in the first quarter of 2019, primarily due to the impact of COVID-19 on hotel operations in March 2020 and nine months ended September 30, 2019other cost cutting initiatives implemented by management.

Marketing, Reservations and 2018 were as follows (in thousands):Reimbursables Expenses
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Marketing, reservations and reimbursables $7,080
 $7,453
 $22,088
 $20,226
Company operated hotels 12,673
 16,051
 36,750
 54,924
Selling, general, administrative and other expenses 8,196
 8,112
 21,921
 23,590
Depreciation and amortization 3,636
 3,621
 11,192
 12,714
Asset impairment 5,382
 7,100
 5,382
 7,100
Loss (gain) on asset dispositions, net 1
 (26,196) 45
 (42,094)
Transaction and integration costs 201
 95
 436
 2,196
Total operating expenses $37,169
 $16,236
 $97,814
 $78,656

Three Months Ended March 31,
(in thousands)
20202019
Marketing, reservations and reimbursables expenses$5,758  $7,161  

Three months ended September 30,March 31, 2020 and 2019 and 2018

Marketing, reservations and reimbursables expenses decreased by $0.4$1.4 million or 5%.20% in the first three months of 2020. This decrease was primarily due to the timing ofa decrease in marketing expenditures andin an effort by management to reduce costs in the first quarter of 2020, along with a decrease in reservation volume.


Depreciation and Amortization
Three Months Ended March 31,
(in thousands)
20202019
Depreciation and amortization$2,537  $3,447  
Company operated hotels
27

Three months ended March 31, 2020 and 2019

Depreciation and amortization expensesexpense decreased by $3.4$0.9 million or 21%.26% during the first three months of 2020. This decrease was driven primarily by the disposal of two properties during the three months ended September 30, 2018. There were nocompany operated hotel properties sold during the three months ended September 30, 2019.

Selling, general, administrative and other expenses increased by $0.1 million or 1% for the three months ended September 30, 2019 compared with three months ended September 30, 2018. The increase was primarily driven by bad debt expense and associated legal costs recognized related to a reserve established in the third quarter of 2019 for certain amounts of accounts receivable, key money and notes receivable outstanding for a large franchise customer in bankruptcy. This increase was partially offset by a reduction in operation expenses, as well a reduction in overall compensation expense including payroll, variable compensation and stock compensation.

We recognized an Asset impairment of $5.4 million on our Hotel RL Washington DC joint venture property in the thirdfourth quarter of 2019 and an Asset impairment of $7.1 million on our Hotel RL Baltimore Inner Harbor joint venture propertytwo additional company operated hotel properties in the thirdfirst quarter of 2018. See Note 5 Property and Equipment within Item 1. Financial Statements for additional detail.

We recognized a net Gain on asset dispositions of $26.2 million primarily from the disposal of two hotel properties during the third quarter of 2018 with no comparable activity in 2019.

Nine months ended September 30, 2019 and 2018

Marketing, reservations and reimbursables expenses increased by $1.9 million or 9% during the nine months ended September 30, 2019.2020. This increase was primarily due to supporting the growth in our mid-scale hotels as well as additional expenses related to our Knights Inn acquisition. The expense increase is consistent with the increase in Marketing, reservations and reimbursables revenues.

Company operated hotels expenses decreased by $18.2 million or 33% and Depreciation and amortization expense decreased $1.5 million or 12%. The decreases were driven primarily by the disposal of nine properties during the nine months ended September 30, 2018. There were no hotel properties sold during the nine months ended September 30, 2019. The decrease in Depreciation and amortization was partially offset by additional amortizationdepreciation recognized from finite-lived intangible assets acquired as part of the Knights Inn acquisition in 2018 and other fixed assets placed in service during the remainder of 20182019 and the first ninethree months of 2019.2020.

Asset Impairment
Three Months Ended March 31,
(in thousands)
20202019
Asset impairment$1,760  $—  
Selling, general, administrative and other expenses
decreased by $1.7 million or 7% for the nine
Three months ended September 30,March 31, 2020 and 2019 compared with nine months ended September 30, 2018. The decrease was driven by a reduction in franchise development and franchise operation expenses, as well a reduction in overall compensation expense including payroll, variable compensation and stock compensation. These decreases were partially offset by bad debt expense and associated legal costs recognized related to to a reserve established in the third quarter of 2019 for certain amounts of accounts receivable, key money and notes receivable outstanding for a large franchise customer in bankruptcy.

We recognized an Asset impairment loss of $5.4$1.8 million on our Red Lion Hotel RL Washington DC joint ventureSeattle Airport leased property in the thirdfirst quarter of 2019 and an Asset impairment of $7.1 million on our Hotel RL Baltimore Inner Harbor joint venture property in the third quarter of 2018.2020. See Note 55. Property and Equipmentwithin Item 1.8. Financial Statementsfor additional detail.

Loss (Gain) on Asset Dispositions, net

Three Months Ended March 31,
(in thousands)
20202019
Loss (gain) on asset dispositions, net$(7,892) $6  

Three months ended March 31, 2020 and 2019

We recognized a net Gaingain on asset dispositions of $42.1$7.9 million primarily from the disposal of ninetwo hotel properties during the nine months ended September 30, 2018first quarter of 2020, with no comparable activity in 2019.


Transaction and integration costs decreased by $1.8 million for the nine months ended September 30, 2019 compared with 2018. There were no acquisitions completed in 2019, while Knights Inn was acquired in the second quarter of 2018. Costs incurred in 2019 relate to integration activities for the Knights Inn acquisition that continued into the current year, in addition to due diligence costs incurred for other potential sales and acquisitions.

Interest Expense

Interest expense increased $0.3 million in the third quarter of 2019 compared to the third quarter of 2018. This increase was primarily due to the two term loans we executed at each of the two properties held by RL Venture in 2019, increasing our outstanding debt balance compared to the third quarter of 2018.


Interest expense decreased $1.7$0.4 million duringin the nine months ended September 30, 2019first quarter of 2020 compared withto the same period in 2018. Thefirst quarter of 2019. This decrease wasis primarily due to hotel sales and the related reduction in our average corporate and hotel-specific debt outstanding during 2019in 2020 as compared to 2018.2019.

Loss on Early Retirement of Debt

In the first quarter of 2020, we recognized a Loss on early retirement of debt of$1.3 million related to the early payoff of our Line of Credit and a secured debt agreement at RLH DC Venture. These loans were paid off using proceeds from the sale of the Hotel RL Washington DC joint venture property and our leasehold interest in the Red Lion Anaheim.

Income Taxes

For the three and nine months ended September 30, 2019,March 31, 2020, we reported an income tax benefit of $752,000 compared with income tax expense of $486,000 and $676,000 compared with$82,000 for the same period in 2019. The income tax benefit of $(26,000) and $(239,000)recognized for the same periods in 2018.three months ended March 31, 2020 is principally related to the provisions of the CARES Act. The income tax provisions varyexpense recognized for the three months ended March 31, 2019 varies from the statutory rate primarily due to a partial valuation allowance against our deferred tax assets. See Note 13 Income Taxes within Item 1. Financial Statements.

28

Liquidity and Capital Resources

Our principal source of liquidity is cash flow from operations. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments on debt. We believe the ongoing effects of COVID-19 on our operations have had, and will continue to have, a material impact on our ability to generate cash from our operations and our financial results, and the impact may continue beyond the containment of the outbreak. We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct given the dynamic nature of the situation.

Working capital, which represents current assets less current liabilities, was $7.9$34.6 million and $5.9$23.0 million as of September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. WeAs of March 31, 2020, we had cash and cash equivalents of $37.8 million and debt of $5.6 million. In order to preserve sufficient liquidity during these uncertain times, we implemented certain cost saving measures at the end of the first quarter of 2020, which included a reduction in force of approximately 40%, company-wide compensation reductions, consolidation of office space and a reduction in 2020 capital expenditures and key money commitments. Based upon our current liquidity position, and assumptions regarding the impact of COVID-19, including its duration, economic impact and impact on travel, we believe that we have sufficient liquidity to fund our operations at least through November 2020.May 2021. However, given the uncertain nature of the COVID-19 pandemic on our operations, we cannot assure you that our assumptions used to estimate our liquidity requirements will be correct.

We may seek to raise additional funds through public or private financings, strategic relationships, sales of assets or other arrangements. We cannot assure that such funds, if needed, will be available on terms attractive to us, or at all. If we sell additional assets, these sales may result in future impairments or losses on the final sale. Finally, any additional equity financings may be dilutive to shareholders and debt financing, if available, may involve covenants that place substantial restrictions on our business.

We are committed to keepingmaintaining our properties well maintainedinfrastructure for systems and attractiveservices we provide to our customers in order to maintain our competitiveness within the industry and keep our hotels properly positioned in their markets.franchisees. This requires ongoing access to capital for replacement of outdated furnishings as well as for facility repair, modernizationinvestments in technology and renovation for our owned properties.related assets.

Sources and Uses of our Cash, Cash Equivalents, and Restricted Cash

The following table summarizes our net cash flows for operating, investing, and financing activities (in thousands):
Three Months Ended March 31,
 20202019
Net cash provided by (used in) operating activities $(2,294) $(2,032) 
Net cash provided by (used in) investing activities 36,114  (1,569) 
Net cash provided by (used in) financing activities (27,753) 8,682  
  Nine Months Ended September 30,
  2019 2018
Net cash provided by (used in) operating activities $4,955
 $(7,627)
Net cash provided by (used in) investing activities (3,932) 80,223
Net cash provided by (used in) financing activities 385
 (94,565)

Operating Activities

Net cash provided by operating activities totaled $5.0 million during the first nine months of 2019 compared with cash used in operating activities totaled $2.3 million during the first three months of $7.62020 compared with $2.0 million during the same period in 2018.2019. The primary driversdriver of the change was an increase in cash flows werefrom working capital accounts of $1.7 million, partially offset by an improvementincrease in net loss excluding Loss (gain) on asset dispositions, net, Asset impairment, and Provision for doubtful accounts of approximately $4.4 million and a $4.8 million reduction in key money disbursed for the nine months ended September 30, 2019 compared to the prior period.$1.3 million.

Investing Activities

Net cash provided by investing activities totaled $36.1 million during the first three months of 2020 compared with cash used in investing activities totaled $3.9 million during the first nine months of 2019 compared with cash provided by investing activities of $80.2$1.6 million during the same period in 2018.2019. Cash spent for capital expenditures was reduced by $2.1flows increased in the first quarter of 2020 primarily due to net proceeds from hotel sales of $36.9 million during the ninefirst three months ended September 30, 2019 compared with the same period in 2018. During the nine months ended September 30, 2018 we had cash outflows of $26.9 million for the acquisition of Knights Inn and we disposed of nine hotels from our company operated hotels portfolio, generating cash proceeds of $113.8 million.2020.


Financing Activities

Net cash used in financing activities was $27.8 million during the first three months of 2020 compared with cash provided by financing activities was $0.4 million during the first nine months of 2019 compared with cash used in financing activities of $94.6$8.7 million in the first ninethree months of 2018.2019. During the ninethree months ended September 30,March 31, 2020, we paid off an outstanding loan for one company operated property along with the outstanding balance on our Line of Credit. During the three months ended March 31, 2019 we executed new mortgage loans for threetwo company operated hotel properties while paying off one.properties. Some of the loan proceeds were distributed to joint venture partners and used to pay down a portion of the outstanding principal on our Senior Secured Term Loan. During the nine months ended September 30, 2018 we executed the Senior Secured Term Loan to finance our acquisition of Knights Inn and we repaid outstanding debt on mortgage loans related to the nine hotel properties disposed of during the period.partners.
29


Debt

As of September 30, 2019,March 31, 2020, we had outstanding total debt, excluding unamortized deferred financing costs and discounts, of $56.5 million.

$5.6 million related to a single property mortgage on our RL Venture Olympia property.
During
In February 2020, we sold the nine months ended September 30, 2019 we executed term loans at eachHotel RL Washington DC for $16.4 million. Using proceeds from the sale, together with the release of the two properties$2.3 million in restricted cash held by RLCP Business Finance I, LP, RLH DC Venture for a total principal amount of $16.6 million. Proceeds fromrepaid the loans were distributed to the Partners of RL Venture in accordance with ownership interest percentage. We transferred $4.2 million of the proceeds received into a cash collateral account, which is included in Restricted cash on the Condensed Consolidated Balance Sheets as of March 31, 2019. In April 2019, the $4.2 million in the cash collateral account was applied against theremaining outstanding principal balance of the Senior Secured Term Loan.

We also executed a new mortgage loan agreement atand accrued exit fee under the RLH DC Venture property forloan agreement of $17.7 million, plus a total principal and accrued exit feeprepayment penalty of $17.5$0.6 million. The

Also in February of 2020, using the net proceeds from the loan were immediately used to pay offsale of our leasehold interest in the existing mortgage loan onRed Lion Anaheim, we repaid the property, which had an outstanding principalLine of Credit balance of $15.9 million at$10.0 million. Upon repayment of the timeoutstanding balance, the Line of closing.Credit was terminated and these funds are no longer available to us.

See Note 8 Debt and Line of Credit within Item 1. Financial Statements of this quarterly report on Form 10-Q, for further additional information about our debt obligations.

Contractual Obligations

Other than the issuance of two term loans for the remaining properties in RL Venture and the replacement of a mortgage loan by RLS DC Venture as described in Note 8 Debt and Line of Credit within Item 1. Financial Statements of this quarterly report on Form 10-Q, there were no material changes to our contractual obligations from what we previously disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2018.

Off-Balance Sheet Arrangements

As of September 30, 2019,March 31, 2020, we had no off-balance sheet arrangements which have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that effect: (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and (ii) the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. We consider a critical accounting policy to be one that is both important to the portrayal of our financial condition and results of operations and requires management's most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Since the date of our annual report on Form 10-K for the fiscal year ended December 31, 2018,2019, we have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them, other than those described in Note 2 Summary of Significant Accounting Policies within Item 1. Financial Statements of this quarterly report on Form 10-Q.them.

New and Recent Accounting Pronouncements

See Note 2 Summary of Significant Accounting Policies within Item 1. Financial Statements of this quarterly report on Form 10-Q for information on new and recent GAAP accounting pronouncements.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Our earnings and cash flows are subject to fluctuations due to changes in interest rates, primarily from outstanding debt. As of September 30, 2019, our outstanding line of credit and debt, excluding unamortized origination fees, was $56.5 million. Of this total debt, $39.0 million of the debt is subject to variable rates based on the LIBOR index.

We enter into derivative transactions to hedge our exposure to interest rate fluctuations, and not for trading purposes. Historically, we have entered into interest rate caps, which effectively cap the associated LIBOR reference rates and reduce our exposure to the impact of changing interest rates and future cash flows for interest. As of September 30, 2019, none of our outstanding debt was subject to interest rate caps as the cap associated with the RLH Atla Venture loan expired in September 2019. For additional information, see Item 7A, "Quantitative3.Quantitative and Qualitative Disclosures About Market Risk"Risk

Pursuant to Item 305(e) of our annual report on Form 10-K forRegulation S-K (§ 229.305(e)), the year ended December 31, 2018. Our exposuresCompany is not required to market risk have not changed materially since December 31, 2018.provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

A 100 basis point change in the underlying interest rates on our $39.0 million of variable rate debt would result in approximately a $0.4 million increase or decrease in annual interest expense.

We do not foresee any changes of significance in our exposure to fluctuations in interest rates, although we will continue to manage our exposure to this risk by monitoring available financing alternatives.

The below table summarizes the principal payment requirements on our debt obligations at September 30, 2019 on our Condensed Consolidated Balance Sheets (in thousands):
  2019 2020 2021 2022 2023 Thereafter Total Fair Value
Total Debt $25,691
 $—
 $16,600
 $—
 $14,189
 $—
 $56,480
 $55,063
Average interest rate             7.0%  

Item 4.Controls and Procedures
Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2019,March 31, 2020, we carried out an evaluation under the supervision and with the participation of our management, including our Interim Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective to ensure that material information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in the company’s internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), during the ninethree months ended September 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II – OTHER INFORMATION

Item 1.Legal Proceedings
Item 1.Legal Proceedings

On September 26, 2018, Radisson Hotels International, Inc. filed a complaint against RLH Corporation and our subsidiary Red Lion Hotels Franchising, Inc. in the United States District Court for the Eastern District of Washington. The complaint alleges tortious interference with agreements between Radisson and several franchisees controlled by Inner Circle Investments and seeks damages in an undetermined amount. RLH Corporation believes this complaint is without merit and we intend to defend it vigorously.

On October 31, 2018, the Company's lease for the Red Lion River Inn expired. The landlord filed a lawsuit against the Company on January 24, 2019 in Spokane Superior Court, alleging breach of the lease agreement and tort claims relating to the condition of the hotel. The Company filed its Answer on January 25, 2019, denying all allegations and asserting various affirmative defenses. RLH Corporation believes this complaint is without merit and we intend to defend it vigorously.

InAt any given time we are subject to claims and actions incidental to the operations of our business. During the second quarter of 2019, we accrued approximately $952,000 for a settlement over a wage dispute with former hotel employees related to the calculation of pay for certain rest, break, meal, and other periods that are required under California laws.law.

Along with many of its competitors, the Company has been named as a defendant in lawsuits filed in various state and federal courts, alleging statutory and common law claims related to purported incidents of sex trafficking at certain franchised hotel facilities. As of April 30, 2020, the Company was involved (as a named defendant) in six separate sex trafficking lawsuits. The Company is in various stages of seeking dismissal on the basis that the Company did not own, operate or manage the hotels at issue, and intends to vigorously defend the lawsuits.

At any given time, we are subject to additional claims and actions incidental to the operation of our business. While the outcome of these proceedings cannot be predicted, it is the opinion of management that none of such proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations. See Note 10 Commitments and Contingencies within Item 1. Financial Statements.



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Item 1A.Risk Factors
Item 1A.Risk Factors

We are subject to various risks, including those set forth below, and those discussed in Part I, Item 1A Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019, that could have a negative effect on our financial condition and could cause results to differ materially from those expressed in forward-looking statements contained in this report or other RLHC communications.You should carefully consider these risk factors, in addition to the other information in this quarterly report.

The COVID-19 outbreak, or an outbreak of a similar pandemic, epidemic or other public health emergency, is expected to have a significant impact on our financial condition and operations.

The current, and uncertain future impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel, is expected to continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price.

The spread of COVID-19 and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. We have been, and will continue to be, further negatively impacted by related developments, including heightened domestic and foreign governmental regulations and travel advisories, social distancing recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, stay-at-home orders and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, our financial results.

As primarily a franchise company in the hospitality industry, we are largely reliant on the financial success and cooperation of our franchisees. Our revenues and operating results are highly dependent upon the ability of our franchisees to generate revenue at their franchised properties, which generates revenue for us from royalty, marketing, and other fees. Due to the COVID-19 pandemic, some of our franchisees have had to close their hotels, and others are experiencing unprecedented declines in room revenues. Some of our franchisees may not be able to withstand the financial pressures on their operations, and may have to close their hotels, or may have their hotels repossessed by lenders holding a mortgage on their property. As a result, we have seen and will continue to see a reduction in our anticipated income, collections of outstanding receivables, and overall cash flows, which will have a negative impact on our financial condition and results of operations.

As our business is reliant on the financial success and cooperation of our franchisees, we have implemented policy changes to address the impact of the COVID-19 pandemic on their financial condition, including the implementation of a fee deferral program to certain of our franchisees in which billings related to fees for March through May of 2020 could be deferred for up to 12 months, temporary fee reductions for review responses, guest relations fees, and certain other fees, and a delay in implementation of capital intensive brand standards. While these changes are temporary, if the COVID-19 pandemic continues for longer than expected, or reappears in the fall or winter, we may be required to extend some of these fee deferral programs, resulting in additional reductions in income and cash flows and negatively impacting our financial condition.

In addition, the hotel business is seasonal in nature, with the period from May through October generally accounting for the greatest portion of our annual company operated hotel revenues, and franchise royalties that are based on a percentage of hotel revenue. Should the COVID-19 pandemic extend into the summer months, we could experience a larger adverse impact to our revenues and results of operations as a result of this seasonality.

We cannot predict when travel restrictions will be lifted. Moreover, even once travel advisories and restrictions are lifted, demand for hotel accommodations may remain weak for a significant length of time and we cannot predict if and when it will return to pre-outbreak demand. In particular, demand may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

We have never previously experienced a crisis of this nature or magnitude, and as a consequence, our ability to predict the impact on our future prospects is uncertain. In particular, we cannot predict the impact of the public’s concern regarding the health and safety of travel, and related decreases in demand for hotel accommodations on our financial performance and our cash flows.

In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 could cause a global recession, which would have a further adverse impact on our financial condition and operations. Current economic forecasts for significant increases in unemployment in the U.S. and other regions is likely to have a negative impact on demand for hotel accommodations once operations resume, and these impacts could exist for an extensive period of time.

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The extent of the effects of the outbreak on our business and the hospitality industry at large is highly uncertain, and will ultimately depend on factors outside our control, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume. To the extent COVID-19 adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many of the other risks described in Part I, Item 1A. Risk Factors included in our annual report on Form 10-K for the year ended December 31, 2019.

Departures of senior executives or other key employees could adversely affect our business.

We have seen significant turnover among our senior executives over the past five years. Our Chief Executive Officer resigned in November 2019 after five years at the company, and we are currently operating with an interim CEO. The Board of Directors has suspended the Company’s search for a permanent Chief Executive Officer at this time. Our current Chief Financial Officer was promoted from Chief Accounting Officer April 1, 2020; our prior CFO was in place from January 2019 until March 2020, and her predecessor was hired in 2017 and announced his departure for personal reasons in October 2018. Our Executive Vice President, President of Global Development, left the Company effective November 7, 2019, and our Chief Marketing Officer departed the Company in May 2019.

Turnover of senior management can adversely impact our stock price, our results of operations, our relationships with our franchisees and may make recruiting for future management positions more difficult. The loss of institutional knowledge and expertise that results from the departure of experienced employees could impact our ability to timely and successfully implement our business plans and strategies, and have a material adverse effect on our business and operations. Changes in personnel could also adversely affect our internal controls over financial reporting, leading to deficiencies or the inability to timely provide reliable and accurate financial reports. Further, we may incur significant expenses related to any executive transition costs that may impact our operating results. For example, we recorded employee separation and transition costs of $0.5 million, and $1.1 million in the first quarter of 2020 and in the year ended December 31, 2019, respectively, related to executive and management transition, which included severance payments and other incremental expenses. Additional losses of senior team members could have a material adverse impact on our financial condition or results of operations. We currently do not carry key person insurance on members of our senior management team.

We place substantial reliance on the lodging industry experience and the institutional knowledge of the members of our senior management team. We compete for qualified personnel with this experience against companies with greater financial resources than ours. In order to successfully recruit qualified employees, we will likely need to offer a combination of base salary and equity compensation. These future issuances of our equity securities will dilute existing shareholders’ ownership interests. Finding suitable replacements for senior management and other key employees can be difficult, and there can be no assurance we will continue to be successful in retaining or attracting qualified personnel in the future.

To be properly integrated into our company, new executives and employees must spend a significant amount of time learning our business model and management system, in addition to performing their regular duties. As a result, the integration of new personnel may result in some disruption to our ongoing operations, and the lack of continuity among our executive team could have a material adverse effect on our business, financial condition and results of operations.

Our recent organizational changes organizational changes and cost cutting measures may not be successful.

On April 2, 2020, our Board of Directors announced a series of organizational changes and cost cutting measures including changes to senior management, a reduction in force of approximately 40% of our corporate workforce, a reduction in capital expenditures and the closing of the Company’s Spokane office. These initiatives accelerated cost-cutting measures begun at the end of 2019, and were broadened and accelerated in light of the COVID-19 pandemic. We believe these changes are needed to streamline our organization and reallocate our resources to better align with our current strategic goals, and to respond to the challenges facing the Company as a result of the COVID-19 pandemic. However, these restructuring and cost cutting activities may yield unintended consequences and costs, such the loss of institutional knowledge and expertise, attrition beyond our intended reduction in force, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have a material adverse effect on our results of operations or financial condition. We may also discover that the reductions in force and cost cutting measures will make it difficult for us to pursue new opportunities and initiatives, requiring us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our annual report on Form 10-K for the year ended December 31, 2018,2019, which could materially affect our business, financial condition or future results. The risks described in our annual report may not be the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results in the future.
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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities
Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures
Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information
Item 5.Other Information

None.

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Item 6.Exhibits
Item 6.Exhibits

Index to Exhibits

Exhibit
Number		Description
Exhibit
Number10.1
DescriptionEmployment offer letter of Nate Troup dated April 1, 2020
10.110.2
Amendment to Julie Shiflett Offer LetterEmployment offer letter of Paul Moerner dated October 8, 2019April 1, 2020
10.210.3
Amendment dated April 1, 2020 to Nate Troup Employment offer letter
10.4
Amendment dated April 1, 2020 to Paul Sacco Promotion Letter dated October 8, 2019Moerner Employment offer letter
10.331.1
Amendment to Gary L. Sims Offer Letter dated October 8, 2019
31.1
Certification of Principal Financial Officer & Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)
32.131.2
Certification of Principal Financial Officer &pursuant to Exchange Act Rule 13a-14(a)
32.1
Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(b)
101.INS
32.2
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b)
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document


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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 thereunto duly authorized.

Red Lion Hotels Corporation
Registrant
 
SignatureTitleDate
By:/s/ John J. Russell, Jr.Interim President and Chief Executive Officer
(Principal Executive Officer)		May 8, 2020
John J. Russell, Jr.
SignatureBy:TitleDate
By:/s/ Julie ShiflettNathan M. Troup
Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Executive Officer)
November 12, 2019May 8, 2020
Julie ShiflettNathan M. Troup


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