Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Effective October 24, 2018, the final transaction provided for in the Purchase and Sale Agreement (“Agreement”) dated July 31, 2018 between Yuma Hospitality Properties LLLP (“Yuma”), a subsidiary of InnSuites Hospitality Trust (the “Trust”), and Palm Springs Inn, LLC (“Buyer”), an unrelated third party, were consummated. Pursuant to the Agreement, as revised, the Buyer acquired the InnSuites Yuma Hotel and Suites Best Western for $16.05 million with an estimated basis of approximately $4.6 million will result in a recognition of a significant profit after transactional costs. Right, title and interest to the InnSuites Yuma Hotel and Suites Best Western hotel property and operating assets were transferred on October 24, 2018.
The unaudited pro forma condensed consolidated financial statements presented herein are for informational purposes only and do not purport to present what the Trust’s actual results would have been had the Sale Transaction occurred on the date assumed, or to project our results of operations or financial position for any future period. The pro forma financial statements include assumptions that are believed to be reasonable and represent all material information that is necessary to fairly present pro forma financial statements.
The following unaudited condensed consolidated financial statements are presented to illustrate the effects of the Transaction. The unaudited pro forma condensed consolidated balance sheet as of July 31, 2018 illustrates the estimated effects of the Transaction as if the sale had occurred on July 31, 2018 and as if all income from the sale had been earned as of that date. The unaudited pro forma condensed consolidated income statement for the six months ended July 31, 2018 and the fiscal year ended January 31, 2018 sets forth the estimated effects of the Transaction on the Trust’s condensed consolidated statements of income as if the sale had occurred in its entirety at the beginning of each those periods.
The unaudited pro forma condensed consolidated financial statement, including the notes thereto, should be read in conjunction with Trust’s audited consolidated financial statements and the notes in the Trust’s Annual Report on Form 10-K as for the fiscal year ended January 31, 2018, as filed with the SEC on May 16, 2018.
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 2018 | PROFORMA | PROFORMA | ||||||||||||
(UNAUDITED) | ADJUSTMENTS | NOTES | JULY 31, 2018 | |||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and Cash Equivalents | $ | 674,621 | $ | 9,735,000 | (d) | $ | 10,409,621 | |||||||
Short-Term Investments – Available For Sale Securities | 3,031,710 | - | 3,031,710 | |||||||||||
Accounts Receivable, including approximately $36,000 and $15,000 from related parties and net of Allowance for Doubtful Accounts of approximately $6,000 and $29,000 as of July 31, 2018 and January 31, 2018, respectively | 52,302 | - | 52,302 | |||||||||||
Advances to Affiliates - Related Party | 869,363 | - | 869,363 | |||||||||||
Notes Receivable - Related Party | 797,065 | - | 797,065 | |||||||||||
Prepaid Expenses and Other Current Assets | 199,632 | - | 199,632 | |||||||||||
Current Assets of Discontinued Operations and Assets Held for Sale | 426,257 | (277,216 | ) | (a) | 149,041 | |||||||||
Total Current Assets | 6,050,950 | 9,457,784 | 15,508,734 | |||||||||||
Property, Plant and Equipment, net | 9,644,419 | - | 9,644,419 | |||||||||||
Noncurrent assets of Discontinued Operations and Assets Held for Sale | 5,144,983 | (4,665,764 | ) | (a) | 479,219 | |||||||||
TOTAL ASSETS | $ | 20,840,352 | $ | 4,792,020 | $ | 25,632,372 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
LIABILITIES | ||||||||||||||
Current Liabilities: | ||||||||||||||
Accounts Payable and Accrued Expenses | $ | 1,596,340 | $ | - | $ | 1,596,340 | ||||||||
Current Portion of Notes Payable - Related Party | 301,530 | - | 301,530 | |||||||||||
Current Portion of Mortgage Notes Payable, net of Discount | 112,162 | - | 112,162 | |||||||||||
Current Portion of Other Notes Payable | 1,231,801 | - | 1,231,801 | |||||||||||
Current Liabilities of Discontinued Operations and Assets Held for Sale | 571,744 | (370,865 | ) | (a) | 200,879 | |||||||||
Total Current Liabilities | 3,813,577 | (370,865 | ) | 3,442,712 | ||||||||||
Notes Payable - Related Party | 335,764 | - | 335,764 | |||||||||||
Mortgage Notes Payable, net of discount | 4,759,845 | - | 4,759,845 | |||||||||||
Other Notes Payable | 377,956 | - | 377,956 | |||||||||||
Noncurrent Liabilities of Discontinued Operations and Assets Held for Sale | 5,413,382 | (5,413,382 | ) | (a) | - | |||||||||
TOTAL LIABILITIES | 14,700,524 | (5,784,247 | ) | 8,916,277 | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||
Shares of Beneficial Interest, without par value, unlimited authorization; | 20,993,689 | 1,990,434 | (b),(d) | 22,984,123 | ||||||||||
Treasury Stock, | (13,244,428 | ) | - | (13,244,428 | ) | |||||||||
TOTAL TRUST SHAREHOLDERS’ EQUITY | 7,749,261 | 1,990,434 | 9,739,695 | |||||||||||
NON-CONTROLLING INTEREST | (1,609,433 | ) | 8,585,833 | (b),(d) | 6,976,400 | |||||||||
TOTAL EQUITY | 6,139,828 | 10,576,267 | 16,716,095 | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 20,840,352 | $ | 4,792,020 | $ | 25,632,372 |
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
REPORTED AT | PROFORMA | PROFORMA | ||||||||||||||
JANUARY 31, 2018 | ADJUSTMENTS | NOTES | JANUARY 31, 2018 | |||||||||||||
REVENUE | ||||||||||||||||
Room | $ | 9,281,199 | $ | 4,058,453 | (c) | $ | 5,222,746 | |||||||||
Food and Beverage | 62,969 | 41,943 | (c) | 21,026 | ||||||||||||
Management and Trademark Fees | 200,457 | - | 200,457 | |||||||||||||
Reservation and Convention | 1,111,775 | - | 1,111,775 | |||||||||||||
Other | 111,192 | 24,543 | (c) | 86,649 | ||||||||||||
TOTAL REVENUE | 10,767,592 | 4,124,939 | 6,642,653 | |||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Room | 2,732,908 | 1,008,884 | (c) | 1,724,024 | ||||||||||||
Food and Beverage | 90,543 | 59,407 | (c) | 31,136 | ||||||||||||
Telecommunications | 37,145 | 34,268 | (c) | 2,877 | ||||||||||||
General and Administrative | 4,349,086 | 586,564 | (c) | 3,762,522 | ||||||||||||
Other | 6,672,717 | 1,611,705 | 5,061,012 | |||||||||||||
TOTAL OPERATING EXPENSES | 13,882,399 | 3,300,828 | 10,581,571 | |||||||||||||
OPERATING INCOME (LOSS) | (3,114,807 | ) | 824,111 | (3,938,918 | ) | |||||||||||
Interest Income | 11,641 | - | 11,641 | |||||||||||||
Interest income - related party | 68,358 | - | 68,358 | |||||||||||||
TOTAL OTHER INCOME | 79,999 | - | 79,999 | |||||||||||||
Interest Paid to Third Parties | 656,810 | 303,656 | (c) | 353,154 | ||||||||||||
Interest on Advances to Affiliates - Related Party | ||||||||||||||||
TOTAL INTEREST EXPENSE | 656,810 | 303,656 | 353,154 | |||||||||||||
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION AND DISCONTINUED OPERATIONS | (3,691,618 | ) | 520,455 | (4,212,073 | ) | |||||||||||
Income Tax Provision | (341,000 | ) | - | (341,000 | ) | |||||||||||
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS | (4,032,618 | ) | 520,455 | (4,553,073 | ) | |||||||||||
Discontinued Operations, Net of Non-Controlling Interest | (605,360 | ) | - | (605,360 | ) | |||||||||||
Gain on Disposal of Discontinued Operations | 11,445,879 | - | 11,445,879 | |||||||||||||
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS AND GAIN ON SALE OF DISCONTINUED OPERATIONS | 10,840,519 | - | 10,840,519 | |||||||||||||
CONSOLIDATED NET (LOSS) INCOME | 6,807,901 | 520,455 | 6,287,446 | |||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 5,410,300 | 379,508 | (c) | 5,030,792 | ||||||||||||
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | 1,397,601 | $ | 140,947 | $ | 1,256,654 | ||||||||||
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – BASIC | $ | (0.42 | ) | $ | 0.05 | $ | 0.01 | |||||||||
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – BASIC | $ | 1.13 | $ | - | $ | (0.44 | ) | |||||||||
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – BASIC | $ | 0.56 | $ | 0.04 | $ | (0.47 | ) | |||||||||
NET (LOSS) INCOME PER SHARE TOTAL - BASIC | $ | 0.15 | $ | 0.01 | $ | (0.06 | ) | |||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 9,612,139 | 9,612,139 | 9,612,139 | |||||||||||||
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – DILUTED | $ | (0.31 | ) | $ | 0.04 | $ | (0.35 | ) | ||||||||
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – DILUTED | $ | 0.83 | $ | - | $ | 0.83 | ||||||||||
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – DILUTED | $ | 0.41 | $ | 0.03 | $ | 0.38 | ||||||||||
NET (LOSS) INCOME PER SHARE TOTAL - DILUTED | $ | 0.11 | $ | 0.01 | $ | 0.10 | ||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 13,085,223 | 13,085,223 | 13,085,223 |
INNSUITES HOSPITALITY TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
JULY 31, 2018 | PROFORMA | PROFORMA | ||||||||||||||
(UNAUDITED) | ADJUSTMENTS | NOTES | JULY 31, 2018 | |||||||||||||
REVENUE | ||||||||||||||||
Room | $ | 5,401,044 | $ | 2,254,307 | (c) | $ | 3,146,737 | |||||||||
Food and Beverage | 43,812 | 21,649 | (c) | 22,163 | ||||||||||||
Management and Trademark Fees | 90,443 | - | (c) | 90,443 | ||||||||||||
Other | 77,716 | 35,061 | (c) | 42,655 | ||||||||||||
TOTAL REVENUE | 5,613,015 | 2,311,017 | 3,301,998 | |||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Room | 1,500,513 | 533,105 | (c) | 967,408 | ||||||||||||
Food and Beverage | 64,192 | 29,102 | (c) | 35,090 | ||||||||||||
Telecommunications | 19,571 | 16,383 | (c) | 3,188 | ||||||||||||
General and Administrative | 1,438,781 | 350,271 | (c) | 1,088,510 | ||||||||||||
Other | 2,342,462 | 777,149 | 1,565,313 | |||||||||||||
TOTAL OPERATING EXPENSES | 5,365,519 | 1,706,010 | 3,659,509 | |||||||||||||
OPERATING INCOME (LOSS) | 247,496 | 605,007 | (357,511 | ) | ||||||||||||
Interest Income | 60,879 | - | 60,879 | |||||||||||||
TOTAL OTHER INCOME | 60,879 | - | 60,879 | |||||||||||||
Interest Paid to Third Parties | 358,821 | 165,895 | (c) | 192,926 | ||||||||||||
Interest on Advances to Affiliates - Related Party | - | |||||||||||||||
TOTAL INTEREST EXPENSE | 358,821 | 165,895 | 192,926 | |||||||||||||
CONSOLIDATED NET LOSS BEFORE INCOME TAX PROVISION AND DISCONTINUED OPERATIONS | (50,446 | ) | 439,112 | (489,558 | ) | |||||||||||
Income Tax Provision | (209,831 | ) | - | (209,831 | ) | |||||||||||
CONSOLIDATED NET LOSS FROM CONTINUING OPERATIONS | $ | (260,277 | ) | $ | 439,112 | $ | (699,389 | ) | ||||||||
Discontinued Operations, Net of Non-Controlling Interest | $ | (686,427 | ) | (686,427 | ) | |||||||||||
Gain on Disposal of Discontinued Operations | $ | - | - | |||||||||||||
CONSOLIDATED NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS AND GAIN ON SALE OF DISCONTINUED OPERATIONS | $ | (686,427 | ) | $ | - | $ | (686,427 | ) | ||||||||
CONSOLIDATED NET (LOSS) INCOME | $ | (946,704 | ) | $ | 439,112 | $ | (1,385,816 | ) | ||||||||
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | 435,345 | 382,950 | (c) | 52,395 | |||||||||||
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | (1,382,049 | ) | $ | 56,162 | $ | (1,438,211 | ) | ||||||||
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – BASIC | $ | (0.03 | ) | $ | 0.05 | $ | (0.07 | ) | ||||||||
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – BASIC | $ | (0.07 | ) | $ | - | $ | (0.07 | ) | ||||||||
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – BASIC | $ | 0.05 | $ | 0.04 | $ | 0.01 | ||||||||||
NET (LOSS) INCOME PER SHARE TOTAL - BASIC | $ | (0.15 | ) | $ | 0.01 | $ | (0.15 | ) | ||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 9,405,357 | 9,405,357 | 9,405,357 | |||||||||||||
NET LOSS PER SHARE FROM CONTINUING OPERATIONS – DILUTED | $ | (0.03 | ) | $ | 0.05 | $ | (0.07 | ) | ||||||||
NET INCOME PER SHARE FROM DISCONTINUED OPERATIONS – DILUTED | $ | (0.07 | ) | $ | - | $ | (0.07 | ) | ||||||||
NET INCOME PER SHARE FROM NON-CONTROLLING INTEREST – DILUTED | $ | 0.05 | $ | 0.04 | $ | 0.01 | ||||||||||
NET (LOSS) INCOME PER SHARE TOTAL - DILUTED | $ | (0.15 | ) | $ | 0.01 | $ | (0.15 | ) | ||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 9,405,357 | 9,405,357 | 9,405,357 |
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. | NOTES TO UNAUDITED PRO FORMA ADJUSTMENT |
(a) | The pro forma adjustment to Hotel Properties, net, Accounts Payable and Accrued Expenses and Current Portion of Mortgage Notes Payable that was on our balance sheet as of July 31, 2018 related to the removal of the net assets and liabilities of the Hotel. |
(b) | The pro forma adjustment to Shares of Beneficial Interest and Non-Controlling Interest that was on the balance sheet as of July 31, 2018 related to the removal of the Shareholders Equity of the Hotel. |
(c) | Revenues and Expenses have been adjusted on the pro forma income statements for the fiscal year ending January 31, 2018 and for the six months ending July 31, 2018 to remove the revenues and expenses associated with the Hotel |
(d) | Adjustment represents the net proceeds the Trust expects to receive from the sale of the Yuma Hotel. The net proceeds were allocated between the Trust ownership of the Yuma Hotel of approximately 20% and the minority ownership percentage of approximately 80% within equity. |