ý
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the fiscal year ended January 31, 2007.
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period from
to
.
|
|
Commission
File No. 1-7062
|
InnSuites
Hospitality Trust
|
||
(Exact
Name of Registrant as Specified in Its Charter)
|
||
Ohio
|
34-6647590
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification Number)
|
|
InnSuites
Hotels Centre, 1615 E. Northern Avenue,
Suite 102,
Phoenix, Arizona
|
85020
|
|
(Address
of Principal Executive Offices)
|
(ZIP
Code)
|
|
Registrant’s
telephone number, including area code: (602)
944-1500
|
||
Title of
Each Class
|
Name
of Each Exchange on Which Registered
|
|
Shares
of Beneficial Interest,
without
par value
|
American
Stock Exchange
|
·
|
changes
in occupancy and room rates achieved by our hotels and by competitive
area
hotels;
|
·
|
desirability
of a hotel’s geographic location and changes in traffic
patterns;
|
·
|
changes
in general and local economic and market conditions, which can adversely
affect the level of business and leisure travel, and therefore the
demand
for lodging and related services;
|
·
|
changes
in the number of hotels operating under specific franchised
brands;
|
·
|
increases
in costs due to inflation may not be able to be totally offset by
increases in room rates;
|
·
|
over-building
in one or more sectors of the hotel industry and/or in one or more
geographic regions, could lead to excess supply compared to demand,
and to
decreases in hotel occupancy and/or room
rates;
|
·
|
changes
in travel patterns and travel costs affected by fuel
prices;
|
·
|
changes
in governmental regulations that influence or determine wages, prices
or
construction costs;
|
·
|
other
unpredictable external factors, such as natural disasters, war, terrorist
attacks, epidemics, airline strikes, transportation and fuel price
increases and severe weather, may reduce business and leisure
travel;
|
·
|
the
need to periodically repair and renovate our hotels at a cost in
excess of
our standard 4% reserve;
|
·
|
increases
in the cost of labor, energy, healthcare, insurance and other operating
expenses resulting in lower operating
margins;
|
·
|
the
financial condition of franchisors and travel related
companies;
|
·
|
our
ability to develop and maintain positive relations with current and
potential franchisors; and
|
·
|
our
ability to develop our own regional “InnSuites”
brand.
|
·
|
fixed
labor costs;
|
·
|
interest
rate levels;
|
·
|
the
availability of financing;
|
·
|
increases
in real property tax rates;
|
·
|
the
cost of compliance with government regulations, including zoning
and tax
laws; and
|
·
|
changes
in government regulations, including those governing usage, zoning
and
taxes.
|
·
|
diversion
of management resources;
|
·
|
the
process may be time consuming and expensive and may result in the
loss of
business opportunities;
|
·
|
the
Trust may not be able to successfully achieve the benefits of any
strategic alternatives; and
|
·
|
perceived
uncertainties as to the Trust’s future direction may result in increased
difficulties in recruiting and retaining employees, particularly
senior
management.
|
PROPERTY
|
NUMBER
OF
SUITES
|
YEAR
OF
CONSTRUCTION/
ADDITION
|
MOST
RECENT
RENOVATION
(1)
|
||||
|
|
|
|||||
InnSuites
Hotel and Suites Airport Albuquerque Best Western
|
101
|
|
1975/1985
|
|
2004
|
|
|
|
|
|
|||||
InnSuites
Hotel and Suites Tucson, Catalina Foothills Best Western
|
159
|
|
1981/1983
|
|
2005
|
|
|
|
|
|
|||||
InnSuites
Hotels and Suites Yuma Best Western
|
166
|
|
1982/1984
|
|
2006
|
|
|
|
|
|
|||||
InnSuites
Hotel and Suites Ontario Airport Best Western
|
150
|
|
1990
|
|
2005
|
|
|
|
|
|
|||||
InnSuites
Hotels and Suites Tucson St. Mary’s
|
267
|
|
1960/1971
|
|
2006
|
|
|
|
|
|
|||||
Total
suites
|
843
|
|
|
|
Item
5.
|
MARKET
FOR THE TRUST’S SHARES, RELATED SHAREHOLDER MATTERS AND TRUST PURCHASES OF
SHARES
|
Fiscal
Year 2007
|
High
|
Low
|
Dividends
|
||||
First
Quarter
|
1.75
|
|
1.30
|
|
—
|
|
|
Second
Quarter
|
1.75
|
|
1.45
|
|
—
|
|
|
Third
Quarter
|
1.54
|
|
1.10
|
|
—
|
|
|
Fourth
Quarter
|
1.75
|
|
1.00
|
|
.01
|
|
Fiscal
Year 2006
|
High
|
Low
|
Dividends
|
||||
First
Quarter
|
1.52
|
|
1.11
|
|
—
|
|
|
Second
Quarter
|
1.75
|
|
1.23
|
|
—
|
|
|
Third
Quarter
|
1.50
|
|
1.24
|
|
—
|
|
|
Fourth
Quarter
|
1.50
|
|
1.20
|
|
.01
|
|
Issuer
Purchases of Equity Securities
|
||||||||||
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number of Shares
Purchased
as Part of
Publicly
Announced
Plans
|
Maximum
Number of
Shares
that May Be Yet
Purchased
Under the
Plans
|
||||||
November 1
- November 30, 2006
|
21,700
|
|
$
|
1.20
|
|
21,700
|
|
124,753
|
|
|
December
1 - December 31, 2006
|
25,900
|
|
$
|
1.20
|
|
25,900
|
|
98,853
|
|
|
January
1 - January 31, 2007
|
32,700
|
|
$
|
1.44
|
|
32,700
|
|
66,153
|
Year
Ended January 31,
|
||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
|
|
|
|
||||||||||||
Total
revenue
|
$
|
21,790,634
|
|
$
|
21,248,839
|
|
$
|
22,875,187
|
|
$
|
24,211,328
|
|
$
|
26,940,473
|
|
|
|
|
|
|
|
||||||||||||
Net
income (loss) from continuing operations
|
$
|
(46,430
|
)
|
$
|
541,578
|
|
$
|
240,442
|
$
|
(2,594,317
|
)
|
$
|
(3,445,948
|
)
|
||
|
|
|
|
|
||||||||||||
Income
(loss) per share - basic
|
$
|
(0.01
|
)
|
$
|
0.06
|
|
$
|
0.10
|
$
|
(1.27
|
)
|
$
|
(1.67
|
)
|
||
Income
(loss) per share - diluted
|
$
|
(0.01
|
)
|
$
|
0.02
|
|
$
|
0.10
|
$
|
(1.27
|
)
|
$
|
(1.67
|
)
|
||
Cash
dividends paid and declared per share
|
$
|
0.01
|
|
$
|
0.01
|
|
$
|
0.01
|
|
$
|
0.02
|
|
$
|
0.01
|
|
|
|
|
|
|
|
||||||||||||
Total
assets
|
$
|
31,379,017
|
|
$
|
31,952,358
|
|
$
|
36,455,521
|
|
$
|
47,961,594
|
|
$
|
61,494,579
|
|
|
|
|
|
|
|
||||||||||||
Notes
and advances payable to banks and others
|
$
|
19,851,327
|
$
|
20,736,859
|
$
|
24,755,858
|
|
$
|
31,974,992
|
|
$
|
38,922,408
|
|
|||
|
|
|
|
|
||||||||||||
Notes
and advances payable to related parties
|
$
|
1,085,717
|
|
$
|
514,706
|
|
$
|
93,512
|
|
$
|
6,852,241
|
|
$
|
9,901,153
|
|
For
the Year Ended January 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
|
|
|
||||||||
Occupancy
|
71.54
|
%
|
69.72
|
%
|
68.55
|
%
|
||||
|
|
|
||||||||
Average
Daily Rate (ADR)
|
$
|
72.95
|
|
$
|
70.55
|
|
$
|
70.83
|
|
|
|
|
|
||||||||
Revenue
Per Available Room (REVPAR)
|
$
|
52.19
|
|
$
|
49.19
|
|
$
|
48.55
|
|
2007
|
2006
|
Change
|
%
Change
|
|||||||||
Revenue
|
$
|
21,790,634
|
|
$
|
21,248,839
|
|
$
|
541,795
|
2.6
|
%
|
||
Operating
Income
|
$
|
1,515,068
|
$
|
349,349
|
$
|
1,165,719
|
|
>100.0
|
%
|
|||
Net
Income (Loss)
|
$
|
(46,430
|
)
|
$
|
541,578
|
$
|
(588,008
|
)
|
>(100.0
|
)%
|
||
Income
Per Share - Basic
|
$
|
(0.01
|
)
|
$
|
0.06
|
$
|
(0.07
|
)
|
>(100.0
|
)%
|
||
Income
Per Share - Diluted
|
$
|
(0.01
|
)
|
$
|
0.02
|
$
|
(0.03
|
)
|
>(100.0
|
)%
|
2006
|
2005
|
Change
|
%
Change
|
|||||||||
Revenue
|
$
|
21,248,839
|
|
$
|
22,875,187
|
|
$
|
(1,626,348
|
)
|
(7.1
|
)%
|
|
Operating
Income (Loss)
|
$
|
349,349
|
$
|
(221,647
|
)
|
$
|
570,996
|
|
>100.0
|
%
|
||
Net
Income
|
$
|
541,578
|
|
$
|
240,442
|
$
|
301,136
|
|
>100.0
|
%
|
||
Income
Per Share - Basic
|
$
|
0.06
|
|
$
|
0.10
|
$
|
(0.04
|
)
|
(40.0
|
)%
|
||
Income
Per Share - Diluted
|
$
|
0.02
|
|
$
|
0.10
|
$
|
(0.08
|
)
|
(80.0
|
)%
|
PAYMENTS
DUE BY PERIOD
|
||||||||||||||||
CONTRACTUAL
OBLIGATIONS
|
TOTAL
|
LESS
THAN
1
YEAR
|
1-3
YEARS
|
3-5
YEARS
|
THEREAFTER
|
|||||||||||
|
|
|
|
|
||||||||||||
Mortgage
notes payable, notes payable to banks, other notes payable and notes
and
advances payable to related parties
|
$
|
20,937,044
|
|
$
|
1,067,036
|
|
$
|
7,741,722
|
|
$
|
1,842,886
|
|
$
|
10,285,400
|
|
|
|
|
|
|
|
||||||||||||
Operating
leases
|
6,795,212
|
|
198,133
|
|
396,266
|
|
396,266
|
|
5,984,547
|
|
||||||
|
|
|
|
|
||||||||||||
TOTAL
|
$
|
27,912,256
|
|
$
|
1,265,169
|
|
$
|
8,137,988
|
|
$
|
2,239,152
|
|
$
|
16,269,947
|
|
TOTAL
|
LESS
THAN
1
YEAR
|
1-3
YEARS
|
3-5
YEARS
|
THEREAFTER
|
||||||||||||
$
|
6,482,183
|
|
$
|
1,754,436
|
$
|
2,789,863
|
$
|
1,227,532
|
|
$
|
710,352
|
·
|
fluctuations
in hotel occupancy rates;
|
·
|
changes
in room rental rates which may be charged by InnSuites Hotels in
response
to market rental rate changes or
otherwise;
|
·
|
seasonality
of our business;
|
·
|
interest
rate fluctuations;
|
·
|
changes
in governmental regulations, including federal income tax laws and
regulations;
|
·
|
competition;
|
·
|
any
changes in the Trust’s financial condition or operating results due to
acquisitions or dispositions of hotel
properties;
|
·
|
insufficient
resources to pursue our current
strategies;
|
·
|
concentration
of our investments in the InnSuites Hotels®
brand;
|
·
|
loss
of franchise contracts;
|
·
|
real
estate and hospitality market
conditions;
|
·
|
hospitality
industry factors;
|
·
|
our
ability to meet present and future debt service
obligations;
|
·
|
terrorist
attacks or other acts of war;
|
·
|
outbreaks
of communicable diseases;
|
·
|
natural
disasters;
|
·
|
loss
of key personnel;
|
·
|
local
or national economic and business conditions, including, without
limitation, conditions which may affect public securities markets
generally, the hospitality industry or the markets in which the Trust
operates or will operate; and
|
·
|
uncertainties
the Trust might encounter in changing from a REIT to a tax-paying
entity.
|
Fiscal
|
|||||||||||||||||||
Debt
Type
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
Total
|
Fair
Value
|
|||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Fixed
rate debt (1)
|
$
|
958,139
|
|
1,979,181
|
|
1,029,124
|
|
1,086,687
|
|
756,199
|
|
10,285,400
|
|
16,094,730
|
|
16,589,474
|
|
||
|
|
|
|
|
|
|
|
||||||||||||
Average
interest rate
|
8.23
|
%
|
8.23
|
%
|
8.31
|
%
|
8.30
|
%
|
8.27
|
%
|
8.26
|
%
|
8.27
|
%
|
8.25
|
%
|
|||
|
|
|
|
|
|
|
|
||||||||||||
Variable
rate debt (1)
|
$
|
108,897
|
|
868,491
|
|
3,864,926
|
|
—
|
|
—
|
|
—
|
|
4,842,314
|
|
4,880,271
|
|
||
|
|
|
|
|
|
|
|
||||||||||||
Interest
rate available on January 31, 2007
|
9.50
|
%
|
9.50
|
%
|
9.50
|
%
|
—
|
|
—
|
|
—
|
9.50
|
%
|
9.50
|
%
|
(1)
|
The
fair value of fixed rate debt and variable rate debt were determined
based
on current rates offered for fixed rate debt and variable rate LIBOR
debt
with similar risks and maturities.
|
Independent
Auditors’ Report -January 31, 2007;
|
24
|
|
Independent
Auditors’ Report -January 31, 2006;
|
25
|
|
Consolidated
Balance Sheets - January 31, 2007 and 2006;
|
26
|
|
Consolidated
Statements of Operations - Years Ended January 31, 2007, 2006 and
2005;
|
27
|
|
Consolidated
Statements of Shareholders’ (Deficit) Equity - Years Ended
January 31, 2007, 2006 and 2005;
|
28
|
|
Consolidated
Statements of Cash Flow - Years Ended January 31, 2007, 2006 and
2005; and
|
29
|
|
Notes
to the Consolidated Financial Statements - January 31, 2007, 2006 and
2005.
|
30
|
Schedule III
- Real Estate and Accumulated Depreciation.
|
50
|
|
Schedule IV
- Mortgage Loans on Real Estate.
|
53
|
To
the Shareholders and Board of Trustees of
|
||
InnSuites
Hospitality Trust
|
||
Phoenix,
Arizona:
|
To
the Shareholders and Board of Trustees of
|
InnSuites
Hospitality Trust
|
Phoenix,
Arizona:
|
/s/EPSTEIN,
WEBER & CONOVER, PLC
|
|
|
|
Scottsdale,
Arizona
|
|
April
24, 2006
|
JANUARY 31
|
|||||||
2007
|
2006
|
||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and Cash Equivalents
|
$
|
202,691
|
$
|
34,251
|
|||
Restricted
Cash
|
128,284
|
226,294
|
|||||
Accounts
Receivable, including $0 and $14,828 from related parties, net of
Allowance for Doubtful Accounts of $115,000 and $112,000,
respectively
|
752,232
|
531,961
|
|||||
Prepaid
Expenses and Other Current Assets
|
485,636
|
494,829
|
|||||
Total
Current Assets
|
1,568,843
|
1,287,335
|
|||||
Hotel
Properties, net
|
29,654,942
|
30,215,391
|
|||||
Deferred
Finance Costs, Long-Term Portion
|
140,245
|
175,645
|
|||||
Deposits,
Long-Term
|
14,987
|
14,987
|
|||||
Deferred
Income Tax Benefit
|
—
|
259,000
|
|||||
TOTAL
ASSETS
|
$
|
31,379,017
|
$
|
31,952,358
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
LIABILITIES
|
|||||||
Current
Liabilities :
|
|||||||
Accounts
Payable and Accrued Expenses, including $518,206 and $95,418 accrued
interest and payables to related parties as of January 31, 2007 and
2006, respectively
|
$
|
2,970,080
|
$
|
2,594,733
|
|||
Notes
Payable to Banks
|
749,777
|
500,000
|
|||||
Current
Portion of Mortgage Notes Payable
|
926,464
|
879,265
|
|||||
Current
Portion of Other Notes Payable
|
109,486
|
121,558
|
|||||
Current
Portion of Notes Payable to Related Parties
|
31,086
|
428,989
|
|||||
Total
Current Liabilities
|
4,786,893
|
4,524,545
|
|||||
Mortgage
Notes Payable
|
17,939,187
|
19,029,612
|
|||||
Notes
Payable to Related Parties
|
1,054,631
|
85,717
|
|||||
Other
Notes Payable
|
126,413
|
206,424
|
|||||
TOTAL
LIABILITIES
|
23,907,124
|
23,846,298
|
|||||
MINORITY
INTEREST IN PARTNERSHIP
|
930,192
|
1,388,132
|
|||||
SHAREHOLDERS’
EQUITY
|
|||||||
Shares
of Beneficial Interest, without par value; unlimited authorization;
9,195,856 and 9,145,365 shares issued and outstanding at January 31,
2007 and 2006, respectively
|
17,030,891
|
17,155,106
|
|||||
Treasury
Stock, 7,536,970 and 7,494,578 shares held at January 31, 2007 and
2006,
respectively
|
(10,489,190
|
)
|
(10,437,178
|
)
|
|||
TOTAL
SHAREHOLDERS’ EQUITY
|
6,541,701
|
6,717,928
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
31,379,017
|
$
|
31,952,358
|
YEARS
ENDED JANUARY 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
REVENUE
|
|
|
|
|||||||
Room
|
$
|
16,057,900
|
|
$
|
16,029,694
|
|
$
|
17,729,550
|
|
|
Food
and Beverage
|
1,273,608
|
|
1,122,191
|
|
1,238,808
|
|
||||
Telecommunications
|
38,163
|
|
56,804
|
|
99,894
|
|
||||
Other
|
396,535
|
|
462,462
|
|
736,873
|
|
||||
Management
and Trademark Fees, including $350,233, $209,862 and $115,105 from
related
parties for 2007, 2006 and 2005, respectively
|
461,579
|
|
382,260
|
|
278,888
|
|
||||
Payroll
Reimbursements, including $3,057,136, $2,471,324 and $2,191,474 from
related parties for 2007, 2006 and 2005, respectively
|
3,562,849
|
|
3,195,428
|
|
2,791,174
|
|
||||
|
|
|
||||||||
TOTAL
REVENUE
|
21,790,634
|
|
21,248,839
|
|
22,875,187
|
|
||||
|
|
|
||||||||
OPERATING
EXPENSES
|
|
|
|
|||||||
Room
|
4,110,342
|
|
4,222,369
|
|
5,010,738
|
|
||||
Food
and Beverage
|
1,123,206
|
|
1,168,246
|
|
1,226,074
|
|
||||
Telecommunications
|
106,438
|
|
153,313
|
|
226,559
|
|
||||
General
and Administrative
|
3,295,554
|
|
3,948,539
|
|
4,445,613
|
|
||||
Sales
and Marketing
|
1,299,082
|
|
1,362,805
|
|
1,642,232
|
|
||||
Repairs
and Maintenance
|
1,471,239
|
|
1,427,470
|
|
1,387,407
|
|
||||
Hospitality
|
771,701
|
|
697,625
|
|
827,166
|
|
||||
Utilities
|
1,224,063
|
|
1,166,233
|
|
1,232,940
|
|
||||
Hotel
Property Depreciation
|
2,032,955
|
|
2,118,492
|
|
2,755,499
|
|
||||
Real
Estate and Personal Property Taxes, Insurance and Ground
Rent
|
1,139,869
|
|
1,258,380
|
|
1,329,463
|
|
||||
Other
|
138,268
|
|
180,590
|
|
221,969
|
|
||||
Payroll
Costs Related to Management Contracts
|
3,562,849
|
|
3,195,428
|
|
2,791,174
|
|
||||
|
||||||||||
TOTAL
OPERATING EXPENSES
|
20,275,566
|
|
20,899,490
|
|
23,096,834
|
|
||||
OPERATING
INCOME (LOSS)
|
1,515,068
|
349,349
|
(221,647
|
)
|
||||||
Interest
Income
|
3,431
|
|
2,134
|
|
7,517
|
|
||||
Other
Income
|
—
|
59,677
|
—
|
|||||||
Gain
on Disposition of Hotels and Property
|
138,751
|
|
1,847,425
|
|
5,113,540
|
|
||||
TOTAL
OTHER INCOME
|
142,182
|
|
1,909,236
|
|
5,121,057
|
|
||||
Interest
on Mortgage Notes Payable
|
1,704,169
|
|
1,846,801
|
|
2,089,708
|
|
||||
Interest
on Notes Payable to Banks
|
41,531
|
|
28,322
|
|
23,659
|
|
||||
Interest
on Notes Payable and Advances Payable to Related Parties
|
49,891
|
|
16,769
|
|
125,336
|
|
||||
Interest
on Other Notes Payable
|
20,780
|
|
17,205
|
|
20,878
|
|
||||
TOTAL
INTEREST EXPENSE
|
1,816,371
|
|
1,909,097
|
|
2,259,581
|
|
||||
INCOME
(LOSS) BEFORE MINORITY INTEREST, INCOME TAXES AND CUMULATIVE EFFECT
OF
ADOPTION OF ACCOUNTING PRINCIPLE
|
(159,121
|
)
|
349,488
|
2,639,829
|
||||||
LESS
MINORITY INTEREST
|
(428,855
|
)
|
(267,265
|
)
|
1,384,985
|
|||||
Income
Tax Provision
|
(316,164
|
)
|
(75,175
|
)
|
(160,000
|
)
|
||||
INCOME
(LOSS) ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST BEFORE CUMULATIVE
EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLE
|
(46,430
|
)
|
541,578
|
1,094,844
|
||||||
CUMULATIVE
EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLE
|
—
|
|
—
|
|
(854,402
|
)
|
||||
INCOME
(LOSS) ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST
|
$
|
(46,430
|
)
|
$
|
541,578
|
$
|
240,442
|
|||
INCOME
(LOSS) PER SHARE BEFORE CUMULATIVE EFFECT OF ADOPTION OF ACCOUNTING
PRINCIPLE- Basic
|
$
|
(0.01
|
)
|
$
|
0.06
|
$
|
0.45
|
|||
NET
LOSS FROM CUMULATIVE EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLE -
Basic
|
—
|
|
—
|
|
(0.35
|
)
|
||||
NET
INCOME (LOSS) PER SHARE - Basic
|
$
|
(0.01
|
)
|
$
|
0.06
|
$
|
0.10
|
|||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - Basic
|
9,251,420
|
|
9,096,338
|
|
2,424,837
|
|
||||
INCOME
(LOSS) PER SHARE BEFORE CUMULATIVE EFFECT OF ADOPTION OF ACCOUNTING
PRINCIPLE- Diluted
|
$
|
(0.01
|
)
|
$
|
0.02
|
$
|
0.45
|
|||
NET
LOSS FROM CUMULATIVE EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLE -
Diluted
|
—
|
|
—
|
|
(0.35
|
)
|
||||
NET
INCOME (LOSS) PER SHARE - Diluted
|
$
|
(0.01
|
)
|
$
|
0.02
|
$
|
0.10
|
|||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - Diluted
|
9,251,420
|
13,341,783
|
2,424,837
|
|||||||
CASH
DIVIDENDS PER SHARE
|
$
|
.01
|
|
$
|
.01
|
|
$
|
.01
|
|
BALANCE,
JANUARY 31, 2004
|
$
|
(1,573,599
|
)
|
||
Net
Income Attributable to Shares of Beneficial Interest
|
240,442
|
||||
Dividends
|
(23,220
|
)
|
|||
Purchase
of Treasury Stock
|
(225,917
|
)
|
|||
Shares
of Beneficial Interest issued for Services Received
|
49,280
|
|
|||
Shares
of Beneficial Interest issued to Satisfy Notes Payable to Related
Parties
|
690,820
|
|
|||
Shares
of Beneficial Interest issued to Purchase Management and Licensing
Contracts
|
155,000
|
|
|||
Shares
of Beneficial Interest issued to Satisfy Advances Payable to the
Partnership
|
3,661,659
|
|
|||
Shares
of Beneficial Interest issued to Purchase Yuma Hospitality Minority
Interest
|
2,766,515
|
||||
Purchase
of Yuma Hospitality Minority Interest Above Carrying Value
|
1,177,425
|
||||
Purchase
of Partnership Units Above Carrying Value
|
98,684
|
||||
Reallocation
of Minority Interest
|
(752,455
|
)
|
|||
|
|||||
BALANCE,
JANUARY 31, 2005
|
6,264,634
|
||||
Net
Income Attributable to Shares of Beneficial Interest
|
541,578
|
||||
Dividends
|
(91,450
|
)
|
|||
Purchase
of Treasury Stock
|
(175,442
|
)
|
|||
Shares
of Beneficial Interest issued for Services Received
|
37,888
|
||||
Partnership
Interest Acquired with Shares of Beneficial Interest
|
213,202
|
||||
Reallocation
of Minority Interest
|
(72,482
|
)
|
|||
|
|||||
BALANCE,
JANUARY 31, 2006
|
$
|
6,717,928
|
|
||
Net
Loss Attributable to Shares of Beneficial Interest
|
(46,430
|
)
|
|||
Dividends
|
(93,302
|
)
|
|||
Purchase
of Treasury Stock
|
(190,301
|
)
|
|||
Shares
of Beneficial Interest issued for Services Received
|
134,055
|
||||
Partnership
Interest Acquired with Shares of Beneficial Interest
|
24,560
|
||||
Reallocation
of Minority Interest
|
(4,809
|
)
|
|||
BALANCE,
JANUARY 31, 2007
|
$
|
6,541,701
|
YEARS
ENDED JANUARY 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
CASH
FLOW FROM OPERATING ACTIVITIES
|
|
|
|
|||||||
Net
Income (Loss) Attributable to Shares of Beneficial
Interest
|
$
|
(46,430
|
)
|
$
|
541,578
|
$
|
240,442
|
|||
Adjustments
to Reconcile Net Income (Loss) Attributable to Shares of Beneficial
Interest to Net Cash Provided by Operating Activities:
|
|
|
|
|||||||
Cumulative
Effect of Adoption of Accounting Principle
|
—
|
|
—
|
|
854,402
|
|
||||
Net
Income from Variable Interest Entities
|
—
|
|
—
|
|
352,882
|
|
||||
Issuance
of Shares for Management and Licensing Contracts
|
—
|
|
—
|
|
155,000
|
|
||||
Stock
Compensation Expense
|
96,390
|
36,436
|
40,580
|
|||||||
Provision
for Uncollectible Receivables
|
146,340
|
|
354,165
|
|
377,465
|
|
||||
Minority
Interest
|
(428,855
|
)
|
(267,265
|
)
|
1,032,103
|
|||||
Hotel
Property Depreciation
|
2,032,955
|
|
2,118,492
|
|
2,755,499
|
|
||||
Deferred
Income Taxes
|
259,000
|
(89,000
|
)
|
(170,000)
|
||||||
(Gain)
Loss on Disposal of Hotel Property
|
(135,791
|
)
|
(1,834,080
|
)
|
(4,999,797
|
)
|
||||
Amortization
of Deferred Loan Fees
|
35,400
|
|
36,373
|
|
38,312
|
|
||||
Changes
in Assets and Liabilities:
|
|
|
|
|||||||
Decrease
(Increase) in Prepaid Expenses and Other Assets
|
9,193
|
|
(57,734
|
)
|
311,781
|
|||||
(Increase)
Decrease in Accounts Receivable
|
(358,106
|
)
|
134,808
|
(439,814
|
)
|
|||||
Increase
in Purchase Deposit from Related Party
|
—
|
|
—
|
|
700,000
|
|
||||
Increase
(Decrease) in Accounts Payable and Accrued Expenses
|
404,507
|
(95,887
|
)
|
(588,430
|
)
|
|||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
2,014,603
|
|
877,886
|
|
660,425
|
|
||||
|
|
|
||||||||
CASH
FLOW FROM INVESTING ACTIVITIES
|
|
|
|
|||||||
Proceeds
From Sale of Hotel Properties
|
160,000
|
|
1,190,192
|
|
9,377,138
|
|
||||
Improvements
and Additions to Hotel Properties
|
(1,496,715
|
)
|
(1,272,259
|
)
|
(1,308,008
|
)
|
||||
Change
in Restricted Cash
|
98,010
|
17,311
|
(113,852
|
)
|
||||||
NET
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
(1,238,705
|
)
|
(64,756
|
)
|
7,955,278
|
|||||
CASH
FLOW FROM FINANCING ACTIVITIES
|
|
|
|
|||||||
Principal
Payments on Mortgage Notes Payable
|
(1,043,226
|
)
|
(931,386
|
)
|
(6,087,771
|
)
|
||||
Payments
on Notes Payable to Banks
|
(2,755,839
|
)
|
(2,217,000
|
)
|
(720,000
|
)
|
||||
Borrowings
on Notes Payable to Banks
|
3,005,616
|
|
2,217,000
|
|
500,000
|
|
||||
Repurchase
of Partnership Units
|
(246
|
)
|
(774
|
)
|
(453,223
|
)
|
||||
Repurchase
of Treasury Stock
|
(182,389
|
)
|
(30,191
|
)
|
(113,517
|
)
|
||||
Payment
of Dividends
|
(93,302
|
)
|
(91,450
|
)
|
(23,220
|
)
|
||||
Distributions
to Minority Interest Holders
|
—
|
|
—
|
(85,683
|
)
|
|||||
Payments
on Notes and Advances Payable to Related Parties
|
(28,989
|
)
|
(35,806
|
)
|
(1,740,299
|
)
|
||||
Borrowings
on Notes and Advances Payable to Related Parties
|
600,000
|
|
400,000
|
|
198,000
|
|
||||
Payments
on Other Notes Payable
|
(109,083
|
)
|
(90,615
|
)
|
(88,647
|
)
|
||||
NET
CASH USED IN FINANCING ACTIVITIES
|
(607,458
|
)
|
(780,222
|
)
|
(8,614,360
|
)
|
||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
168,440
|
|
32,908
|
1,343
|
||||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
34,251
|
|
1,343
|
|
—
|
|
||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
202,691
|
|
$
|
34,251
|
|
$
|
1,343
|
|
The
amounts charged to the allowance for doubtful accounts are as follows
for
the years ended January 31:
|
||||||||
Balance
at the
|
||||||||
Beginning
of
|
Charged
to
|
Balance
at the
|
||||||
Year
|
Year
|
Expense
|
Deductions
|
End
of Year
|
||||
2005
|
$106,773
|
$377,465
|
$(206,145)
|
$278,093
|
||||
2006
|
278,093
|
354,165
|
(519,835)
|
112,423
|
||||
2007
|
112,423
|
146,340
|
(143,793)
|
114,970
|
2005
|
||||
Net
income:
|
$
|
240,442
|
||
|
|
|
|
|
Plus:
|
|
|
|
|
Stock
compensation recorded in the statements of operations
|
49,280
|
|
||
Minus:
|
|
|
||
Total
stock-based compensation expense as defined under the fair value
method
|
(49,280
|
)
|
||
|
|
|
||
Pro
forma stock compensation expense
|
—
|
|
||
|
|
|
|
|
Pro
forma
|
$
|
240,442
|
||
|
|
|
|
|
Net
income per share - basic
|
|
|
|
|
As
reported
|
$
|
0.10
|
||
|
|
|
|
|
Pro
forma
|
$
|
0.10
|
Restricted
Shares
|
||
Shares
|
Weighted-Average
Grant Date Fair Value
|
|
Balance
at January 31, 2006
|
—
|
—
|
Granted
|
99,300
|
$1.35
|
Vested
|
(99,300)
|
$1.35
|
Forfeited
|
—
|
—
|
Balance
of unvested awards at January 31, 2007
|
—
|
—
|
For
the Twelve Months Ended January 31,
|
||||
2007
|
2006
|
2005
|
||
Income
(Loss) attributable to Shares of Beneficial Interest
|
$
|
(46,430)
|
$
541,578
|
$
240,442
|
Plus:
Income (Loss) attributable to minority interest unit
holders
|
—
|
(267,265)
|
1,384,985
|
|
Income
attributable to Shares of Beneficial Interest after unit
conversion
|
$
|
(46,430)
|
$
274,313
|
$
1,625,427
|
Weighted
average common shares outstanding, basic
|
9,251,420
|
9,096,338
|
2,424,837
|
|
Plus:
Weighted average incremental shares resulting from unit
conversion
|
—
|
4,245,445
|
—
|
|
Weighted
average common shares outstanding after unit conversion
|
9,251,420
|
13,341,783
|
2,424,837
|
|
Diluted
Earnings Per Share
|
$
|
(0.01)
|
$
0.02
|
$
0.10
|
2007
|
2006
|
||||||
Land
|
$
|
2,824,520
|
|
$
|
2,824,520
|
|
|
Building
and improvements
|
34,101,584
|
|
33,520,145
|
|
|||
Furniture,
fixtures and equipment
|
7,413,834
|
|
7,213,866
|
|
|||
|
|
||||||
Total
hotel properties
|
44,339,938
|
|
43,558,531
|
|
|||
Less
accumulated depreciation
|
(14,684,996
|
)
|
(13,343,140
|
)
|
|||
|
|
||||||
Hotel
properties, net
|
$
|
29,654,942
|
|
$
|
30,215,391
|
|
January
31,
|
|||||||
2007
|
2006
|
||||||
Prepaid
Insurance
|
$
|
125,108
|
121,964
|
||||
Deferred
Financing Costs, Current Portion
|
35,683
|
35,683
|
|||||
Tax
and Insurance Escrow
|
310,159
|
320,017
|
|||||
Other
Prepaid Expenses and Current Assets
|
14,686
|
17,165
|
|||||
Total
Prepaid
Expenses
and Current Assets
|
$
|
485,636
|
494,829
|
January
31,
|
|||||||
2007
|
2006
|
||||||
Accounts
Payable
|
$
|
845,413
|
863,723
|
||||
Accrued
Salaries and Wages
|
503,447
|
368,288
|
|||||
Accrued
Vacation
|
208,706
|
188,965
|
|||||
Sales
Tax Payable
|
240,468
|
169,702
|
|||||
Accrued
Interest Payable
|
95,550
|
102,363
|
|||||
Advanced
Customer Deposits
|
46,248
|
33,637
|
|||||
Income
Tax Liability
|
31,805
|
240,671
|
|||||
Accrued
Property Taxes
|
266,619
|
282,043
|
|||||
Accrued
Land Lease
|
106,393
|
97,750
|
|||||
Accrued
Other
|
113,745
|
189,149
|
|||||
Advances
From Related Parties, net
|
511,686
|
58,442
|
|||||
Total
Accounts Payable and Accrued Liabilities
|
$
|
2,970,080
|
2,594,733
|
2007
|
2006
|
||||||
Mortgage
note payable, due in variable monthly installments ($41,521 as of
January
31, 2007), including interest at prime rate plus 1.0% per year (9.5%
as of
January 31, 2007), through July 29, 2009, secured by the Tucson St.
Mary’s property with a carrying value of $9.3 million at January 31,
2007.
|
$
|
4,092,537
|
|
$
|
4,191,981
|
|
|
|
|
||||||
Mortgage
note payable, due in monthly installments of $48,738, including interest
at 8% per year, through May 1, 2016, secured by the Tucson Oracle
property
with a carrying value of $5.1 million at January 31,
2007.
|
3,837,263
|
|
4,103,465
|
|
|||
|
|
||||||
Mortgage
note payable, due in monthly installments of $71,141, including interest
at 8.28% per year, through May 11, 2011, secured by the Ontario property
with a carrying value of $6.8 million at January 31,
2007.
|
8,297,893
|
|
8,448,212
|
|
|||
|
|
||||||
Mortgage
note payable, due in monthly installments of $15,858, including interest
at 8.875% per year, through September 1, 2015, secured by the
Albuquerque property with a carrying value of $1.7 million at
January 31, 2007.
|
1,147,738
|
|
1,232,062
|
|
|||
|
|
||||||
Mortgage
note payable, due in monthly installments of $41,168, including interest
at 9.25% per year, through August 1, 2011, secured by the Yuma
property with a carrying value of $6.4 million at January 31,
2007.
|
1,490,220
|
|
1,933,157
|
|
|||
|
|
||||||
Totals
|
$
|
18,865,651
|
|
$
|
19,908,877
|
|
2007
|
2006
|
||||||
Line
of credit payable to Rare Earth Financial, L.L.C., an affiliate of
Mr.
Wirth, unsecured and bearing interest at 7% per annum. Due in one
installment of accrued interest and unpaid principal on March 1,
2008.
|
$
|
1,000,000
|
|
$
|
—
|
|
|
|
|
||||||
Note
payable to The Anderson Charitable Remainder Unitrust, an affiliate
of
Mason Anderson, former Trustee of the Trust, bearing interest at
7% per
annum, and secured by Shares of Beneficial Interest in the Trust.
Due in
monthly principal and interest payments of $1,365 through
November 2009.
|
41,985
|
|
54,929
|
|
|||
|
|
||||||
Note
payable to Wayne Anderson, son of Mason Anderson, former Trustee
of the
Trust, bearing interest at 7% per annum, and secured by Shares of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
15,280
|
|
20,886
|
|
|||
|
|
||||||
Note
payable to Karen Anderson, daughter of Mason Anderson, former Trustee
of
the Trust, bearing interest at 7% per annum, and secured by Shares
of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $574 through June 2009.
|
15,280
|
|
20,886
|
|
|||
|
|
||||||
Note
payable to Kathy Anderson, daughter of Mason Anderson, former Trustee
of
the Trust, bearing interest at 7% per annum, and secured by Shares
of
Beneficial Interest in the Trust. Due in monthly principal and interest
payments of $495 through June 2009.
|
13,172
|
|
18,005
|
|
|||
|
|
||||||
Note
payable to Rare Earth Financial, L.L.C., an affiliate of Mr. Wirth,
unsecured and bearing interest at 7% per annum. Satisfied in full
during
fiscal year 2007 with proceeds from the line of credit with Rare
Earth
Financial.
|
—
|
|
400,000
|
|
|||
|
|
||||||
Totals
|
$
|
1,085,717
|
|
$
|
514,706
|
|
FISCAL
YEAR ENDED
|
RELATED
PARTIES
|
MORTGAGES
|
OTHER
NOTES PAYABLE
|
TOTAL
|
|||||||||
2008
|
$
|
31,086
|
$
|
926,464
|
$
|
109,486
|
$
|
1,067,036
|
|
||||
2009
|
1,033,333
|
1,007,403
|
806,936
|
2,847,672
|
|
||||||||
2010
|
21,298
|
4,834,138
|
37,614
|
4,894,050
|
|
||||||||
2011
|
—
|
1,057,051
|
29,636
|
1,086,687
|
|
||||||||
2012
|
—
|
754,195
|
2,004
|
756,199
|
|
||||||||
Thereafter
|
—
|
10,285,400
|
—
|
10,285,400
|
|
||||||||
|
|||||||||||||
$
|
1,085,717
|
$
|
18,865,651
|
$
|
985,676
|
$
|
20,937,044
|
CALENDAR
2006
|
CALENDAR
2005
|
CALENDAR
2004
|
|||||||||||||||||||||||
Month
Paid
|
Ordinary
Income
|
Return
of
Capital
|
Total
Paid
|
Ordinary
Income
|
Return
of
Capital
|
Total
Paid
|
Ordinary
Income
|
Return
of
Capital
|
Total
Paid
|
||||||||||||||||
January
|
—
|
|
$
|
.01
|
|
$
|
.01
|
|
—
|
|