Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assumptions and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is generally recognized as services are performed. Revenue primarily represents room rental fees, food and beverage sales, and other fees. The Company collects sales tax from all nonexempt customers and remits the entire amount to the appropriate states upon collection from the customer. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenue and expenses.

Restricted Cash

The Company maintains reserves for property taxes, capital improvements and insurance as required by its debt agreements. At March 31, 2026 and 2025, reserves for property taxes were $932,532 and $717,588, respectively, reserves for capital improvements were $2,799,619 and $2,140,466, respectively, and reserves for insurance were $104,558 and $168,318, respectively. The Company also included $110,200 and $176,160 of guest advance deposits as restricted cash at March 31, 2026 and 2025, respectively.

Noncontrolling Interests

Noncontrolling Interest

Noncontrolling interest represents the portion of equity of Procaccianti Convertible Fund, LLC (“PCF”) held by owners other than the Company. Noncontrolling interest is reported in the condensed consolidated balance sheets within equity, separately from stockholders’ equity. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest are reported in the condensed consolidated statement of operations.

Per Share Data

The Company calculates its basic and diluted earnings per common share (“EPS”) utilizing the two-class method. Under the two-class method, both basic and diluted EPS are calculated for each class of common stock considering distributions declared and accumulated and the rights of common shares and participating securities in any undistributed earnings. Undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. As of March 31, 2026, 6,750 restricted K Shares held by the Company’s independent directors are included in the calculation of basic EPS because such shares have been issued and participate in distributions.

The Company’s calculated EPS for the three months ended March 31, 2026 and 2025, were as follows:


	Three Months Ended March 31,
	2026		2025
Net loss attributable to common stockholders	$	(1,859,901)	$	(1,186,320)
Less: Class K Common Stock dividends declared and accumulated		665,355		670,156
Less: Class K-I Common Stock dividends declared and accumulated		248,516		242,972
Less: Class A Common Stock dividends declared and accumulated		100,353		100,353
Undistributed net loss	$	(2,874,125)	$	(2,199,801)
Class K Common Stock:
Undistributed net loss	$	(1,846,218)	$	(1,424,279)
Class K Common Stock dividends declared and accumulated		665,355		670,156
Net loss	$	(1,180,863)	$	(754,123)
Net loss per common share, basic and diluted	$	(0.31)	$	(0.19)
Weighted average number of common shares outstanding, basic and diluted		3,854,833		3,882,650
Class K-I Common Stock:
Undistributed net loss	$	(689,582)	$	(516,388)
Class K-I Common Stock dividends declared and accumulated		248,516		242,972
Net loss	$	(441,066)	$	(273,416)
Net loss per common share, basic and diluted	$	(0.31)	$	(0.19)
Weighted average number of common shares outstanding, basic and diluted		1,439,818		1,407,695
Class A Common Stock:
Undistributed net loss	$	(278,458)	$	(213,280)
Class A Common Stock dividends declared and accumulated		100,353		100,353
Net loss	$	(178,105)	$	(112,927)
Net loss per common share, basic and diluted	$	(0.31)	$	(0.19)
Weighted average number of common shares outstanding, basic and diluted		581,410		581,410
Class B Common Stock:
Undistributed net loss	$	(59,867)	$	(45,854)
Net loss per common share, basic and diluted	$	(0.48)	$	(0.37)
Weighted average number of common shares outstanding, basic and diluted		125,000		125,000