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What changed in INNSUITES HOSPITALITY TRUST's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INNSUITES HOSPITALITY TRUST's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+99 added−97 removedSource: 10-K (2023-05-02) vs 10-K (2022-05-27)

Top changes in INNSUITES HOSPITALITY TRUST's 2023 10-K

99 paragraphs added · 97 removed · 78 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

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Biggest change(UPI), efficient clean energy power generation company. This investment is expected to expand over the next 36 months, as the Trust exercises warrants and convertible bonds into UniGen equity. The Trust may continue to seek further diversification through a reverse merger with a larger non-public entity.
Biggest changeThe Trust may not invest further in hotels, but rather diversify into investments such as the investment made by the Trust in December 2019 in the innovative UniGen Power, Inc. (UniGen), efficient clean energy power generation company. This investment is expected to expand over the next 36 months, as the Trust exercises warrants and convertible bonds into UniGen equity.
The hotel located in New Mexico historically experiences their most profitable periods during the second and third fiscal quarters (the summer high season), providing balance to the general seasonality of the Trust’s hotel business. The seasonal nature of the Trust’s business increases its vulnerability to risks such as labor force shortages and cash flow issues.
The hotel located in Albuquerque, New Mexico historically experiences their most profitable periods during the second and third Fiscal quarters (the summer high season), providing balance to the general seasonality of the Trust’s hotel business. The seasonal nature of the Trust’s business increases its vulnerability to risks such as labor force shortages and cash flow issues.
The Trust seeks to achieve this objective through intensive management and marketing of the InnSuites© hotels, by selling hotel real estate at market prices well above book values and benefitting from diversified investments, including UniGen Power, Inc. (UPI).
The Trust seeks to achieve this objective through intensive management and marketing of the InnSuites© hotels, by selling hotel real estate at market prices well above book values and benefitting from diversified investments, including UniGen Power, Inc. (UniGen).
We anticipate selling one or both Hotels in the next twelve to thirty-six (12-36) months. RRF Limited Partnership, a 75.98% majority-owned subsidiary of the Trust, provides management services for the two Trust Hotels. The Trust has approximately 49 full-time employees and approximately 27 part-time employees.
We anticipate selling one or both Hotels in the next twelve to thirty-six (12-36) months. RRF Limited Partnership, a 75.98% majority-owned subsidiary of the Trust, provides management services for the two Trust Hotels. The Trust has approximately 52 full-time employees and approximately 27 part-time employees.
At January 31, 2022, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.00% interest in the InnSuites hotel located in Albuquerque, New Mexico. The Tucson and Albuquerque hotels are sometimes referred to as the “ Hotels ”.
At January 31, 2023, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.50% interest in the InnSuites hotel located in Albuquerque, New Mexico. The Tucson and Albuquerque hotels are sometimes referred to as the “ Hotels ”.
Under these arrangements, fees paid for membership fees and reservations were approximately $160,000 and $171,000, recorded in on the Consolidated Statement of Operations, for Fiscal Years ended January 31, 2022, and 2021, respectively. COMPETITION IN THE HOTEL INDUSTRY The hotel industry is highly competitive.
Under these arrangements, fees paid for membership fees and reservations were approximately $173,000 and $160,000, recorded in on the Consolidated Statement of Operations, for Fiscal Years ended January 31, 2023, and 2022, respectively. COMPETITION IN THE HOTEL INDUSTRY The hotel industry is highly competitive.
With the completed renovations meeting Best Western standards at our Tucson, Arizona and Albuquerque, New Mexico hotel properties, those hotels are expected to see incremental demand during the next 24 months, as supply had been steady in those respective markets, and demand is expected to increase as COVID-19 restrictions phase out.
With the completed renovations meeting Best Western standards at our Tucson, Arizona and Albuquerque, New Mexico hotel properties, those hotels are expected to see incremental demand during the next 24 months, as supply had been steady in those respective markets, and demand is expected to increase as the economy and travel industry grow.
The Trust’s primary business objective is to maximize returns to its shareholders through increases in asset value and long-term total returns to shareholders, including profitable hotel operations and sale of assets, along with growth of investments.
For the Fiscal Year 2024 ahead, February 1, 2023 through January 31, 2024, the Trust’s operations are focused on the Trust’s primary business objective which is to maximize returns to its shareholders through increases in asset value and long-term total returns to shareholders, including profitable hotel operations and sale of assets, along with growth of investments.
Continued competition in corporate, leisure, group, and government business in the markets in which we operate, may affect our ability to maintain room rates and maintain market share.
The drastic impact of COVID-19 to the world economy and hospitality industry resulted in severely reduced occupancy and significant reduction in room rates, both of which have now fully recovered. Continued competition in corporate, leisure, group, and government business in the markets in which we operate, may affect our ability to maintain room rates and maintain market share.
The hotels experienced a decrease in demand due to impact of the COVID-19 virus and the related restrictions and reduction of travel after February 1, 2020 through March 31, 2021. The Trust may not invest further in hotels, but rather diversify into investments such as the investment made by the Trust in December 2019 in the innovative UniGen Power, Inc.
The hotels experienced a decrease in demand due to impact of the COVID-19 virus and the related restrictions and reduction of travel after February 1, 2020 through March 31, 2021, with increased demand thereafter.
There were clear signs and trends of economic recovery starting in April 2021 through January 31, 2022, and continuing at the present time. Both the Tucson and Albuquerque hotels experienced GOP Profits in the most recent 12 months, substantially higher than both Covid and Pre-Covid GOP Profits.
Both the Tucson and Albuquerque hotels experienced record high GOP Profits in the most recent 12 months, substantially higher than both Covid and Pre-Covid GOP Profits. This gross operating profit is growing even more due to stringent cost control measures.
Removed
For the Fiscal Year 2023 ahead, February 1, 2022 through January 31, 2023, the Trust’s operations are focused on the final recovery from the impact of the Corona Virus (COVID-19) pandemic, and the Covid related adverse impact on the travel and hospitality industries which took place after February 1, 2020.
Added
The Trust may continue to seek further diversification through a reverse merger with a larger non-public entity.
Removed
This gross operating profit is growing even more due to stringent cost control measures. The drastic impact of COVID-19 to the world economy and hospitality industry resulted in severely reduced occupancy and significant reduction in room rates, both of which have now fully recovered.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed4 unchanged
Biggest changeThe Trust owns a direct 21% interest in the InnSuites Hotel and Suites Albuquerque Airport Best Western Hotel. The Partnership owns a 51.01% interest in the InnSuites Hotel and Suites Tucson Oracle Best Western Hotel. The Trust owns a 75.98% general partner interest in the Partnership.
Biggest changeThe Trust owns a direct 21.05% interest in the InnSuites Hotel and Suites Albuquerque Airport Best Western Hotel. The Partnership owns a 51.01% interest in the InnSuites Hotel and Suites Tucson Oracle Best Western Hotel. The Trust owns a 75.98% general partner interest in the Partnership.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−1 removed1 unchanged
Biggest changeThe Trust intends to maintain the current conservative strong dividend policy. The Trust currently is, and has, been paying two semiannual dividends each Fiscal Year totaling $0.02 per share per Fiscal Year.
Biggest changeThe Trust intends to maintain the current conservative dividend policy. The Trust currently is, and has, been paying two semiannual dividends each Fiscal Year totaling $0.02 per share per Fiscal Year. In the Fiscal Years ended January 31, 2023 and 2022, the Trust paid dividends of $0.01 per share per share in each of the second and the fourth quarters.
These grants were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), pursuant to Section 4(a)(2). No stock option grants were made in Fiscal 2021 or 2022.
These grants were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), pursuant to Section 4(a)(2). No stock option grants were made in Fiscal 2022 or 2023.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Trust’s Shares of Beneficial Interest are traded on the NYSE American under the symbol “IHT.” On January 31, 2022, the Trust had approximately 9,079,513 shares outstanding.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Trust’s Shares of Beneficial Interest are traded on the NYSE American under the symbol “IHT.” On January 31, 2023, the Trust had approximately 9,160,991 shares outstanding.
As of May 27, 2022, there were approximately 339 holders of record of our Shares of Beneficial Interest, not including holders who hold their asset positions with banks and brokers. 5 The following table sets forth, for the periods indicated, the high and low sales prices of the Trust’s Shares of Beneficial Interest, as reported on the NYSE American, as well as dividends declared thereon: Fiscal Year 2022 High Low Dividends First Quarter $ 3.95 $ 1.96 - Second Quarter $ 14.77 $ 1.90 $ 0.01 Third Quarter $ 5.35 $ 3.15 - Fourth Quarter $ 5.00 $ 2.15 $ 0.01 Fiscal Year 2021 High Low Dividends First Quarter $ 1.60 $ 0.92 - Second Quarter $ 1.41 $ 0.77 $ 0.01 Third Quarter $ 1.65 $ 1.05 - Fourth Quarter $ 2.92 $ 1.53 $ 0.01 The Trust has declared uninterrupted annual dividends for 52 years, since 1971, when the Trust was founded and first listed on the NYSE.
As of May 1, 2023, there were approximately 329 holders of record of our Shares of Beneficial Interest, not including holders who hold their asset positions with banks and brokers. 5 The following table sets forth, for the periods indicated, the high and low sales prices of the Trust’s Shares of Beneficial Interest, as reported on the NYSE American, as well as dividends declared thereon: Fiscal Year 2023 High Low Dividends First Quarter $ 4.34 $ 3.77 - Second Quarter $ 3.77 $ 2.99 $ 0.01 Third Quarter $ 3.74 $ 2.84 - Fourth Quarter $ 3.71 $ 2.96 $ 0.01 Fiscal Year 2022 High Low Dividends First Quarter $ 3.95 $ 1.96 - Second Quarter $ 14.77 $ 1.90 $ 0.01 Third Quarter $ 5.35 $ 3.15 - Fourth Quarter $ 5.00 $ 2.15 $ 0.01 The Trust has declared uninterrupted annual dividends for 53 years, since 1971, when the Trust was founded and first listed on the NYSE.
The Trust currently intends to pay the scheduled semiannual $0.01 dividend payable on July 31, 2022 at NYSE American. 6 See Part III, Item 12 for information about our equity compensation plans.
The Trust has paid uninterrupted annual dividends each Fiscal Year since its inception in 1971. The Trust currently intends to pay the scheduled semiannual $0.01 dividend payable on July 31, 2023 at NYSE American. 6 See Part III, Item 12 for information about our equity compensation plans.
Removed
In the Fiscal Years ended January 31, 2021 and 2022, the Trust paid dividends of $0.01 per share per share in each of the second and the fourth quarters. The Trust has paid uninterrupted annual dividends each Fiscal Year since its inception in 1971.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+20 added−16 removed60 unchanged
Biggest changeExamples of such uncertainties include, but are not limited to: ● Covid-19 Virus Pandemic and its effect on the Economic and Travel Industry slowdown; ● terrorist attacks or other acts of war; ● local, national, or international, political economic and business conditions, including, without limitation, conditions that may, or may continue to, affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate; ● fluctuations in hotel occupancy rates; ● changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise; ● seasonality of our hotel operations business; ● our ability to sell any of our Hotels at market value, listed sale price, or at all; ● interest rate fluctuations; ● changes in, or reinterpretations of, governmental regulations, including, but not limited to, environmental and other regulations, the Americans with Disability Act and federal income tax laws and regulations; ● competition including supply and demand for hotel rooms and hotel properties; 17 ● availability of credit or other financing; ● our ability to meet present and future debt service obligations; ● our ability to refinance or extend the maturity of indebtedness at, prior to, or after the time it matures; ● any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties; ● insufficient resources to pursue our current strategy; ● concentration of our investments in the InnSuites Hotels® brand; ● loss of membership contracts; ● the financial condition of franchises, brand membership companies and travel related companies; ● ability to develop and maintain positive relations with “Best Western” and potential future franchises or brands; ● real estate and hospitality market conditions; ● hospitality industry factors; ● our ability to carry out our strategy, including our strategy regarding diversification and investments; ● the Trust’s ability to remain listed on the NYSE American; ● effectiveness of the Trust’s software program; ● the need to periodically repair and renovate our Hotels at a cost at or in excess of our standard 4% reserve; ● tariffs may affect trade and travel; ● our ability to cost effectively integrate any acquisitions with the Trust in a timely manner; ● increases in the cost of labor, energy, healthcare, insurance and other operating expenses as a result of changed or increased regulation or otherwise; ● outbreaks of communicable diseases attributed to our hotels or impacting the hotel industry in general; ● natural disasters, including adverse climate changes in the areas where we have or serve hotels; ● airline strikes; ● transportation and fuel price increases; ● adequacy of insurance coverage and increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; ● data breaches or cybersecurity attacks, including breaches impacting the integrity and security of employee and guest data; and ● loss of key personnel and uncertainties in the interpretation and application of the 2017 Tax Cuts and Jobs Act.
Biggest changeExamples of such uncertainties include, but are not limited to: ● Virus Pandemic and its effect on the Travel Industry; ● potential risk of investments, including the investment in UniGen; ● inflation and economic recession; ● terrorist attacks or other acts of war; ● local, national or international, political economic and business conditions, including, without limitation, conditions that may, or may continue to, affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate; ● available cash, supply chain issues, and increased labor costs for diversified clean energy development and production; ● fluctuations in hotel occupancy rates; ● changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise; ● seasonality of our hotel operations business; ● our ability to sell any of our Hotels at market value, or at all; ● interest rate fluctuations; ● changes in, or reinterpretations of, governmental regulations, including, but not limited to, environmental and other regulations, the Americans with Disability Act, Covid-19 restrictions, and federal income tax laws and regulations; ● competition including supply and demand for hotel rooms and hotel properties; ● availability of credit or other financing; ● our ability to meet present and future debt service obligations; ● our ability to refinance or extend the maturity of indebtedness at, prior to, or after the time it matures; ● any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties; ● concentration of our investments in the InnSuites Hotels® brand; ● loss of membership contracts; ● the financial condition of franchises, brand membership companies, travel related companies, and receivables from travel related companies; ● ability to develop and maintain positive relations with “Best Western” and potential future franchises or brands; ● real estate and hospitality market conditions; ● hospitality industry factors; ● our ability to carry out our strategy, including our strategy regarding diversification and investments; ● the Trust’s ability to remain listed on the NYSE American; ● effectiveness of the Trust’s software and cyber security; 17 ● the need to periodically repair and renovate our Hotels at a cost at or in excess of our standard 4% reserve; ● tariffs and health travel restrictions may affect trade and travel; ● our ability to cost effectively integrate any acquisitions with the Trust in a timely manner; ● increases in the cost and availability of labor, energy, healthcare, insurance and other operating expenses as a result of inflation, or changed or increased regulation, or otherwise; ● terrorist attacks or other acts of war; ● outbreaks of communicable diseases attributed to our hotels or impacting the hotel industry in general; ● natural disasters, including adverse climate changes in the areas where we have or serve hotels; ● airline strikes; ● transportation and fuel price increases; ● adequacy of insurance coverage and increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; ● data breaches or cybersecurity attacks, including breaches impacting the integrity and security of employee and guest data; and ● loss of key personnel and uncertainties in the interpretation and application of ever-changing tax laws.
We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. SEASONALITY See Item 1 for related discussion of seasonality. 15 INFLATION We rely entirely on the performance of the Hotels and InnSuites Hotels’ ability to increase revenue to keep pace with inflation.
We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. SEASONALITY See Item 1 for related discussion of seasonality. 15 INFLATION We rely entirely on the performance of the Hotels and InnSuites ability to increase revenue to keep pace with inflation.
However, we believe that the asking price values are reasonable based on upturn local market conditions, comparable sales, and anticipated upturns in occupancy, rates, and profits per hotel. Changes in market conditions have in part resulted, and may in the future result, in our changing one or all of the asking prices.
However, we believe that the asking price values are reasonable based on upturn local market conditions, comparable sales, and anticipated continued upturns in occupancy, rates, and profits per hotel. Changes in market conditions have in part resulted, and may in the future result, in our changing one or all of the asking prices.
Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability, and the Partnership’s ability, to generate sufficient cash flow from hotel operations, from management fees, and from the potential sale and/or refinance of the hotel, to service our debt, and source repayment of any intercompany loan from Tucson and Albuquerque.
Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability, and the Partnership’s ability, to generate sufficient cash flow from hotel operations, from management fees, and from the potential sale and/or refinance of the hotel, and to service our debt and the source of repayment of intercompany loan from Tucson and Albuquerque.
For information relating to such related party transactions see the following: ● For a discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management and Licensing Contracts.” ● For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 11 to our Consolidated Financial Statements – “Mortgage Notes Payable.” ● For a discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, and 4 to our Consolidated Financial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” and “Sale of Ownership Interests in Tucson Hospitality Properties Subsidiary,” respectively. ● For a discussion of other related party transactions, see Note 19 to our Consolidated Financial Statements – “Other Related Party Transactions.” Results of operations of the Trust for the Fiscal Year ended January 31, 2022 compared to the Fiscal Year ended January 31, 2021.
For information relating to such related party transactions see the following: ● For a discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management and Licensing Contracts.” ● For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 11 to our Consolidated Financial Statements – “Mortgage Notes Payable.” ● For a discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, and 4 to our Consolidated Financial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” and “Sale of Ownership Interests in Tucson Hospitality Properties Subsidiary,” respectively. ● For a discussion of other related party transactions, see Note 19 to our Consolidated Financial Statements – “Other Related Party Transactions.” Results of operations of the Trust for the Fiscal Year ended January 31, 2023 compared to the Fiscal Year ended January 31, 2022.
If we are unable to raise additional or replacement funds, we may be required to refinance or sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable. 11 We anticipate no material additional competitive new-build hotel supply during the remaining Fiscal Year 2023, and accordingly we anticipate steady hotel supply in our markets and increased travel demand as the industry rebounds with recovery of revenues and operating margins.
If we are unable to raise additional or replacement funds, we may be required to refinance or sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable. 11 We anticipate no material additional competitive new-build hotel supply during the remaining Fiscal Year 2024, and accordingly we anticipate steady hotel supply in our markets and increased travel demand as the industry rebounds with recovery of revenues and operating margins.
The Trust did take a reserve for bad debt as of January 31, 2021 reflecting its concern with the collectability of the Obasa note receivable, related to the sale of the IBC technology segment. 14 Sale of Hotel Assets Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market value.
The Trust did take a reserve for bad debt as of January 31, 2022 reflecting its concern with the collectability of the Obasa note receivable, related to the sale of the IBC technology segment. 14 Sale of Hotel Assets Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market value.
In addition, the Trust is seeking a larger private reverse merger partner that may benefit from a merger that would afford that partner access to our listing on the NYSE AMERICAN. In the process of reviewing merger opportunities, the Trust identified and invested $1 million in Unigen Power, Inc. (“Unigen”, or “UPI), an innovative efficient clean energy power generation company.
In addition, the Trust is seeking a larger private reverse merger partner that may benefit from a merger that would afford that partner access to our listing on the NYSE AMERICAN. In the process of reviewing merger opportunities, the Trust identified and invested $1 million in UniGen Power, Inc. (“UniGen”), an innovative efficient clean energy power generation company.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES As a partial offset to the current hotel industry Virus induced drop in demand pressure, the Trust looks to benefit from, and expand, its UPI clean energy operation diversification investments in the months, and years ahead. See Note 7 of the Audited Consolidated Financial Statements for discussion on UPI.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES As a partial offset to the current hotel industry Virus induced drop in demand pressure, the Trust looks to benefit from, and expand, its UniGen clean energy operation diversification investments in the months, and years ahead. See Note 7 of the Audited Consolidated Financial Statements for discussion on UniGen.
At January 31, 2022, the Trust had two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites.
At January 31, 2023, the Trust had two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites.
They have two of the six Board of Directors seats or 33% and were elected in December 2019 to serve on the board of UPI to closely monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.
They have two of the six UniGen Board of Directors seats or 33% and were elected in December 2019 to serve on the board of UniGen to closely monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.
Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, as amended, the qualifications set forth hereinabove are appropriate to any forward-looking statements in this Form 10-K relating to the operations of the Partnership.
Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, as amended, the qualifications set forth hereinabove are inapplicable to any forward-looking statements in this Form 10-K relating to the operations of the Partnership.
We continue to make our Tucson Hotel and Albuquerque Hotel available for sale at market value, on the website www.suitehotelsrealty.com. The table below provides book values, mortgage balances and listed asking price for the Hotels.
We continue to make our Tucson Hotel and Albuquerque Hotel available for sale at market value, on the website www.suitehotelsrealty.com. The table below provides book values, mortgage balances and Estimated Market Asking Price for the Hotels.
The Trust has invested $1 million debentures convertible into 1 million shares of UniGen Power Inc., has purchased approximately 260,000 UniGen shares, and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next three years, which could result up to 25% ownership in UPI.
The Trust has invested $1 million debentures convertible into 1 million shares of UniGen Power Inc., has purchased approximately 495,000 UniGen shares, and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next three years, which could result up to 25% ownership in UniGen.
With approximately $1,224,000 of cash as of January 31, 2022 and the availability of a $250,000 bank lines of credit, an up to $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of repayment of Advances to Affiliate credit facilities and available Bank line of Credit, we believe that we will have enough cash on hand to meet all of our financial obligations as they become due for at least the next twelve months from the issuance date of the these consolidated financial statements.
With approximately $2,111,000 of cash as of January 31, 2023 and the availability of a $250,000 bank lines of credit, an up to $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of repayment of Advances to Affiliate credit facilities and available Bank line of Credit, we believe that we will have enough cash on hand to meet all of our financial obligations as they become due for at least the next twelve months from the issuance date of the these consolidated financial statements.
At January 31, 2022, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.00% interest in the InnSuites hotel located in Albuquerque, New Mexico. Our operations consist of one reportable segment – Hotel Operations & Hotel Management Services.
At January 31, 2023, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.50% interest in the InnSuites hotel located in Albuquerque, New Mexico. Our operations consist of one reportable segment – Hotel Operations & Hotel Management Services.
This represents a reversal of liability arising from an occupancy tax discrepancy generated from our Tucson Oracle and Albuquerque hotels from prior periods, as the liabilities had been assumed by a related party.
The 2022 activity represents a reversal of liability arising from an occupancy tax discrepancy generated from our Tucson Oracle and Albuquerque hotels from prior periods, as the liabilities had been assumed by a related party.
As of January 31, 2022, our management does not believe that the carrying values of any of our hotel properties are impaired.
As of January 31, 2023, our management does not believe that the carrying values of any of our hotel properties are impaired.
Fiscal 2022 Consolidated Net Revenues from continuing operations were approximately $6,409,000 as compared with Fiscal 2021 Revenues of approximately $4,202,000. 13 FUTURE POSITIONING In viewing the hotel industry cycles, recently reconfirmed by the COVID-19 disruption of travel and hospitality, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for our two remaining Hotel properties.
Fiscal 2023 Consolidated Net Loss from continuing operations were approximately $7,146,000 as compared with Fiscal 2022 Revenues of approximately $6,410,000. 13 FUTURE POSITIONING In viewing the hotel industry cycles, recently reconfirmed by the COVID-19 disruption of travel and hospitality, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for our two remaining Hotel properties.
For Fiscal 2023, (February 1, 2022 to January 31, 2023), we expect continued modest increase in occupancy, substantial further increases in rates, and continued increased profits and revenues compared to both prior Covid and prior pre-Covid levels.
For Fiscal 2024, (February 1, 2023 to January 31, 2024), we expect continued modest increase in occupancy, substantial further increases in rates, and continued increased record profits and revenues compared to both prior levels.
Adjusted EBITDA does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity. 12 A reconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the Fiscal Years ended January 31, 2022 and 2021 approximate follows: Fiscal Year Ended January 31, 2022 2021 Net income (loss) attributable to controlling interests $ 254,000 $ (1,626,000 ) Add back: Depreciation 725,000 831,000 Interest expense 367,000 361,000 Less: Tax Benefit - (69,000 ) Interest Income (130,000 ) Adjusted EBITDA $ 1,285,000 $ (633,000 ) FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts (“ NAREIT ”), which is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales of properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus non-cash depreciation and amortization of real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership.
Adjusted EBITDA does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity. 12 A reconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the Fiscal Years ended January 31, 2023 and 2022 approximate follows: Twelve Months Ended January 31, 2023 2022 Net income attributable to controlling interests $ 523,000 $ 254,000 Add back: Depreciation 702,000 725,000 Interest expense 530,000 367,000 Less: Interest Income (65,000 ) (1,061,000 ) Adjusted EBITDA $ 1,690,000 $ 285,000 FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts (“ NAREIT ”), which is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales of properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus non-cash depreciation and amortization of real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership.
Positive cash provided by operating activities totaled approximately $263,000 during the twelve months ended January 31, 2022 as compared to net cash used of approximately $807,000 during the twelve months ended January 31, 2021.
Positive cash provided by operating activities totaled approximately $54,000 during the twelve months ended January 31, 2023 as compared to net cash provided of approximately $263,000 during the twelve months ended January 31, 2022.
Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $2,011,000 for the Fiscal Year ended January 31, 2022 compared to approximately $1,526,000 in the prior year period for an increase of approximately $485,000, or 32%.
Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $2,222,000 for the Fiscal Year ended January 31, 2023 compared to approximately $2,011,000 in the prior year period for an increase of approximately $211,000, or 11%.
For the 2021 Fiscal Year (February 1, 2020 to January 31, 2021), which was adversely affected by the Covid pandemic, InnSuites Hotels and the entire hotel industry in general experienced strong declines and reduced travel, resulting in much lower revenues and profits.
For the 2022 Fiscal Year (February 1, 2021 to January 31, 2022), which was adversely affected by the Covid pandemic, InnSuites and the entire hotel industry in general experienced strong declines and reduced travel, resulting in much lower revenues and profits. For the 2023 Fiscal Year ended January 31, 2023, InnSuites experienced substantial recovery of post Covid revenues and profits.
We realized a 59% increase in room revenues during Fiscal Year 2022 as room revenues were approximately $6,208,000 for the Fiscal Year ending January 31, 2022 as compared to approximately $3,905,000 for the Fiscal Year ending January 31, 2021.
We realized a 12% increase in room revenues during Fiscal Year 2023 as room revenues were approximately $6,974,000 for the Fiscal Year ending January 31, 2023 as compared to approximately $6,208,000 for the Fiscal Year ending January 31, 2022.
UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) including to purchase up to 1,000,000 shares of Class A Common Stock. The Debenture Warrants are exercisable at an exercise price of $1.00 per share of Class A Common Stock.
The Debenture Warrants are exercisable at an exercise price of $1.00 per share of Class A Common Stock. UniGen, also, issued the Trust additional common stock purchase warrants (“Additional Warrants”) to purchase up to 500,000 shares of Class A Common Stock. The Additional Warrants are exercisable at an exercise price of $2.25 per share of Class A Common Stock.
Consolidated net income was approximately $1,540,000 for the twelve months ended January 31, 2022 as compared to consolidated net loss for the twelve months ended January 31, 2021 of approximately $2,828,000. A major improvement in each Fiscal Year was PPP loan forgiveness and the employee retention credit.
Consolidated net income was approximately $737,000 for the twelve months ended January 31, 2023 as compared to consolidated net income for the twelve months ended January 31, 2022 of approximately $1,540,000. A decrease in each Fiscal Year was PPP loan forgiveness offset by and the employee retention credit.
Fiscal 2022 and 2021 Consolidated Net Loss from operations included non-cash depreciation of approximately $725,000 and $832,000, respectively. Fiscal 2022 Consolidated Net Income from operations before non-cash depreciation was approximately $1,219,000 as compared to Consolidated Net Loss from operations before non-cash depreciation of approximately $1,980,000 for Fiscal 2021.
Fiscal 2022 and 2021 Consolidated Net Loss from operations included non-cash depreciation of approximately $702,000 and $725,000, respectively. Fiscal 2023 Consolidated Net Loss from operations before non-cash depreciation was approximately $404,000 as compared to Consolidated Net Loss from operations before non-cash depreciation of approximately $421,000 for Fiscal 2022.
A reconciliation of FFO to net income (loss) attributable to controlling interests for Fiscal Year ended January 31, 2022 and 2021 are as follows: Fiscal Year Ended January 31, 2022 2021 Net income (loss) attributable to controlling interests $ 254,000 $ (1,626,000 ) Add back: Depreciation 725,000 831,000 Non-controlling interest 1,286,000 (1,202,000 ) FFO $ 2,265,000 $ (1,997,000 ) The Trust reported Consolidated Net Income from operations of approximately $494,000 for the Fiscal Year ended January 31, 2022 compared to Consolidated Net Loss from operations of approximately $2,828,000 for the Fiscal Year ended January 31, 2021.
A reconciliation of FFO to net income (loss) attributable to controlling interests for Fiscal Year ended January 31, 2023 and 2022 are as follows: Twelve Months Ended January 31, 2023 2022 Net income attributable to controlling interests $ 523,000 $ 254,000 Add back: Depreciation 702,000 725,000 Non-controlling interest 214,000 1,286,000 FFO $ 1,439,000 $ 2,265,000 The Trust reported Consolidated Net Loss from operations of approximately $298,000 for the Fiscal Year ended January 31, 2023 compared to Consolidated Net Loss from operations of approximately $304,000 for the Fiscal Year ended January 31, 2022.
The increased occupancy and ADR resulted in an increase in REVPAR of $21.65, or 52.36%, to $63.00 in Fiscal Year 2022 from $41.35 in Fiscal Year 2021. The increase in Occupancy, ADR and REVPAR reflect the Covid-19 travel lockdown easing and resulting improved economy. For the Fiscal Year 2022, ending January 31, 2022, we experienced a substantial recovery.
The increased ADR resulted in an increase in REVPAR of $7.75, or 12.30%, to $70.75 in Fiscal Year 2023 from $63.00 in Fiscal Year 2022. The increase in ADR and REVPAR reflect the Covid-19 travel lockdown easing and resulting improved economy. For the Fiscal Year 2023, ending January 31, 2023, we experienced a substantial recovery.
Repairs and maintenance expense increased by approximately $37,000, or 11%, to approximately $392,000 for the twelve months ended January 31, 2022 from approximately $354,000 for the twelve months ended January 31, 2021.
Repairs and maintenance expense increased by approximately $20,000, or 5%, to approximately $413,000 for the twelve months ended January 31, 2023 from approximately $392,000 for the twelve months ended January 31, 2022.
The Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona.
Potential future real estate hotel sales is another future source of cash. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona.
We expect the major challenge for Fiscal Year 2023 to be the economy, continued recovery of the travel industry, rebound of occupancy levels, continued increases in room rates, and cost control.
We experienced recovery from weak travel and hospitality industry for much of the current Fiscal Year 2023, ending January 31, 2023 due to the recovery of domestic travel. We expect the major challenge for Fiscal Year 2024 to be the economy, continued recovery of the travel industry, rebound of occupancy levels, continued increases in room rates, and cost control.
Management fees remained unchanged year on year at 5%. 9 EXPENSES Total expenses before interest expense, employee retention credit and income tax provision were approximately $5,915,000 for the twelve months ended January 31, 2022 reflecting a decrease of approximately $1,099,000 compared to total expenses before interest expense, employee retention credit and income tax provision of approximately $7,015,000 for the twelve months ended January 31, 2021.
Management fees remained unchanged year on year at 5%. 9 EXPENSES Total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision were approximately $7,443,000 for the twelve months ended January 31, 2023 reflecting an increase of approximately $730,000 compared to total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision of approximately $6,713,000 for the twelve months ended January 31, 2022.
LIQUIDITY AND CAPITAL RESOURCES Overview – Hotel Operations & Hotel Management Services One principal source of cash to meet our cash requirements, including dividends to our shareholders, is our share of the Partnership’s cash flow of the Tucson hotel, and quarterly distributions from the Albuquerque, New Mexico properties.
LIQUIDITY AND CAPITAL RESOURCES Overview – Hotel Operations & Hotel Management Services Two principal sources of cash to meet our cash requirements, include monthly management fees from our two hotels and distributions to our investors of our share of the Partnership’s cash flow of the Tucson hotel, and quarterly distributions from the Albuquerque, New Mexico properties.
Hospitality expense increased by approximately $82,000, or 55%, to approximately $233,000 for the twelve months ended January 31, 2022 from approximately $151,000 for the twelve months ended January 31, 2021. The increase was primarily due to the increased occupancy and increased breakfast offerings at the hotel properties due to COVID-19 restrictions.
Hospitality expense increased by approximately $135,000, or 58%, to approximately $368,000 for the twelve months ended January 31, 2023 from approximately $233,000 for the twelve months ended January 31, 2022. The increase was primarily due to the increased occupancy and increased breakfast offerings at the hotel properties due to previous pandemic restrictions no longer in effect.
The total of all stock ownership upon conversion of the note receivable is 1 million shares and if all stock warrants available but not outstanding are exercised, these would total to 3 million UniGen shares, which amounts to approximately 25% of fully diluted UniGen equity.
The total of all stock ownership upon conversion of the note receivable and exercise of warrants could total up to 3 million UniGen shares, which amounts to approximately 25% of fully diluted UniGen equity.
The decrease was primarily due to a decrease in sales and occupancy expense and cost savings measures in general and administrative expenses. Specific expense comparisons to the prior Fiscal Year are detailed in the following categories.
The increase was primarily due to an increase in room expenses and general and admirative expenses. Specific expense comparisons to the prior Fiscal Year are detailed in the following categories.
The following table shows certain historical financial and other information for the periods indicated: For the Fiscal Year Ended Albuquerque January 31, 2022 2021 Change %-Incr/Decr Occupancy 83.44 % 56.50 % 26.94 % 47.68 % Average Daily Rate (ADR) $ 85.32 $ 66.37 $ 18.95 28.55 % Revenue Per Available Room (REVPAR) $ 71.19 $ 37.51 $ 33.68 89.79 % For the Fiscal Year Ended Tucson January 31, 2022 2021 Change %-Incr/Decr Occupancy 70.04 % 57.60 % 12.44 % 21.60 % Average Daily Rate (ADR) $ 81.66 $ 73.94 $ 7.72 10.44 % Revenue Per Available Room (REVPAR) $ 57.19 $ 42.58 $ 14.61 34.31 % For the Fiscal Year Ended Combined January 31, 2022 2021 Change %-Incr/Decr Occupancy 75.60 % 57.05 % 18.55 % 32.52 % Average Daily Rate (ADR) $ 83.34 $ 70.16 $ 13.18 18.79 % Revenue Per Available Room (REVPAR) $ 63.00 $ 41.35 $ 21.65 52.36 % 8 No assurance can be given that occupancy, ADR and/or REVPAR will or will not increase or decrease as a result of changes in national or local economic or hospitality industry conditions.
The following table shows certain historical financial and other information for the periods indicated: For the Twelve Months Ended Albuquerque January 31, 2023 2022 Change %-Incr/Decr Occupancy 82.27 % 83.44 % -1.17 % -1.40 % Average Daily Rate (ADR) $ 98.90 $ 85.32 $ 13.58 15.92 % Revenue Per Available Room (REVPAR) $ 81.36 $ 71.19 $ 10.17 14.29 % For the Twelve Months Ended Tucson January 31, 2023 2022 Change %-Incr/Decr Occupancy 68.07 % 70.04 % -1.97 % -2.81 % Average Daily Rate (ADR) $ 92.88 $ 81.66 $ 11.22 13.74 % Revenue Per Available Room (REVPAR) $ 63.22 $ 57.19 $ 6.03 10.54 % For the Twelve Months Ended Combined January 31, 2023 2022 Change %-Incr/Decr Occupancy 73.96 % 75.60 % -1.64 % -2.17 % Average Daily Rate (ADR) $ 95.66 $ 83.34 $ 12.32 14.78 % Revenue Per Available Room (REVPAR) $ 70.75 $ 63.00 $ 7.75 12.30 % 8 No assurance can be given that occupancy, ADR and/or REVPAR will or will not increase or decrease as a result of changes in national or local economic or hospitality industry conditions.
The Tempe hotel was owned outside of the Trust, and only an affiliate. It was not part of the Trust consolidation. Management fees associated with the management of the Tempe Hotel were revenues received by the Trust, prior to its sale.
Management fees associated with the management of the Tempe Hotel were revenues received by the Trust, prior to its sale.
IHT may fund a $500,000 line of credit to be repaid in the form of UniGen stock at a rate of $1 per share. UniGen has also agreed to allow IHT to fund a $500,000 line of credit at the option of IHT convertible into 500,000 shares of UniGen stock at $1 per share.
UniGen has agreed to allow IHT to fund a $500,000 line of credit at the option of IHT convertible into 500,000 shares of UniGen stock at $1 per share. Currently, there is no outstanding balance at this time.
On the Trust’s balance sheet, the investment of the $1,000,000 consists of approximately $700,000 in note receivables and approximately $300,000 as the fair value of the warrant issued with the Trust’s investment in UniGen. The value of the premium related to the fair value of the warrants will accrete over the life of the debentures.
On the Trust’s balance sheet, the investment of the $1,588,750 consists of approximately $700,000 in note receivables, approximately $300,000 as the fair value of the warrants issued with the Trust’s investment in UniGen, and $588,750 of UniGen Common Stock (495,000 shares), at cost.
Management has assessed the materiality of the discrepancy on prior reported periods and has concluded it is qualitatively immaterial to the readers of our Consolidated Financial Statements.
Management has assessed the materiality of the discrepancy on prior reported periods and has concluded it is qualitatively immaterial to the readers of our Consolidated Financial Statements. Employment Tax Refunds and Credits, for the two previously filed calendar years 2020, and 2021, respectively, resulted in the Employment Retention Tax Credit.
Real estate and personal property taxes, Insurance and Ground Rent expenses increased approximately $20,000, or 4%, to approximately $502,000 for the twelve months ended January 31, 2022 from approximately $482,000 for the twelve months ended January 31, 2021.
Real estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $72,000, or 14%, to approximately $429,000 for the twelve months ended January 31, 2023 from approximately $501,000 for the twelve months ended January 31, 2022. 10 Sales and occupancy tax expenses increased approximately $798,000, or 100%, to $0 for the twelve months ended January 31, 2023 from approximately ($798,000) for the twelve months ended January 31, 2022.
The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6% (approximately $15,000 per quarter). The Debentures are convertible into 1,000,000 Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share.
There is no Investment Commitment to UniGen requiring any restriction of cash. The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6% (approximately $15,000 per quarter).
Hotel Property Book Value Mortgage Balance Estimated Market Asking Price Albuquerque $ 1,181,154 $ 1,296,019 8,595,000 Tucson Oracle 6,346,071 4,461,283 17,950,000 $ 7,527,225 $ 5,757,302 $ 26,545,000 The “Estimated Market Asking Price” is the amount at which we believe would sell each of the Hotels and is adjusted to reflect hotel sales in the Hotels’ areas of operation and projected upcoming 12 month earnings of each of the Hotels.
Hotel Property Book Value Mortgage Balance Estimated Market Asking Price Albuquerque $ 1,065,921 $ 1,261,793 9,500,000 Tucson Oracle 6,120,679 8,266,677 18,500,000 $ 7,186,600 $ 9,528,470 $ 28,000,000 The “Estimated Market Asking Price” is the amount at which we believe may sell each of the Hotels and is adjusted to reflect hotel sales in the Hotels’ areas of operation and projected upcoming 12 month earnings of each of the Hotels.
The Trust provided the required Plan by December 15, 2021, and the NYSE American has granted the additional 18 months to execute the Plan.
The Trust provided the required Plan by December 15, 2021, and the NYSE American granted the additional 18 months to execute the Plan. On April 30, 2022, the Trust requested and was granted an extension for their annual Form 10-K.
We also realized an approximate 82% decrease in management and trademark fee revenues during Fiscal Year 2022 to approximately $21,000 as compared to approximately $115,000 during Fiscal Year 2021. Management and trademark fee revenues decreased during Fiscal Year 2021 as a result of the loss of management fees due to the sale of the Tempe hotel in December, 2020.
Management and trademark fee revenues decreased during Fiscal Year 2021 as a result of the loss of management fees due to the sale of the Tempe hotel in December, 2020. The Tempe hotel was owned outside of the Trust, and only an affiliate. It was not part of the Trust consolidation.
Sales and marketing expense increased approximately $20,000, or 5%, to approximately $399,000 for the twelve months ended January 31, 2022 from approximately $379,000 for the twelve months ended January 31, 2021. Open positions for sales and marketing resources, due to a tight labor market, remained unfilled, and accounted for the decrease.
Sales and marketing expense increased approximately $52,000, or 13%, to approximately $451,000 for the twelve months ended January 31, 2023 from approximately $399,000 for the twelve months ended January 31, 2022. Filled positions for sales and marketing resources accounted for the increase.
In Fiscal Year 2022, as compared with fiscal 2021, occupancy increased approximately 32.52% to 75.60% from 57.05% in the prior Fiscal Year. ADR increased by $13.18, or 18.79%, to $83.34 in Fiscal Year 2022 from $70.16 in Fiscal Year 2021.
In Fiscal Year 2023, as compared with Fiscal 2022, occupancy decreased approximately 2.17% to 73.96% from 75.60% in the prior Fiscal Year. ADR increased by $12.32, or 14.78%, to $95.66 in Fiscal Year 2023 from $83.34 in Fiscal Year 2022.
InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021 that could expand into a multi-million-dollar investment totaling up to approximately 25 percent ownership in privately held UniGen Power, Inc. (UPI) to develop a patented high profit potential new efficient clean energy generation innovation.
On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UniGen”). InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021. UniGen is in the process of developing a patented high profit potential new efficient clean energy generation innovation.
Operators of hotels in general, and InnSuites Hotels in particular, can change room rates quickly, but competitive pressures may limit InnSuites Hotels’ ability to raise rates as fast as or faster than inflation INVESTMENT IN UNIGEN POWER, INC. On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UPI” or “UniGen”).
Operators of hotels in general, and InnSuites in particular, can change room rates quickly, but competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2023, ended January 31, 2023, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses. INVESTMENT IN UNIGEN POWER, INC.
Overview A summary of total Trust operating results for the Fiscal Years ended January 31, 2022 and 2021 is as follows: 2022 2021 Change % Change Total Revenues $ 6,409,800 $ 4,202,574 $ 2,207,226 53 % Operating Expenses 6,713,135 7,014,719 542,854 9 % Operating Income (Loss) (303,335 ) (2,812,145 ) 1,664,372 85 % Interest Income and Other 1,061,464 276,320 785,144 284 % Interest Expense (367,235 ) (360,676 ) (6,559 ) 2 % Employee Retention Benefit 350,791 - 350,791 0 % Income Tax Benefit 50 68,661 (68,611 ) (100 %) Consolidated Net Income (Loss) 741,735 (2,827,840 ) 2,725,137 137 % REVENUE For the twelve months ended January 31, 2022, we had total revenue of approximately $6,409,000 compared to approximately $4,202,000 for the twelve months ended January 31, 2021, an increase of approximately $2,207,000, or 53%.
Overview A summary of total Trust operating results for the Fiscal Years ended January 31, 2023 and 2022 is as follows: 2023 2022 Change % Change Total Revenues $ 7,145,687 $ 6,409,800 $ 735,887 11 % Operating Expenses 7,443,022 6,713,135 729,887 11 % Operating Loss (297,335 ) (303,335 ) 6,000 2 % Interest Income and Other 68,072 1,061,464 (993,392 ) (94 )% Interest Expense (530,347 ) (367,235 ) (163,112 ) (44 )% Employee Retention Benefit 1,403,164 350,791 1,052,373 300 % Sales and Occupancy Taxes - 798,000 (798,000 ) (100 )% Income Tax Benefit 93,497 50 93,447 186,894 % Consolidated Net Income 737,051 1,539,735 (802,684 ) (52 )% REVENUE For the twelve months ended January 31, 2023, we had total revenue of approximately $7,146,000 compared to approximately $6,410,000 for the twelve months ended January 31, 2022, an increase of approximately $736,000, or 53%.
Hotel property depreciation expenses decreased by approximately $105,000 to approximately $725,000 for the twelve months ended January 31, 2022 from approximately $831,000 for the twelve months ended January 31, 2021. Decreased depreciation resulted from the capital expenditures being fully depreciated, and thus less expense was incurred and recorded.
Decreased depreciation resulted from the capital expenditures being fully depreciated, and thus less expense was incurred and recorded.
Utility expenses increased approximately $26,000, or 7%, to approximately $383,000 reported for the twelve months ended January 31, 2022 from approximately $357,000 for the twelve months ended January 31, 2021. The increase was primarily due to the increase in Hotel occupancy.
Utility expenses increased approximately $45,000, or 12%, to approximately $428,000 reported for the twelve months ended January 31, 2023 from approximately $383,000 for the twelve months ended January 31, 2022. Hotel property depreciation expenses decreased by approximately $23,000 to approximately $702,000 for the twelve months ended January 31, 2023 from approximately $725,000 for the twelve months ended January 31, 2022.
UniGen, also, issued the Trust additional common stock purchase warrants (“Additional Warrants”) to purchase up to 200,000 shares of Class A Common Stock. The Additional Warrants are exercisable at an exercise price of $2.25 per share of Class A Common Stock. In February 2021, UniGen separately issued an additional 300,000 warrants at $2.25.
The Debentures are convertible into 1,000,000 Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) including to purchase up to 1,000,000 shares of Class A Common Stock.
While room revenue and general occupancy increased, our food and beverage revenue remained flat for Fiscal Year 2022 at approximately $56,000 during Fiscal Years 2022 and 2021 due to continued COVID restrictions in eating spaces.
While room revenue increased, our food and beverage revenue remained flat for Fiscal Year 2023 at approximately $53,000 during Fiscal Years 2023 and 2022. We also realized an approximate 82% decrease in management and trademark fee revenues during Fiscal Year 2022 to approximately $21,000 as compared to approximately $115,000 during Fiscal Year 2021.
We have from time to time listed each of the properties with a local real estate hotel broker who has successfully sold five of our hotel properties and we believe that each of the assets are being marketed at a price that is reasonable in relation to its current fair value.
The Estimated Market Asking Price is not based on appraisals of the properties. We have from time to time listed hotel properties with a long time highly successful local real estate hotel broker who has successfully sold four of our hotel properties.
The initial investment was made December 16, 2019, with significant positive progress to date despite the virus, economic, and travel disruptions of 2020. During the first Fiscal Quarter of 2021, an additional investment of $400,000 was made bringing the total to $1 Million. The investment includes warrants convertible to UPI stock upon election of the Trust.
The initial investment was made December 16, 2019, with positive progress to date despite the virus, economic, travel disruptions, cost overruns, and delays. The investment includes warrants convertible to UniGen stock upon election of the Trust. The investment is valued at fair value (level 3), as defined in Note 2 of the Consolidated Financial Statements.
General and administrative expenses of approximately $1,832,000 for the twelve months ended January 31, 2022, decreased approximately $126,000 from approximately $1,958,000 for the twelve months ended January 31, 2021 primarily due to lower charges in corporate staffing in support of the hotels and property sales efforts.
General and administrative expenses of approximately $2,227,000 for the twelve months ended January 31, 2023, increased approximately $395,000 from approximately $1,832,000 for the twelve months ended January 31, 2022 primarily due to increases in minimum wage laws affecting a majority of our employees, creating higher personnel costs along with increased employment taxes, accordingly.
We experienced extremely weak economic conditions during Fiscal Year 2021, ended January 31, 2021, primarily a result of the Covid-19 virus pandemic. We experienced recovery from weak travel and hospitality industry for much of the current Fiscal Year 2022, ending January 31, 2022 due to the recovery of domestic travel.
For more information on our strategic plan, including information on our progress in disposing of our hotel properties and expanding energy diversification, see “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations We experienced weak economic conditions during Fiscal Year 2022, ended January 31, 2022, primarily a result of the Covid-19 virus pandemic.
Removed
For the 2022 Fiscal Year ended January 31, 2022, InnSuites Hotels experienced substantial recovery of post Covid revenues and profits.
Added
Over time, we expect our UniGen diversification efficient clean energy generation investment to grow and provide a substantial source of income in the foreseeable future.
Removed
The increase was due to a slight increase in Insurance costs 10 Sales and occupancy tax expenses decreased approximately $1,642,000, or 195%, to approximately ($798,000) for the twelve months ended January 31, 2022 from approximately $844,000 for the twelve months ended January 31, 2021.
Added
We expect the current Fiscal Year 2024 to be continued recovery of the travel industry, continued recovery of our Hotel’s occupancy levels, continued recovery of room rates, as well as continuation of current cost control all leading to improved profitability of our hotels.
Removed
Another principal source of cash is management fees earned in the operation of the Trusts’ two hotels. In addition, cash flow may be enhanced by the refinance and/or sale of potential future real estate hotel sales.
Added
We believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining complementary guest items, including complimentary breakfast and free Internet access.
Removed
Also, another source of cash is repayment of the intercompany loans, which was recently facilitated with the Tempe Hotel sale, which was sold December 16, 2020. The subsequent event refinance of our Tucson Hotel on March 30, 2022 also enhanced cash flows considerably.
Added
Our strategic plan is to continue to obtain the full benefit of our real estate equity, by ultimately obtaining full market value for our two Hotels at market value which is believed by management to be substantially higher than lower book values, over the next 24-36 months.
Removed
On May 16, 2020, the Trust received a letter from NYSE AMERICAN giving an official notice of noncompliance of the Trust with continued listing standards of NYSE American LLC (the “Exchange”) because the Trust failed to timely file with the Securities and Exchange Commission (the “SEC”) its Annual Report on Form 10-K for the year ended January 31, 2021 (the “Delinquent Report”).
Added
In addition, the Trust is seeking a larger private reverse merger partner that may benefit from a merger that would afford that partner access to our listing on the NYSE AMERICAN. In the process of reviewing merger opportunities, the Trust identified in December 2019, and invested $1 million in UniGen Power, Inc.
Removed
This filing delinquency subjected the Trust to the procedures and requirements of Section 1007 of the NYSE American Company Guide. The requisite Form 8-K and associated press release were issued on May 22, 2020, and the Trust filed the annual Form 10-K on August 14, 2020.
Added
(“UniGen”), an innovative efficient clean energy power generation company. The Trust has invested $1 million in debentures convertible into 1 million shares of UniGen Power Inc., and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next approximately three years, which could result up to 25% ownership in UniGen.
Removed
On December 12, 2020, the Trust requested and was granted an extension for their quarterly reports for the First, Second, and Third Fiscal Quarters, under the Covid-19 SEC Relief and Late Filer Extension Request process. The Late Filer Extension was initially granted until February 15, 2021 for all three delinquent Quarters.
Added
Fiscal Year 2023, ended January 31, 2023 continued this upward trend achieving record profits.
Removed
Subsequently, after filing the First Quarter 10-Q on January 11, 2021, the Trust requested and was granted an additional extension for the Second and Third Quarters respectively, until April 15, 2021. The Trust filed their Second Quarterly Report on March 1, 2021. The Trust filed their Third Quarterly Report on March 25, 2021.
Added
As a result, the Trust conservatively placed an amount equal to approximately 12% of this total as a Tax Credit Receivable and Tax Refund on the Balance Sheet and Income statement, respectively, for the Fiscal Years ended January 31, 2023 and 2022, respectively.
Removed
The Estimated Market Asking Price is not based on appraisals of the properties.
Added
The Trust has further conservatively recognized an additional 12% each Fiscal Quarter, approximately, of the total anticipated Tax Credit receivable for the Quarter ended January 31, 2023. This recognition began in Fiscal Year 2022. The amount recognized increased from approximately $350,000 for the twelve months ended January 31, 2022 to approximately $1,400,000 for the twelve months ended January 31, 2023.
Removed
We plan to sell our remaining two Hotel properties one within 12-36 months, based on feedback received by our local hotel real estate property professional brokers, who specialize in the selling/buying hotel real estate properties.

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Other IHT 10-K year-over-year comparisons