[10-Q] INNSUITES HOSPITALITY TRUST Quarterly Earnings Report
InnSuites Hospitality Trust (IHT) reported interim results showing continued hotel operations with mixed financial performance. Combined hotel revenue for the first half of Fiscal 2026 was approximately $4.05 million. For the three and six months ended July 31, 2025 the filings show operating losses (examples: consolidated operating loss of $(16,304) and $(238,700) in periods presented) and consolidated net losses before certain items ranging from approximately $(295,871) to $(367,814) across periods compared.
The balance sheet discloses total current assets around $1.69 million and total hotel properties of $18.93 million. Total current liabilities were about $1.44 million with related-party notes payable of ~$1.72 million and mortgage notes payable (net) of ~$8.65 million. Cash sources noted include ~$207,000 cash on hand and availability of ~ $300,000 from credit facilities and a $250,000 revolving credit line; management believes this provides sufficient liquidity for at least twelve months. The Trust continued semiannual dividends of $0.01 per share and retains significant ownership stakes in its partnership entities and an investment in UniGen (575,000 shares at cost $668,750 plus warrants).
InnSuites Hospitality Trust (IHT) ha riportato risultati intermedi che mostrano operazioni alberghiere ancora operative con una performance finanziaria mista. Il fatturato alberghiero combinato per i primi sei mesi dell’Esercizio 2026 è stato di circa 4,05 milioni di dollari. Per i tre e sei mesi chiusi il 31 luglio 2025, i fascicoli indicano perdite operative (ad esempio una perdita operativa consolidata di $(16.304) e $(238.700) nei periodi presentati) e perdite nette consolidate prima di determinati elementi che vanno da circa $(295.871) a $(367.814) su base comparata.
Lo stato patrimoniale mostra attività correnti totali di circa 1,69 milioni di dollari e proprietà alberghiere totali di 18,93 milioni. Le passività correnti totali erano circa 1,44 milioni, con note verso parti correlate di circa 1,72 milioni e note ipotecarie da pagare (netto) di circa 8,65 milioni. Le fonti di liquidità indicate includono circa 207.000 dollari in cassa e disponibilità di circa 300.000 dollari da linee di credito e una linea di credito revolving di 250.000 dollari; la direzione ritiene che questa liquidità sia sufficiente per almeno dodici mesi. Il Trust ha continuato a distribuire dividendi semestrali di 0,01 dollari per azione e mantiene partecipazioni significative nelle sue entità di partnership nonché un investimento in UniGen (575.000 azioni a costo di 668.750 dollari più warrant).
InnSuites Hospitality Trust (IHT) reportó resultados interinos mostrando operaciones hoteleras continuas con rendimiento financiero mixto. Los ingresos hoteleros combinados para los primeros seis meses del año fiscal 2026 fueron aproximadamente de 4,05 millones de dólares. Para los tres y seis meses terminados el 31 de julio de 2025, los archivos muestran pérdidas operativas (por ejemplo, pérdida operativa consolidada de $(16.304) y $(238.700) en los periodos presentados) y pérdidas netas consolidadas antes de ciertos conceptos que oscilan entre aproximadamente $(295.871) y $(367.814) a lo largo de los periodos comparados.
El balance refleja activos corrientes totales de alrededor de 1,69 millones de dólares y propiedades hoteleras totales de 18,93 millones. Las pasivas corrientes totales eran de aproximadamente 1,44 millones, con notas a partes relacionadas de about 1,72 millones y notas hipotecarias por pagar (neto) de aproximadamente 8,65 millones. Las fuentes de liquidez mencionadas incluyen alrededor de 207.000 dólares en caja y disponibilidad de aproximadamente 300.000 dólares de facilidades de crédito y una línea de crédito revolvente de 250.000 dólares; la dirección considera que esto proporciona liquidez suficiente para al menos doce meses. El Trust continuó con dividendos semestrales de 0,01 por acción y mantiene participaciones significativas en sus entidades de asociación y una inversión en UniGen (575.000 acciones a costo de 668.750 dólares más warrants).
InnSuites Hospitality Trust(IHT)가 중간 실적을 보고하며 지속적인 호텔 운영과 혼합된 재무 실적을 보였습니다. 2026 회계연도 상반기 합산 호텔 매출은 약 405만 달러였습니다. 2025년 7월 31일에 종료된 3개월 및 6개월 기간의 filed 자료에 따르면 운영 손실(예: 제시된 기간의 연결된 영업 손실은 각각 $(16,304) 및 $(238,700))과 특정 항목을 제외한 연결 순손실이 약 $(295,871)에서 $(367,814) 사이로 나타났습니다.
대차대조표상 유동자산 총액은 약 169만 달러, 호텔 자산 총액은 1893만 달러로 표시됩니다. 총 유동부채는 약 144만 달러였고 관련당사자 차입금은 약 172만 달러, 담보대출(순액)은 약 865만 달러였습니다. 현금원으로는 현금 보유 약 20만7천 달러와 신용시설에서의 약 30만 달러, 25만 달러의 회전신용한도가 포함되어 있습니다. 경영진은 이 현금유동성이 최소 12개월간 충분하다고 봅니다. 트러스트는 1주당 0.01달러의 반년 배당을 계속했고, 파트너십 법인들에 대한 상당한 지분과 UniGen(668,750달러 비용에 575,000주 + 워런트 보유) 투자도 유지합니다.
InnSuites Hospitality Trust (IHT) a publié des résultats intermédiaires montrant des activités hôtelières poursuivies avec une performance financière mitigée. Le chiffre d’affaires hôtelier combiné pour les premier et deuxièmes trimestres de l’exercice 2026 s’élève à environ 4,05 millions de dollars. Pour les périodes de trois et six mois terminées le 31 juillet 2025, les dépôts indiquent des pertes opérationnelles (par exemple une perte opérationnelle consolidée de $(16 304) et $(238 700) dans les périodes présentées) et des pertes nettes consolidées avant certains éléments allant approximativement de $(295 871) à $(367 814) sur les périodes comparées.
Le bilan révèle des actifs courants totaux d’environ 1,69 million de dollars et des propriétés hôtelières totales de 18,93 millions. Les passifs courants totaux s’élevaient à environ 1,44 million, avec des notes envers des parties liées d’environ 1,72 million et des notes hypothécaires à payer (nettes) d’environ 8,65 millions. Les sources de liquidité indiquées incluent environ 207 000 dollars en caisse et une disponibilité d’environ 300 000 dollars provenant de facilités de crédit et une ligne de crédit renouvelable de 250 000 dollars ; la direction estime que cette liquidité est suffisante pour au moins douze mois. Le Trust a maintenu des dividendes semestriels de 0,01 dollar par action et conserve des participations importantes dans ses entités de partenariat ainsi qu’un investissement dans UniGen (575 000 actions au coût de 668 750 dollars plus des warrants).
InnSuites Hospitality Trust (IHT) meldete Zwischenergebnisse, die fortlaufende Hotelbetriebe mit gemischter finanzieller Leistung zeigen. Der kombinierte Hotelumsatz für die ersten sechs Monate des Geschäftsjahres 2026 betrug ca. 4,05 Millionen US-Dollar. Für die drei- und sechs Monate zum 31. Juli 2025 zeigen die Unterlagen operative Verluste (Beispiele: konsolidierte operative Verluste von $(16.304) und $(238.700) in den dargestellten Zeiträumen) und konsolidierte Nettoverluste vor bestimmten Posten, die sich über die Zeiträume auf ca. $(295.871) bis $(367.814) belaufen.
Die Bilanz weist liquide Mittel in Höhe von ca. 1,69 Millionen USD und Gesamthotelimmobilien in Höhe von 18,93 Millionen USD aus. Die gesamten kurzfristigen Verbindlichkeiten betrugen ca. 1,44 Millionen USD, mit Verbindlichkeiten gegenüber verbundenen Parteien von ca. 1,72 Millionen USD und Hypothekenschulden (netto) von ca. 8,65 Millionen USD. Als liquide Quellen werden ca. 207.000 USD Bargeld, Verfügbarkeit von ca. 300.000 USD aus Kreditlinien und eine revolvierende Kreditlinie von 250.000 USD genannt; das Management glaubt, dass diese Liquidität für mindestens zwölf Monate ausreicht. Der Trust setzte semianuale Dividenden von 0,01 USD pro Aktie fort und hält nach wie vor bedeutende Beteiligungen an seinen Partnerschaftsgesellschaften sowie eine Investition in UniGen (575.000 Aktien zu Kosten von 668.750 USD plus Warrants).
أبلغت InnSuites Hospitality Trust (IHT) عن نتائج نصف سنوية تُظهر استمرار العمليات الفندقية مع أداء مالي مختلط. كان إجمالي إيرادات الفنادق المجمّعة للنصف الأول من السنة المالية 2026 نحو 4.05 مليون دولار. بالنسبة للفترات المنتهية في 31 يوليو 2025 لثلاثة وستة أشهر، تُظهر الملفات خسائر تشغيلية (مثال: خسارة تشغيلية موحدة قدرها $(16,304) و$(238,700) في الفترات المعروضة) وخسائر صافية موحدة قبل عناصر معينة تتراوح تقريباً بين $(295,871) و$(367,814) عبر الفترات المقارنة.
يكشف الميزانية عادة أن إجمالي الأصول Current هو حوالي 1.69 مليون دولار وإجمالي ممتلكات فندقية بقيمة 18.93 مليون دولار. كانت الخصوم الحالية حوالي 1.44 مليون دولار مع ملاحظات تجاه أطراف ذات علاقة بنحو 1.72 مليون دولار وملاحظات الرهن العقاري القابلة للدفع (صافي) نحو 8.65 مليون دولار. تشمل المصادر النقدية المذكورة نحو 207,000 دولار نقداً ووجود نحو 300,000 دولار من خطوط الاعتماد وخط ائتمان دوّار قدره 250,000 دولار؛ وتعتقد الإدارة أن هذا يوفر سيولة كافية لمدة لا تقل عن اثني عشر شهراً. واصل الثقة توزيع أرباح نصف سنوية قدرها 0.01 دولار للسهم ويحافظ على حصص ملكية كبيرة في كيانات الشراكة واستثمار في UniGen (575,000 سهم بتكلفة 668,750 دولار إضافة إلى أسهم خيارات).
InnSuites Hospitality Trust (IHT) 报告了中期业绩，显示酒店运营持续但财务表现参差不齐。 截至本财年2026年前六个月的合并酒店收入约为405万美元。对于截至2025年7月31日的三个月和六个月， filing 显示经营亏损（示例：在所列期间的合并经营亏损为 $(16,304) 和 $(238,700)）以及在未包含特定项目前的合并净亏损，在大约 $(295,871) 至 $(367,814) 之间波动。
资产负债表显示流动资产总额约为169万美元，酒店物业总额为1893万美元。流动负债总额约为144万美元，与相关方的应付票据约为172万美元，按揭票据应付（净额）约865万美元。现金来源包括约207,000美元的现金和约300,000美元的信用额度以及250,000美元的循环信用额度；管理层认为这足以维持至少12个月的流动性。该信托继续每股0.01美元的半年股息，并在其合伙实体中保留重要的所有权份额，同时投资于 UniGen（57.5万股成本66.875万美元，外加认股权证）。
- Combined H1 Fiscal 2026 hotel revenue of approximately $4.05 million
- Management reports sufficient liquidity for twelve months via $207,000 cash, ~ $300,000 available credit and a $250,000 revolver
- Continued dividend payments ($0.01 per share semiannual) and long history of paying dividends
- Significant asset base with total hotel properties of ~$18.93 million and ownership stakes in partnership entities
- Insurance cost reduction at Tucson hotel from ~$450,000 to ~$100,000 annualized, saving ~ $350,000
- Recurring operating and consolidated net losses (examples: consolidated net loss figures reported around $(295,871) to $(367,814) in referenced periods)
- High mortgage and long-term debt including mortgage notes payable net of discount of ~$8.65 million and related-party notes of ~$1.72 million
- Best Western Rewards guest voucher expense recognized (examples: $66,000 and larger BW-related amounts) reducing operating results
- Interest payments paused on certain related-party facilities, and some interest accruals were paused beginning Fiscal 2025, creating payment timing risk
- Management notes strategic sales or refinancing may not be available on favorable terms, implying contingent liquidity risk
Insights
TL;DR: Revenue recovery underway but persistent operating losses and significant mortgage and related-party debt keep near-term outlook cautious.
The financials show modest revenue momentum with $4.05 million combined hotel revenue for H1 Fiscal 2026 and August monthly highs, yet recurring operating losses and consolidated net losses indicate margin pressure. Liquidity is supported by $207,000 cash and access to roughly $300,000 of credit capacity plus a $250,000 revolver; however, material mortgage balances (~$8.65M net) and related-party notes (~$1.72M) are significant. Continued dividend payments and asset-backed hotel properties provide equity support, but earnings need sustained improvement to materially change valuation dynamics.
TL;DR: Key risk drivers are high leverage, paused interest accruals, and contingent refinancing/sale needs despite improved cost saves.
Leverage concentration in two hotel properties (hotel assets ~$18.9M) and mortgage obligations with monthly installments (~$50,000) create refinancing and cash-flow risk. Management paused certain interest payments and notes automatically renew, introducing counterparty and timing uncertainty. Positive actions include reducing Tucson insurance annualized cost by ~$350,000 and access to revolving facilities, but the filing explicitly notes strategic transactions may not be available on favorable terms, representing a material liquidity risk.
InnSuites Hospitality Trust (IHT) ha riportato risultati intermedi che mostrano operazioni alberghiere ancora operative con una performance finanziaria mista. Il fatturato alberghiero combinato per i primi sei mesi dell’Esercizio 2026 è stato di circa 4,05 milioni di dollari. Per i tre e sei mesi chiusi il 31 luglio 2025, i fascicoli indicano perdite operative (ad esempio una perdita operativa consolidata di $(16.304) e $(238.700) nei periodi presentati) e perdite nette consolidate prima di determinati elementi che vanno da circa $(295.871) a $(367.814) su base comparata.
Lo stato patrimoniale mostra attività correnti totali di circa 1,69 milioni di dollari e proprietà alberghiere totali di 18,93 milioni. Le passività correnti totali erano circa 1,44 milioni, con note verso parti correlate di circa 1,72 milioni e note ipotecarie da pagare (netto) di circa 8,65 milioni. Le fonti di liquidità indicate includono circa 207.000 dollari in cassa e disponibilità di circa 300.000 dollari da linee di credito e una linea di credito revolving di 250.000 dollari; la direzione ritiene che questa liquidità sia sufficiente per almeno dodici mesi. Il Trust ha continuato a distribuire dividendi semestrali di 0,01 dollari per azione e mantiene partecipazioni significative nelle sue entità di partnership nonché un investimento in UniGen (575.000 azioni a costo di 668.750 dollari più warrant).
InnSuites Hospitality Trust (IHT) reportó resultados interinos mostrando operaciones hoteleras continuas con rendimiento financiero mixto. Los ingresos hoteleros combinados para los primeros seis meses del año fiscal 2026 fueron aproximadamente de 4,05 millones de dólares. Para los tres y seis meses terminados el 31 de julio de 2025, los archivos muestran pérdidas operativas (por ejemplo, pérdida operativa consolidada de $(16.304) y $(238.700) en los periodos presentados) y pérdidas netas consolidadas antes de ciertos conceptos que oscilan entre aproximadamente $(295.871) y $(367.814) a lo largo de los periodos comparados.
El balance refleja activos corrientes totales de alrededor de 1,69 millones de dólares y propiedades hoteleras totales de 18,93 millones. Las pasivas corrientes totales eran de aproximadamente 1,44 millones, con notas a partes relacionadas de about 1,72 millones y notas hipotecarias por pagar (neto) de aproximadamente 8,65 millones. Las fuentes de liquidez mencionadas incluyen alrededor de 207.000 dólares en caja y disponibilidad de aproximadamente 300.000 dólares de facilidades de crédito y una línea de crédito revolvente de 250.000 dólares; la dirección considera que esto proporciona liquidez suficiente para al menos doce meses. El Trust continuó con dividendos semestrales de 0,01 por acción y mantiene participaciones significativas en sus entidades de asociación y una inversión en UniGen (575.000 acciones a costo de 668.750 dólares más warrants).
InnSuites Hospitality Trust(IHT)가 중간 실적을 보고하며 지속적인 호텔 운영과 혼합된 재무 실적을 보였습니다. 2026 회계연도 상반기 합산 호텔 매출은 약 405만 달러였습니다. 2025년 7월 31일에 종료된 3개월 및 6개월 기간의 filed 자료에 따르면 운영 손실(예: 제시된 기간의 연결된 영업 손실은 각각 $(16,304) 및 $(238,700))과 특정 항목을 제외한 연결 순손실이 약 $(295,871)에서 $(367,814) 사이로 나타났습니다.
대차대조표상 유동자산 총액은 약 169만 달러, 호텔 자산 총액은 1893만 달러로 표시됩니다. 총 유동부채는 약 144만 달러였고 관련당사자 차입금은 약 172만 달러, 담보대출(순액)은 약 865만 달러였습니다. 현금원으로는 현금 보유 약 20만7천 달러와 신용시설에서의 약 30만 달러, 25만 달러의 회전신용한도가 포함되어 있습니다. 경영진은 이 현금유동성이 최소 12개월간 충분하다고 봅니다. 트러스트는 1주당 0.01달러의 반년 배당을 계속했고, 파트너십 법인들에 대한 상당한 지분과 UniGen(668,750달러 비용에 575,000주 + 워런트 보유) 투자도 유지합니다.
InnSuites Hospitality Trust (IHT) a publié des résultats intermédiaires montrant des activités hôtelières poursuivies avec une performance financière mitigée. Le chiffre d’affaires hôtelier combiné pour les premier et deuxièmes trimestres de l’exercice 2026 s’élève à environ 4,05 millions de dollars. Pour les périodes de trois et six mois terminées le 31 juillet 2025, les dépôts indiquent des pertes opérationnelles (par exemple une perte opérationnelle consolidée de $(16 304) et $(238 700) dans les périodes présentées) et des pertes nettes consolidées avant certains éléments allant approximativement de $(295 871) à $(367 814) sur les périodes comparées.
Le bilan révèle des actifs courants totaux d’environ 1,69 million de dollars et des propriétés hôtelières totales de 18,93 millions. Les passifs courants totaux s’élevaient à environ 1,44 million, avec des notes envers des parties liées d’environ 1,72 million et des notes hypothécaires à payer (nettes) d’environ 8,65 millions. Les sources de liquidité indiquées incluent environ 207 000 dollars en caisse et une disponibilité d’environ 300 000 dollars provenant de facilités de crédit et une ligne de crédit renouvelable de 250 000 dollars ; la direction estime que cette liquidité est suffisante pour au moins douze mois. Le Trust a maintenu des dividendes semestriels de 0,01 dollar par action et conserve des participations importantes dans ses entités de partenariat ainsi qu’un investissement dans UniGen (575 000 actions au coût de 668 750 dollars plus des warrants).
InnSuites Hospitality Trust (IHT) meldete Zwischenergebnisse, die fortlaufende Hotelbetriebe mit gemischter finanzieller Leistung zeigen. Der kombinierte Hotelumsatz für die ersten sechs Monate des Geschäftsjahres 2026 betrug ca. 4,05 Millionen US-Dollar. Für die drei- und sechs Monate zum 31. Juli 2025 zeigen die Unterlagen operative Verluste (Beispiele: konsolidierte operative Verluste von $(16.304) und $(238.700) in den dargestellten Zeiträumen) und konsolidierte Nettoverluste vor bestimmten Posten, die sich über die Zeiträume auf ca. $(295.871) bis $(367.814) belaufen.
Die Bilanz weist liquide Mittel in Höhe von ca. 1,69 Millionen USD und Gesamthotelimmobilien in Höhe von 18,93 Millionen USD aus. Die gesamten kurzfristigen Verbindlichkeiten betrugen ca. 1,44 Millionen USD, mit Verbindlichkeiten gegenüber verbundenen Parteien von ca. 1,72 Millionen USD und Hypothekenschulden (netto) von ca. 8,65 Millionen USD. Als liquide Quellen werden ca. 207.000 USD Bargeld, Verfügbarkeit von ca. 300.000 USD aus Kreditlinien und eine revolvierende Kreditlinie von 250.000 USD genannt; das Management glaubt, dass diese Liquidität für mindestens zwölf Monate ausreicht. Der Trust setzte semianuale Dividenden von 0,01 USD pro Aktie fort und hält nach wie vor bedeutende Beteiligungen an seinen Partnerschaftsgesellschaften sowie eine Investition in UniGen (575.000 Aktien zu Kosten von 668.750 USD plus Warrants).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
EXCHANGE ACT OF 1934
For The Quarterly Period Ended
or
EXCHANGE ACT OF 1934
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
Registrant’s
telephone number, including area code:
Indicate
by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or l5(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). ☐ Yes ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | |||
| Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Aggregate market value of Shares of Beneficial Interest held by non-affiliates of the registrant as of July 31, 2025, based upon the closing sales price of the registrant’s Shares of Beneficial Interest on that date, as reported on the NYSE AMERICAN: $4,293,062
Number
of outstanding Shares of Beneficial Interest, without par value, as of September 12, 2025:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
TABLE OF CONTENTS
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2025
| Pages | ||
| PART I. FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements | 3 |
| Condensed Consolidated Balance Sheets – January 31, 2025 (audited) and July 31, 2025(unaudited) | 3 | |
| Condensed Consolidated Statements of Operations – Six Months Ended July 31, 2025 and July 31, 2024 (unaudited) | 4 | |
| Condensed Consolidated Statements of Operations – Three Months Ended July 31, 2025 and July 31, 2024 (unaudited) | 5 | |
| Condensed Consolidated Statements of Shareholders’ Equity – Six Months Ended July 31, 2025 and July 31, 2024 (unaudited) | 6 | |
| Condensed Consolidated Statements of Cash Flows – Six Months ended July 31, 2025 and July 31, 2024 (unaudited) | 7 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 8 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 42 |
| Item 4 | Controls and Procedures | 42 |
| PART II. OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 43 |
| Item 1A | Risk Factors | 43 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 43 |
| Item 4 | Mine Safety Disclosures | 44 |
| Item 5 | Other Information | 44 |
| Item 6 | Exhibits | 44 |
| Signature | 45 | |
| Exhibit Index | ||
| 2 |
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| JULY 31, 2025 | JANUARY 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable | ||||||||
| Employee Retention Credit Receivable | ||||||||
| Prepaid Expenses and Other Current Assets | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment, net | ||||||||
| Notes Receivable (net) | ||||||||
| Operating Lease – Right of Use | ||||||||
| Convertible Note Receivable | ||||||||
| Investment in Private Company Stock | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable and Accrued Expenses | $ | $ | ||||||
| Current Portion of Mortgage Notes Payable, net of Discount | ||||||||
| Current Portion of Other Notes Payable | ||||||||
| Current Portion of Notes Payable to Banks | - | |||||||
| Current Portion of Operating Lease Liability | ||||||||
| Total Current Liabilities | ||||||||
| Notes Payable - Related Party | ||||||||
| Mortgage Notes Payable, net of Discount | ||||||||
| Operating Lease Liability, net of current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | - | |||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Shares of Beneficial Interest, without par value, unlimited authorization; | ||||||||
| Treasury Stock, | ( | ) | ( | ) | ||||
| TOTAL TRUST SHAREHOLDERS’ EQUITY | ||||||||
| NON-CONTROLLING INTEREST | ( | ) | ( | ) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 3 |
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| 2025 | 2024 | |||||||
| FOR THE SIX MONTHS ENDED | ||||||||
| JULY 31, | ||||||||
| 2025 | 2024 | |||||||
| REVENUE | ||||||||
| Room | $ | $ | ||||||
| Food and Beverage | ||||||||
| Other | ||||||||
| TOTAL REVENUE | ||||||||
| OPERATING EXPENSES | ||||||||
| Room | ||||||||
| Food and Beverage | ||||||||
| General and Administrative | ||||||||
| Sales and Marketing | ||||||||
| Repairs and Maintenance | ||||||||
| Hospitality | ||||||||
| Utilities | ||||||||
| Depreciation | ||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | ||||||||
| Other | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Interest Income | - | |||||||
| TOTAL OTHER INCOME | ||||||||
| Interest on Mortgage Notes Payable | ||||||||
| Interest on Other Notes Payable | ||||||||
| TOTAL INTEREST EXPENSE | ||||||||
| CONSOLIDATED NET LOSS BEFORE BW REWARDS CREDIT VOUCHER EXPENSE AND INCOME TAX BENEFIT | ( | ) | ( | ) | ||||
| BW Rewards Guest Voucher Expense | ( | ) | - | |||||
| Income Tax Benefit | - | |||||||
| CONSOLIDATED NET LOSS | $ | ( | ) | $ | ( | ) | ||
| LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | $ | ||||||
| NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER SHARE – BASIC & DILUTED | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC & DILUTED | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 4 |
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| 2025 | 2024 | |||||||
| FOR THE THREE MONTHS ENDED | ||||||||
| JULY 31, | ||||||||
| 2025 | 2024 | |||||||
| REVENUE | ||||||||
| Room | $ | $ | ||||||
| Food and Beverage | ||||||||
| Other | ||||||||
| TOTAL REVENUE | ||||||||
| OPERATING EXPENSES | ||||||||
| Room | ||||||||
| Food and Beverage | ||||||||
| General and Administrative | ||||||||
| Sales and Marketing | ||||||||
| Repairs and Maintenance | ||||||||
| Hospitality | ||||||||
| Utilities | ||||||||
| Depreciation | ||||||||
| Real Estate and Personal Property Taxes, Insurance and Ground Rent | ||||||||
| Other | - | |||||||
| TOTAL OPERATING EXPENSES | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Interest Income | - | |||||||
| TOTAL OTHER INCOME | ||||||||
| Interest on Mortgage Notes Payable | ||||||||
| Interest on Other Notes Payable | ||||||||
| TOTAL INTEREST EXPENSE | ||||||||
| CONSOLIDATED NET LOSS BEFORE BW REWARDS CREDIT VOUCHER EXPENSE AND INCOME TAX BENEFIT | ( | ) | ( | ) | ||||
| BW Rewards Guest Voucher Expense | ( | ) | - | |||||
| Income Tax Benefit | - | - | ||||||
| CONSOLIDATED NET LOSS | $ | ( | ) | $ | ( | ) | ||
| LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | $ | ( | ) | $ | ( | ) | ||
| NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER SHARE – BASIC & DILUTED | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC & DILUTED | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 5 |
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 2025
Shares | Amount | Shares | Amount | Equity | Interest | Equity | ||||||||||||||||||||||
| Shares of Beneficial Interest | Treasury Stock | Trust Shareholders’ | Non- Controlling | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Equity | Interest | Equity | ||||||||||||||||||||||
| Balance, January 31, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Net Income | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||
| Sales of Ownership Interests in Subsidiary, net | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, April 30, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Shares of Beneficial Interest Issued for Services Rendered | - | |||||||||||||||||||||||||||
| Dividends | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Reallocation of Non-Controlling Interests and Other | - | |||||||||||||||||||||||||||
| Balance, July 31, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
FOR THE SIX MONTHS ENDED JULY 31, 2024
| Shares of Beneficial Interest | Treasury Stock | Trust Shareholders’ | Non- Controlling | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Equity | Interest | Equity | ||||||||||||||||||||||
| Balance, January 31, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Net Income | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||
| Purchase of Treasury Stock | ( | ) | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||
| Distribution to Non-Controlling Interests | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, April 30, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Balance | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Purchase of Treasury Stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Dividends | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Distribution to Non-Controlling Interests | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, July 31, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Balance | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 6 |
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2025 | 2024 | |||||||
| FOR THE SIX MONTHS ENDED | ||||||||
| JULY 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Consolidated Net Income | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Consolidated Net Loss to Net Cash Provided By (Used In) Operating Activities: | ||||||||
| Stock-Based Compensation | - | |||||||
| Depreciation | ||||||||
| Changes in Assets and Liabilities: | ||||||||
| Accounts Receivable | ||||||||
| Prepaid Expenses and Other Assets | ( | ) | ||||||
| Operating Lease | ( | ) | ( | ) | ||||
| Accounts Payable and Accrued Expenses | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Improvements and Additions to Hotel Properties | ( | ) | ( | ) | ||||
| Payments on Investments in Unigen | - | ( | ) | |||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Principal Payments on Mortgage Notes Payable | ( | ) | ( | ) | ||||
| Borrowing (Payments) on Notes Payable - Related Party | ||||||||
| Borrowing on Notes Payable to Banks | - | |||||||
| Payment of Dividends | ( | ) | ( | ) | ||||
| Distributions to Non-Controlling Interest Holders | - | ( | ) | |||||
| Sale of Ownership Interest in Subsidiary, net | ( | ) | - | |||||
| Repurchase of Treasury Stock | - | ( | ) | |||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ( | ) | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 7 |
INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 31, 2025, AND JANUARY 31, 2025
AND FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2025 AND 2024
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
As
of July 31, 2025, InnSuites Hospitality Trust (the “Trust”, “IHT”, “we”, “us” or “our”)
is a publicly traded unincorporated Ohio real estate investment trust (REIT). The Trust and its shareholders directly in and through
a Partnership, own interests in two hotels with an aggregate of 270 hotel suites in Arizona and New Mexico. Both are operated under the
federally trademarked name “InnSuites”, as well as operating under the brand name “Best Western”. The Trust and
its shareholders hold a $
IHT is currently taxed as a C corporation, founded and first listed on NYSE 55 years ago with uninterrupted annual dividends each year since inception in 1971. IHT is pursuing opportunities in ownership and management of hotels, reservations and branding services of independent hotels, and diversified development of innovative new efficient clean energy generation. Ownership of hotels takes place through Tucson Hospitality Properties and Albuquerque Suite Hotels subsidiaries. Management of hotels, and management of InnDependent Boutique Collection Hotels (IBC), is handled through RRF Limited Liability Limited Partnership (RRF), its management subsidiary. Diversified clean energy investment takes place through investment in UniGen Power Inc.
Hotel Operations:
Our Tucson, Arizona Hotel and our Hotel located in Albuquerque, New Mexico are moderate service hotels. Both hotels offer swimming pools, fitness centers, business centers, and complimentary breakfast. In addition, the Hotels offer modest conference facilities. The Tucson hotel has “PJ’s” Pub and Café, as well.
The
Trust is the sole general partner of RRF Limited Liability Limited Partnership, a Delaware limited partnership (the “Partnership”),
and owned a
RRF LLLP, an IHT subsidiary, manages the Hotels’ daily operations under 2 hotel management agreements. In addition, RRF manages the IBC Hotels, LLC entity, as well. RRF also provides the use of the “InnSuites” trademark to the Hotels. All expenses and reimbursements between the Trust and RRF Partnership have been eliminated in consolidation.
The Trust classified the Hotels as operating assets, but these assets are available for sale. At this time, the Trust is unable to predict when, and if, either of these will be sold. Neither the Tucson Hotel nor the Albuquerque Hotel is currently listed for sale, but the Trust is willing to consider offers for each Hotel. Each of the Hotels is being made available at a price that management believes is reasonable in relation to its current fair market value, earnings, profits, and replacement cost.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements have been prepared by management in accordance with accounting principles in conformity with accounting principles generally accepted in the United States of America (“GAAP”), and include all assets, liabilities, revenues and expenses of the Trust and its subsidiaries, as listed in the table below. All material intercompany transactions and balances have been eliminated. Certain items have been reclassified to conform to the current fiscal year presentation. The Trust exercises unilateral control over the Partnership and the entities listed below. Therefore, the unaudited condensed financial statements of the Partnership and the entities listed below are consolidated with the Trust, and all intercompany transactions and balances have been eliminated.
SCHEDULE OF ENTITY OWNERSHIP PERCENTAGE
| IHT OWNERSHIP % | ||||||||
| ENTITY | DIRECT | INDIRECT (i) | ||||||
| Albuquerque Suite Hospitality, LLC | % | - | ||||||
| Tucson Hospitality Properties, LLLP | - | % | ||||||
| RRF Limited Partnership | % | - | ||||||
| (i) |
| 8 |
PARTNERSHIP AGREEMENT
The
Partnership Agreement of the Partnership provides for the issuance of two classes of Limited Partnership units, Class A and Class B.
Class A and Class B Partnership units are identical in all respects. On July 31, 2025 and January 31, 2025,
LIQUIDITY
The Trust’s two principal sources of cash to meet its cash requirements is revenues from hotel room/suite sales, and from RRF Management fees. The Trust’s liquidity, including our ability to make distributions to its shareholders, to service debt, and to invest in hotels, independent hotels reservation services, and energy diversification, will depend upon the ability of the Trust and the Partnership’s ability to generate sufficient cash flow from hotel operations and RRF management fees, as well as to generate funds from repayment of intercompany advances, sale of assets, and return on diversification investments.
At a future date, the Trust may receive cash from independent hotel reservation services, and energy operations and/or full or partial refinance or sale of one or both hotels, and/or full or partial sale of its interest in IBC or UniGen diversification investment.
As
of July 31, 2025, the Trust had a related party Demand/Revolving Line of Credit/Promissory Note with an amount payable of approximately
$
As
of July 31, 2025, the Trust had three Revolving lines of Credit totaling $
With
approximately $
There can be no assurance that the Trust will be successful in selling properties, merging, improving operations profitability and/or cash flow, or raising additional or replacement funds, or that these funds may be available on terms that are favorable to it. If the Trust is unable to raise additional or replacement funds, it may be required to raise additional funds from affiliates, to sell or refinance certain of our assets to meet liquidity needs, which may not be on terms that are favorable, or raise additional equity capital.
| 9 |
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared by the Trust in accordance with GAAP for interim financial information, and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statement presentation. However, the Trust believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended July 31, 2025, are not necessarily indicative of the results that may be expected for the Fiscal Year ending January 31, 2026. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended January 31, 2025.
The Trust has evaluated subsequent events through the date of the filing of its Q1 and Q2 Form 10-Q with the Securities and Exchange Commission. The Trust changed Auditors and Transfer Agents in the 2025 Second Fiscal Quarter (May 1, 2024 to July 31, 2024). Other than those events disclosed including a new push into independent hotel reservations and services, and fluctuation in tariffs, economics, or business activity, the Company is not aware of any other significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Trust’s financial statements.
As the general partner of the Partnership, the Trust exercises unilateral control over the Partnership. Therefore, the financial statements of the Partnership are consolidated with the Trust, and all significant intercompany transactions and balances have been eliminated.
Under Accounting Standards Codification (“ASC”) Topic 810-10-25, Albuquerque Suite Hospitality, LLC has been determined to be a variable interest entity with the Trust as the primary beneficiary (see Note 4 – “Variable Interest Entity”). Therefore, the financial statements of Albuquerque Suite Hospitality, LLC, are consolidated with the Trust, and all significant intercompany transactions and balances have been eliminated.
The financial statements of the Partnership including management activities, and management directly of Tucson Hospitality Properties, LLLP, are consolidated with the Partnership and the Trust, and all significant intercompany transactions and balances have been eliminated.
SEASONALITY OF THE HOTEL BUSINESS
The Hotels’ operations historically have been somewhat seasonal. The Tucson Arizona Hotel historically experiences the highest occupancy in the first Fiscal Quarter (the winter high season) and, to a lesser extent, the fourth Fiscal Quarter. The second Fiscal Quarter (summer low season) historically tends to be the lowest occupancy period at this Arizona Hotel. The Hotel located in Albuquerque, New Mexico historically experiences its 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 travel disruptions, labor force shortages and cash flow issues. Further, if an adverse event such as tariff related economic fluctuations, an actual or threatened virus pandemic, terrorist attack, international conflict or trade war, data breach, regional economic downturn or poor weather should occur at either of its two hotels, the adverse impact to the Trust’s revenues and profit could be significant.
| 10 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the audited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Trust’s operations are affected by numerous factors, including the economy, inflation, virus/pandemic, competition in the hotel industry and the effect of tariffs and the economy on the travel and hospitality industries. The Trust cannot predict if any of the above items will have a significant impact in the future, nor can it predict what impact, if any, the occurrence of these or other events might have on the Trust’s operations and cash flows. Significant estimates and assumptions made by management include, but are not limited to, the estimated useful lives of long-lived assets and recoverability of long-lived assets and the fair values of the long-lived assets.
PROPERTY AND EQUIPMENT
Furniture,
fixtures, building and improvements and hotel properties are stated at cost, except for land, and depreciated using the straight-line
method over estimated lives ranging up to
Land is an indefinite-lived asset. The Trust tests its land for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its carrying value to its implied fair value.
For tax purposes the Trust takes advantage of accelerated depreciation methods (MACRS) for new capital additions and improvements to its Hotels.
| 11 |
Management applies guidance ASC 360-10-35, to determine when it is required to test an asset for recoverability of its carrying value and whether, or not, an impairment exists. Under ASC 360-10-35, the Trust is required to test a long-lived asset for impairment when there is an indicator of impairment. Impairment indicators may include, but are not limited to, a drop in the performance of a long-lived asset, a decline in the travel and hospitality industry or a decline in the economy. If an indicator of potential impairment is present, then an assessment is performed of whether the carrying amount of an asset exceeds its estimated undiscounted future cash flows over its estimated remaining life.
If the estimated undiscounted future cash flows over the asset’s estimated remaining life are greater than the asset’s carrying value, no impairment is recognized; however, if the carrying value of the asset exceeds the estimated undiscounted future cash flows, then the Trust would recognize an impairment expense to the extent the asset’s carrying value exceeds its fair value, if any. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. Long-lived assets evaluated for impairment are analyzed on a property-specific basis independent of the cash flows of other groups of assets. Evaluation of future cash flows is based on historical experience and other factors, including certain economic conditions, and committed future bookings. Management has determined no impairment is required of long-lived assets for the Fiscal Period ended July 31, 2025.
CASH
The Trust believes it places its cash only with high credit quality financial institutions, although these balances periodically exceed federally insured limits.
REVENUE RECOGNITION
Hotel and Operations
Revenues are primarily derived from the sources below and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities and are generally not significant.
Revenues primarily currently consist of room rentals, food and beverage sales, management and trademark fees and other miscellaneous revenues from our properties. Revenues are recorded when rooms are occupied and when food and beverage sales are delivered. Management and trademark fees include a monthly accounting fee and a percentage of hotel room revenues for managing the daily operations of the Hotels.
Each room night consumed by a guest with a cancelable reservation represents a contract whereby the Trust has a performance obligation to provide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation (i.e., each room night) is met. Such contract is renewed if the guest continues their stay. For room nights consumed by a guest with a non-cancellable reservation, the entire reservation period represents the contract term whereby the Trust has a performance obligation to provide the room night or nights at an agreed upon price. For non-cancellable reservations, the Trust recognizes revenue over the term of the performance period (i.e., the reservation period) as room nights are consumed. For these reservations, the room rate is typically fixed over the reservation period. The Trust uses an output method based on performance completed to date (i.e., room nights consumed) to determine the amount of revenue it recognizes on a daily basis if the length of a non-cancellable reservation exceeds one night since consumption of room nights indicates when services are transferred to the guest. In certain instances, variable consideration may exist with respect to the transaction price, such as discounts, coupons and price concessions made upon guest checkout.
In evaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such as free high-speed internet Wi-Fi, complimentary breakfast, and free parking), as the other obligations are not distinct and separable because the guest cannot benefit from the additional amenities without the consumed room night. The Trust’s obligation to provide the additional items or services is not separately identifiable from the fundamental contractual obligation (i.e., providing the room and its contents). The Trust has no performance obligations once a guest’s stay is complete.
We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in revenues. 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.
| 12 |
ACCOUNTS RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts
receivable are derived from guest stays and other reservations at the Hotels. Accounts receivable are carried at original amounts billed
less an estimate made for doubtful accounts based on a review of outstanding amounts on a quarterly basis. Management generally records
an allowance for doubtful accounts for
LEASE ACCOUNTING
The Trust determines, at the inception of a contract, if the arrangement is a lease and whether it meets the classification criteria for a finance or operating lease. Right of Use (ROU), assets represent the Trust’s right to use an underlying asset during the lease term and lease liabilities represent the Trust’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. ROU assets also include any advance lease payments and exclude lease incentives. As most of the Trust’s operating leases do not provide an implicit rate, the Trust uses its incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating fixed lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term (see Note 14).
TRUSTEE STOCK-BASED COMPENSATION
The
Trust has an employee equity incentive plan, which is described more fully in Note 15 - “Share-Based Payments.” The three
independent members of the Board of Trustees each earn
| 13 |
TREASURY STOCK
Treasury stock is carried at cost, including any brokerage commissions paid to repurchase the shares. Any shares issued from treasury stock are removed at cost, with the difference between cost and fair value at the time of issuance recorded against Shares of Beneficial Interest.
NET LOSS PER SHARE
Basic
and diluted net income per Share of Beneficial Interest is computed based on the weighted-average number of Shares of Beneficial Interest
and potentially dilutive securities outstanding during the period. Dilutive securities are limited to the Class A and Class B units of
the Partnership, which are convertible into
For
the six months ended July 31, 2025 and 2024, there were Class A and Class B Partnership units outstanding, which are convertible into
Shares of Beneficial Interest of the Trust. Assuming conversion at the beginning of each period, the aggregate weighted-average of these
Shares of Beneficial Interest would have been
ADVERTISING COSTS
Amounts
incurred for advertising costs are expensed as incurred. Advertising expense for continuing operations totaled approximately $
CONCENTRATION OF CREDIT RISK
Credit risk is the risk of an unexpected loss if a third party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Trust to a concentration of credit risk consist primarily of cash and cash equivalents. Management’s assessment of the Trust’s credit risk for cash and cash equivalents is low as cash and cash equivalents are held in financial institutions believed to be credit worthy. The Trust limits its exposure to credit loss by placing its cash with various major financial institutions and invests only in short-term obligations.
While the Trust is exposed to credit losses due to the non-performance of its counterparties, the Trust considers the risk of this remote. The Trust estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet.
FAIR VALUE OF FINANCIAL INSTRUMENTS
For disclosure purposes, fair value is determined by using available market information and appropriate valuation methodologies. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants in the principle or most advantageous market for the asset or liability. The fair value framework specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The fair value hierarchy levels are as follows:
| ● | Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. |
| 14 |
| ● | Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and / or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are level 2 valuation techniques. | |
| ● | Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect a company’s own judgments about the assumptions that market participants would use in pricing an asset or liability. |
The Trust has assets that are carried at fair value on a recurring basis, including stock and warrants in a 3rd party private company on the unaudited condensed consolidated balance sheet.
Due to their short maturities, the carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value. The fair value of mortgage notes payable, notes payable to banks and notes and advances payable to related parties is estimated by using the current rates which would be available for similar loans having the same remaining maturities and are based on level 3 inputs.
CONVERTIBLE NOTE RECEIVABLE, COMMON STOCK AND WARRANTS IN UNIGEN POWER, INC.
On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UniGen”).
The
Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $
UniGen
issued the Trust common stock purchase warrants (the “Debenture Warrants”) to purchase up to
UniGen
also issued the Trust additional common stock purchase warrants (“Additional Warrants”) to purchase up to
The
total of all stock ownership upon conversion of the note receivable is
Certain stock option warrants have expired, but may be extended to secure additional funds as part of the current UniGen effort to raise additional capital, and complete the first two prototypes.
On
the Trust’s balance sheet, the investment of the $
The value of the warrants issued with the note receivable was based on Black-Scholes pricing model based on the following inputs:
Debenture Warrants
SCHEDULE OF WARRANTS VALUATION ASSUMPTIONS
| Type of option | Call option | |||
| Stock price | $ | |||
| Exercise (Strike) price | $ | |||
| Time to maturity (years) | ||||
| Annualized risk-free rate | % | |||
| Annualized volatility | % | |||
Additional Warrants
| Type of option | Call option | |||
| Stock price | $ | |||
| Exercise (Strike) price | $ | |||
| Time to maturity (years) | ||||
| Annualized risk-free rate | % | |||
| Annualized volatility | % | |||
| 15 |
If
all notes are converted and all available but not outstanding warrants exercised, IHT could hold up to approximately
During
the year ended January 31, 2025, the Trust reinvested $
During the Second Fiscal Quarter (May 1, 2024 to July 31, 2024), three months ended July 31, 2024, as well as the Third Fiscal Quarter (August 1, 2024 to October 31, 2024), three months ended October 31, 2024, and Fourth Fiscal Quarter (November 1, 2024 to January 31, 2025), the Trust did not receive any interest income from UniGen.
As
of July 31, 2025, IHT held
UniGen Power Inc. (UPI), progress of the UPI efficient clean energy innovation is as follows:
1.
UniGen has stated they have completed
2. Demand for the UniGen innovation has increased. Due to global tariffs, travel and economic events, an increasingly unreliable American power grid, increasing demand for electric vehicles, increasing demand for data center power, Artificial Intelligence projected electricity demand, inflation, and supply chain pressures, the UniGen marketing team estimates product’s market has grown. The market for total electricity in the U.S. is projected to double over the next five years. The initial order for thirty UniGen Power units has been reaffirmed.
James
Wirth (IHT President) and Marc Berg (IHT Executive Vice President) both lack significant UniGen control. They hold two of the five UniGen
Board of Directors seats or
The Trust has valued UniGen investment as a level 3 fair value measurement, for the following reasons: The investment does not qualify for level 1 since there are no identical actively traded instruments or level 2 identical or similar unobservable markets.
OTHER RECENT PRONOUNCEMENTS
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
3. OWNERSHIP INTERESTS IN ALBQUERQUE AND TUCSON SUBSIDIARIES
The
Trust has sold non-controlling interests in certain subsidiaries, including Albuquerque Suite Hospitality, LLC (the “Albuquerque
entity”) and Tucson Hospitality Properties, LLLP (the “Tucson entity, which sales are described in detail in our Annual Report
on Form 10-K filed on April 30, 2025, with the Securities and Exchange Commissions. Generally, interests have sold for $
On
February 15, 2017, the Trust and Partnership entered into a restructuring agreement with Rare Earth Financial, LLC (“REF”)
to allow for the sale of non-controlling partnership units in Albuquerque Suite Hospitality LLC (“Albuquerque”) for $
On
October 1, 2013, the Partnership entered into an updated restructured limited partnership agreement with Rare Earth to allow for the
sale of additional interest units in the Tucson entity for $
For
the Albuquerque entity,
For
the Tucson entity, as of July 31, 2025 and January 31, 2025, respectively, the Partnership held a
| 16 |
4. VARIABLE INTEREST ENTITIES
Management evaluates the Trust’s explicit and implicit variable interests to determine if they have any interests in variable interest entities (“VIEs”). Variable interests are contractual, ownership, or other pecuniary interests in an entity whose value changes with changes in the fair value of the entity’s net assets, exclusive of variable interests. Explicit variable interests are those which directly absorb the variability of a VIE and can include contractual interests such as loans or guarantees as well as equity investments. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing of variability indirectly, such as through related party arrangements or implicit guarantees. The analysis includes consideration of the design of the entity, its organizational structure, including decision making ability over the activities that most significantly impact the VIE’s economic performance. GAAP requires a reporting entity to consolidate a VIE when the reporting entity has a variable interest, or combination of variable interest, that provides it with a controlling financial interest in the VIE. The entity that consolidates a VIE is referred to as the primary beneficiary of that VIE.
The Partnership has determined that the Albuquerque entity is a variable interest entity with the Trust as the primary beneficiary with the ability to exercise control, as determined under the guidance of ASC Topic 810-10-25. In its determination, management considered the following qualitative and quantitative factors:
a) The Partnership, Trust, and their related parties, which share common ownership and management, have guaranteed material financial obligations of the Albuquerque hotel.
b) The Partnership, Trust and their related parties have maintained, as a group, a controlling ownership interest in the Albuquerque hotel, with the largest ownership belonging to the Trust.
c) The Partnership, Trust and their related parties have maintained control over the decisions which most impact the financial performance of the Albuquerque hotel, including providing the personnel to operate the property daily.
During the six months ended July 31, 2025 and the Fiscal Year ended January 31, 2025, neither the Trust nor the Partnership have provided any implicit or explicit financial support for which they were not previously contracted. Both the Partnership and the Trust provided mortgage loan guarantees which allowed our properties to obtain financing as needed, and on favorable terms.
5. PROPERTY AND EQUIPMENT
As of July 31, 2025, and January 31, 2025, hotel properties consisted of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
| HOTEL SEGMENT | ||||||||
| July 31, 2025 | January 31, 2025 | |||||||
| Land | $ | $ | ||||||
| Building and improvements | ||||||||
| Furniture, fixtures and equipment | ||||||||
| Total hotel properties | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Hotel properties, net | ||||||||
| 17 |
As of July 31, 2025, and January 31, 2025, corporate property, plant, and equipment consisted of the following:
| CORPORATE PP&E | ||||||||
| July 31, 2025 | January 31, 2025 | |||||||
| Land | $ | - | $ | - | ||||
| Building and improvements | ||||||||
| Furniture, fixtures and equipment | ||||||||
| Total property, plant and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property, Plant and Equipment, net | $ | $ | ||||||
6. MORTGAGE NOTES PAYABLE
On
March 29, 2022 Tucson Hospitality Properties LLLP,
On
December 2, 2019, Albuquerque Suites Hospitality, LLC entered into a $
See Note 9 – “Minimum Debt Payments” for scheduled minimum payments on the mortgage notes payable.
7. NOTES PAYABLE AND NOTES RECEIVABLE – RELATED PARTY
On
December 1, 2014, the Trust entered a Demand/Revolving Line of Credit/Promissory Note with Rare Earth Financial, LLC, an entity which
is wholly owned by Mr. Wirth and his family members. The Demand/Revolving Line of Credit/Promissory Note, as amended on June 19, 2017,
bears interest of up to
| 18 |
8. OTHER NOTES PAYABLE
As
of July 31, 2025, the Trust had a $
On
July 1, 2019, the Trust and the Partnership together entered into an unsecured loan totaling $
See Note 10 – “Minimum Debt Payments” for scheduled minimum payments on the debt liabilities.
| 19 |
9. NOTES PAYABLE TO BANKS
On
October 17, 2017, the Trust entered into a Business Loan Agreement with Republic Bank of Arizona, now Pima Federal Credit Union, for
a revolving line of credit for $
On
October 17, 2017 Albuquerque Suite Hospitality LLC (the Albuquerque Hotel) entered into a Business Loan Agreement with Republic Bank
of Arizona, now Pima Federal Credit Union, for a revolving line of credit for $
On
October 17, 2017 Tucson Hospitality Properties LLLP (the Tucson Hotel) entered into a Business Loan Agreement with Republic Bank of Arizona,
now Pima Federal Credit Union, for a revolving line of credit for $
10. MINIMUM DEBT PAYMENTS
Scheduled minimum payments of debt, net of debt discounts, as of July 31, 2025 are approximately as follows in the respective Fiscal Years indicated:
SCHEDULE OF MINIMUM PAYMENTS OF DEBT
| FISCAL YEAR | MORTGAGES | OTHER NOTES PAYABLE | NOTES PAYABLE TO BANKS | NOTES PAYABLE - RELATED PARTY | TOTAL | |||||||||||||||
| 2026 | - | |||||||||||||||||||
| 2027 | - | - | ||||||||||||||||||
| 2028 | - | - | - | |||||||||||||||||
| 2029 | - | - | - | |||||||||||||||||
| 2030 | - | - | - | |||||||||||||||||
| Thereafter | - | - | ||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
11. DESCRIPTION OF BENEFICIAL INTERESTS
Holders of the Trust’s Shares of Beneficial Interest are entitled to receive dividends when and if declared by the Board of Trustees of the Trust out of funds legally available. The holders of Shares of Beneficial Interest, upon any liquidation, dissolution or winding-down of the Trust, are entitled to share ratably in any assets remaining after payment in full of all liabilities of the Trust. The Shares of Beneficial Interest possess ordinary voting rights, each share entitling the holder thereof to one vote. Holders of Shares of Beneficial Interest do not have cumulative voting rights in the election of Trustees and do not have preemptive rights.
For
the six months ended July 31, 2025 and 2024, the Trust repurchased
| 20 |
12. RELATED PARTY TRANSACTIONS
As
of July 31, 2025, and January 31, 2025, Mr. Wirth and his affiliates held
As
of July 31, 2025, and January 31, 2025, the Trust owned
The
Trust directly manages the two Hotels and IBC Hotels, LLC, through the Trust’s majority-owned subsidiary, RRF LLLP (RRF).
Under the management agreements, RRF manages the daily operations of both Trust Hotels. All Trust managed Hotel expenses, revenues
and reimbursements among the Trust, and the Partnership have been eliminated in consolidation. The management fees for the Hotels
are
The
Trust employs part time, an immediate family member of Mr. Wirth, Brian James Wirth, who provides part time IT Technology support services
to the Trust, receiving up to approximately $
13. STATEMENTS OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES
The
Trust paid $
14. COMMITMENTS AND CONTINGENCIES
Restricted Cash:
The
Trust is obligated under a loan agreement relating to the Tucson Oracle property to deposit
Membership Agreements:
InnSuites
Hotels has entered into membership agreements with Best Western International, Inc. (“Best Western”) for both hotel properties.
In exchange for use of the Best Western name, trademark and reservation system, each Hotel pays fees to Best Western based on reservations
received through the use of the Best Western reservation system and the number of available suites at the Hotels. The agreements with
Best Western have no specific expiration terms and may be cancelled by either party. Best Western requires that the hotels meet certain
requirements for room quality, and the Hotels are subject to removal from its reservation system if these requirements are not met. The
Hotels with third-party membership agreements received significant reservations through the Best Western reservation system. Under these
arrangements, fees paid for membership fees and reservations for the Albuquerque and Tucson Hotels, were approximately $
| 21 |
Litigation:
The Trust and/or its hotel affiliates, are involved from time to time in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Trust’s unaudited condensed consolidated financial position, results of operations or liquidity.
Indemnification:
The Trust has entered into indemnification agreements with all our executive officers and Trustees. The agreements provide for indemnification against all liabilities and expenses reasonably incurred by an officer or Trustee in connection with the defense or disposition of any suit or other proceeding, in which he or she may be involved or with which he or she may be threatened, while in office or thereafter, because of his or her position at the Trust. There is no indemnification for any matter as to which an officer or Trustee is adjudicated to have acted in bad faith, with willful misconduct or reckless disregard of his or her duties, with gross negligence, or not in good faith in the reasonable belief that his or her action was in the Trust’s best interests. These agreements require the Trust, among other things, to indemnify the Trustee or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as our Trustee or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by us. The Trust may advance payments in connection with indemnification under the agreements. The level of indemnification is to the full extent of the net equity based on appraised and/or market value of the Trust. Historically, the Trust has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying consolidated balance sheets.
See Note 15 – Leases, for discussion on lease payment commitments.
15. LEASES
The Trust has operating leases for its corporate offices in Phoenix, Arizona and land leased in Albuquerque, New Mexico. The Trust’s corporate office lease is month to month. The Albuquerque Land lease is non-cancelable.
Operating Leases
The
Trust holds a month to month office lease agreement with Northpoint Properties for a commercial office lease at 1730 E Northern Ave,
Suite 122, Phoenix, Arizona 85020. Base monthly rent is $
The
Trust’s Albuquerque Hotel is subject to non-cancelable ground lease.
| 22 |
The following table presents the Trust’s lease costs for the six months ended July 31, 2025:
SCHEDULE OF LEASE COSTS
| For the Six Months Ended | ||||
| July 31, 2025 | ||||
| Operating Lease Costs: | ||||
| Operating lease cost* | ||||
| * |
Supplemental cash flow information is as follows:
SCHEDULE OF CASH FLOW INFORMATION
| For the Six Months Ended | ||||
| July 31, 2025 | ||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from operating leases | $ | ( | ) | |
| Lease obligations: | ||||
| Operating leases, net | $ | |||
| Long-term obligations | $ | |||
Weighted average remaining lease terms and discount rates were as follows:
SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATES
| Weighted average remaining lease term (years) | July 31, 2025 | |||
| Operating leases | ||||
| Weighted average discount rate | % | |||
| Operating leases | ||||
The aggregate future lease payments for Operating Lease Liability as of July 31, 2025 are as follows:
SCHEDULE OF ANNUAL LEASE OBLIGATIONS
| For the Years Ending January 31, | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total minimum lease payments | $ | ||||
| Less: amount representing interest | |||||
| Total present value of minimum payments | |||||
| Less: current portion | $ | ||||
| Long term portion of operating lease liability | |||||
16. SHARE-BASED PAYMENTS
The
Trust compensates its three non-employee Trustees for their services through grants of restricted Shares. As compensation for our Fiscal
Year 2026, (February 1, 2025 to January 31, 2026), on February 15, 2025, we issued
See Note 2 – “Summary of Significant Accounting Policies” for information related to grants of restricted shares under “Stock-Based Compensation.”
| 23 |
17. NOTES RECEIVEABLE
Sale of IBC Hospitality Technologies; IBC Hotels LLC (IBC)
On
August 15, 2018 InnSuites Hospitality Trust (IHT) entered into a final sale agreement of its technology subsidiary, IBC Hotels LLC (IBC),
to an unrelated third-party buyer (Buyer). As a part of the amended sale agreement, the Trust received a secured promissory note adjusted
to the principal amount of $
| ● | No interest accrued through May 2024, and no payments on the note receivable including principal and interest based on the extended time period were due through May 2024. | |
| ● | Note is secured by (1) pledge of the Buyer’s interest in IBC, and (2) a security interest in all assets of IBC, provided IHT shall agree to subordinate such equity interest to commercially reasonable debt financing upon request. | |
| ● | ||
| ● | The
note has matured. However, RRF, the Management Subsidiary of IHT is currently the new Management Company of IBC, as of March 6, 2025,
and further extended the Note to June 30, 2030, including interest modification to | |
| ● | Future payments on this note are shown in the table below. |
SCHEDULE OF FUTURE PAYMENTS OF DEBT
| FISCAL YEAR | |||||
| 2031 | |||||
| Total | $ | ||||
| ● | Management’s best, conservative valuation of IBC’s assets, and their marketability, in the case of a default by the Buyer. | |
| ● | There were past negative impacts of the COVID-19 pandemic, on the travel and hospitality industry, in which IBC’s reservation and booking technology operates. IHT strongly believes the IBC business model is sound and viable, partly because IBC focus is on independent hotels. Half of the world’s hotels are non-affiliated independent hotels. There are only two major international hotel reservation systems, both with multi-billion dollar valuation, which are both focused on affiliated hotels. |
As of July 31, 2025, management evaluated the carrying value of the note and determined no further impairment is needed at this time. This is detailed further with the aforementioned extension, which allows time for IBC to benefit from the current rebound in the travel, hospitality services, and hotel industries.
IHT had no managerial control nor did IHT have the ability to direct the operations or capital requirements of IBC as of August 1, 2018. IHT had no rights to any benefits or losses from IBC as of August 1, 2018.
On
March 6, 2025, Rare Earth Financial (REF), an investment entity owned by the chairman and family of IHT chairman and majority IHT shareholder,
purchased IBC Hotels, LLC, and hired RRF, LLLP (RRF), the management company subsidiary of InnSuites Hospitality Trust (IHT) to manage
the rebirth of IBC using updated current technology, to benefit from the substantial unfulfilled need by independent hotels worldwide
for independent hotel and resort reservations, Boutique branding, and related hotel services. In the process, RRF, a
| 24 |
18. INCOME TAXES
The
Trust is taxed as a C-Corporation. The Trust’s practice is to recognize interest and/or penalties related to income tax matters
in income tax expense. The Trust has received various IRS and state tax jurisdiction notices which the Trust in the process of responding
to in which management believes the notices are without merit and expect full remediation of all tax notices. The Trust and subsidiaries
have deferred tax assets of $
19. COVID-19 DISCLOSURE
COVID-19 had a material detrimental impact on our business, financial results and liquidity in Fiscal Year 2021, ended January 31, 2021. Its consequences had dramatically reduced travel and demand for hotel rooms, in Fiscal Year 2021. We believe that lodging demand and revenue level have now recovered.
Fiscal Year 2025, starting February 1, 2024 and ending January 31, 2025, confirmed a significant strong rebound and encouraging progress. The start of Fiscal Year 2026, starting February 1, 2025 and ending January 31, 2026, has shown revenue is stable, but profits down somewhat as a result of inflation and increased costs.
20. EMPLOYEE RETENTION TAX CREDIT
The Trust participated in Economic Relief through a Credit allowed for Entities that suffered financial hardship during the Covid-19 Pandemic, under the CARES (The Coronavirus Aid, Relief, and Economic Security) Act (2020), and The Consolidated Appropriations Act (2021). Both provided fast and direct economic assistance for American workers, families, small businesses, and industries, by the U.S. Department of the Treasury along with Congress. This Credit was available for Entities impacted by the Virus and who paid Employment Taxes, while trying to remain solvent and viable. It is a fully refundable tax credit for Eligible Employers that paid employees to carry on a trade or business that was partially or fully suspended during any calendar year 2020; or that experienced significant decline in gross receipts during any calendar quarter in 2020, due to COVID-19.
As
a result of both legislative acts, the Trust is anticipated to be receiving a net of approximately $
| 25 |
21. GOING CONCERN
InnSuites
Hospitality Trust Fiscal Year 2025 was its first Fiscal Year with a loss in the last four Fiscal Years, dating back to Fiscal Year ended
1/31/21. Going forward, IHT is focused on cost cutting at a time of increased tariff/economic uncertainty. For example,
22. BEST WESTERN REWARDS GUEST VOUCHER EXPENSE
During
the six months ended July 31, 2025, the Trust recorded an expense of approximately $
23. IBC RECEIVABLE
Historically, in the process of ownership and management of branded and unbranded hotels, IHT recognized an unfulfilled need to provide hotel reservations, branding, and hotel services for unaffiliated global independent hotels, which at the time and still represent half the hotels in the world. In February 2014, IHT founded IBC Hotels, LLC to explore this unfulfilled opportunity, developing reservations, branding, and related hotel services doing business as “InnDependent Boutique Collection “(IBC Hotels). Initial success in providing reservations for an IHT operated independent hotel was substantial. As this independent hotel services opportunity grew, and the size of this potential demand was increasingly recognized in the travel industry, IBC Hotels was sold in August 2018 to a foreign hotel company planning expansion of independent hotel reservations and services internationally.
The new owner added additional hotels to the reservation system, further developed, updated, and improved existing IBC software, and pursued an agreement with a large international internet hotel guest source. When Covid hit in early 2020 and travel virtually briefly, but almost completely came to a standstill in March 2020, the new owner was not in a position to continue operations pausing IBC Hotels reservation services.
On March 5, 2025, REF , an investment entity owned by the chairman and family of the IHT majority IHT shareholder, purchased IBC Hotels, LLC, and hired RRF LLLP, the management company subsidiary of InnSuites Hospitality Trust (IHT), to manage the rebirth of IBC, to benefit from the substantial unfulfilled need worldwide for independent hotel and resort reservations, Boutique branding, and related hotel services. In the process, RRF LLLP, a 76% owned subsidiary of IHT and manager of IHT hotels, was engaged as manager of IBC obtaining a five-year option to purchase, at cost, IBC Hotels, LLC . This option is believed to provide IHT a valuable opportunity, if successful, to receive upside profit from the revitalization of InnDependent Boutique Collection (IBC Hotels).
Covid had profound initial adverse effects on the travel industry, with reservation companies consolidating to two large, primary international reservation providers. With travel now having rebounded, these two large reservation providers each hold multibillion-dollar valuations concentrating primarily on branded hotels.
In the process, unaffiliated independents still representing half the world’s hotels continue operation with an unfulfilled need offering significant opportunity to a provider of independent hotel reservations, boutique hotel branding, and hotel services focused on independent hotels. IHT is now in a position to benefit from this global profit opportunity through its management subsidiary, obtaining a management contract to operate IBC Hotels, LLC, and also obtaining a five-year option to purchase, at cost, IBC Hotels, LLC.
24. SUBSEQUENT EVENTS
The
Trust intends to maintain its current conservative dividend policy. The Trust currently is, and has, been paying two semi-annual dividends
each Fiscal Year totaling $
Rare
Earth Financial LLC (REF), an affiliate majority-owned by our President and CEO, James Wirth, entered into an agreement with the Obasa
Group of Companies, on March 5, 2025, to purchase 102037739 Saskatchewan Ltd, and its subsidiary IBC Hotels, LLC. RRF LLLP, a subsidiary
of IHT, agreed to become the Management Company of IBC, in an effort to rekindle earlier operations that were initially substantially
successful, until the Covid-19 pandemic in early 2020. The Note Payable to IHT, obtained by IHT in its sale of IBC Hotels, LLC, in August
of 2018, was extended until June 30, 2030, with interest to be paid at maturity, at
Hotel
Operation results of the Albuquerque Hotel and the Tucson Hotel both achieved record revenue and Gross Operating Profit (GOP)
results for the Fiscal Year ended January 31, 2025. Total Revenues increased to approximately $
The Trust made a change with their External Auditor and outside Tax Preparation Service Provider on May 17, 2024, hiring the BCRG Group for the Fiscal Year 2025, and continuing in Fiscal Year 2026.
InnSuites
lost a long-time Board of Trustee Member, and dear friend, Mr. J.R. “Ronee” Chase, who passed away suddenly and unexpectedly
on June 14, 2024. Mr. Chase had been temporarily replaced as a Trustee by Mr. Michael G. Marchi. Mr. Marchi assumed the role performed
by Mr. Chase effective June 19, 2024, and was re-elected for a three-year term, at the 2025 Fiscal Year Annual Shareholder Meeting, on
August 14, 2024. Mr. Marchi was issued
OTHER RECENT PRONOUCEMENTS
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
| 26 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto for the first two Fiscal Quarters of Fiscal 2026, appearing elsewhere in this Form 10-Q and our audited consolidated Form 10-K for the fiscal year ended January 31, 2025.
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q, including statements containing the phrases “believes,” “intends,” “expects,” “anticipates,” “predicts,” “projects,” “will be,” “should be,” “looking ahead,” “may” or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend that such forward-looking statements be subject to the safe harbors created by such Acts. These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) expansion of UniGen; (vii) our plans and expectations regarding future sales of hotel properties; and (viii) trends affecting our or any Hotel’s financial condition or results of operations.
These forward-looking statements reflect our current views in respect of future events and financial performance, but are subject to many uncertainties and factors relating to the operations and business environment of the Hotels that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties include, but are not limited to:
| ● | Tariffs and their effect on the Travel Industry; | |
| ● | potential risk and uncertainty of investments, including UniGen and IBC Hotels, LLC; | |
| ● | inflation and potential economic recession;
| |
| ● | Pandemic, terrorist attacks, or other acts of war; | |
| 27 |
| ● | political instability, and potentially reduced government travel; | |
| ● | available cash, supply chain issues, and increased labor costs; | |
| ● | fluctuations in hotel occupancy and rates; | |
| ● | changes in room rental rates that may be charged by InnSuites in response to market changing demand and rental rate changes or otherwise; | |
| ● | seasonality of our hotel operations business; | |
| ● | collectability of receivables; | |
| ● | 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, trade, and other regulations, the Americans with Disability Act, Covid-19 restrictions, ERTC, and federal, state, and local 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 or investment properties; | |
| ● | insufficient resources to pursue our current strategy; | |
| ● | concentration of our investments in the InnSuites ® , or another 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 current 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; |
| 28 |
| ● | the Trust’s ability to remain listed on the NYSE American; | |
| ● | effectiveness and security 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 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; | |
| ● | presence of drugs or 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, and variations in airline travel demand; | |
| ● | transportation and fuel price increases, and availability; | |
| ● | adequacy of property and liability insurance coverage including liability coverage, and increases in cost for property, liability, and 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 tax laws and other legislation. |
We do not undertake any obligation to update publicly or revise any forward-looking statements whether as a result of new information, future events or otherwise except as may be required by law. 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.
OVERVIEW
We are engaged in the ownership and operation of hotel properties. On July 31, 2025, 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. We are also involved in various operations incidental to the operation of hotels, such as the operation of a limited service restaurant and bar, as well as meeting/banquet room rentals.
At July 31, 2025, we owned a direct 21.90% interest in the Albuquerque, New Mexico Hotel, and, together with the Partnership, owned an indirect 51.75% interest in the Tucson, Arizona Hotel.
In addition, we now manage InnDependent Boutique Collection Hotels, (IBC Hotels, LLC), offering reservations and branding services to independent hotels, with new technology reservations and booking engine technology provided, and with an option to purchase IBC Hotels, LLC, at cost over the next five years. We hold a diversification investment in UniGen Power Inc., which is developing an efficient clean energy portable efficient electricity generator innovation.
Trust operations consist of one reportable segment – Hotel Ownership & Management Services. Hotel Ownership Operations derives its revenue from the ownership and operation of the Trust’s two hotel properties with an aggregate of 270 hotel suites in Arizona and New Mexico. Hotel management services, provides hotel and IBC Hotel management services including the Trust’s two Hotels. As part of our management services, we also provide trademark and licensing services.
Our results are significantly affected by the overall economy and travel, occupancy and room rates at the Hotels, our ability to manage costs, changes in room rates, and changes in the number of available suites caused by the Trust’s disposition activities. Results are also significantly impacted by overall economic conditions and conditions in the travel industry. Unfavorable changes in these factors, such as tariff uncertainty, or the virus-related travel slowdown, can and have negatively impacted hotel room demand and pricing, which reduces our profit margins. Additionally, our ability to manage costs could be adversely impacted by significant inflationary increases in operating expenses, resulting in lower operating margins, and higher hourly labor costs. Further increases in area hotel supply, hourly labor cost, declines in demand, or declines in room rates, could result in increased competition, which could have an adverse effect on the rates, revenue, costs, and profits of the Hotels in their respective markets.
Over time, we expect our high risk but also high profit potential UniGen diversification efficient clean energy generation investment, to grow and provide a substantial source of income in the future. We are also optimistic for the high profit potential from IBC management, and the five-year option to purchase IBC at cost.
We expect the current Fiscal Year 2026 to be uncertain for the travel industry, Hotel occupancy, room rates, as well as continuation of current cost control efforts. 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 hot breakfast and free high-speed Internet.
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 36 months. We look forward to the expansion of IBC, with its five-year option to purchase at cost. We anticipate to benefit from the UniGen efficient clean energy generator investment, as well. 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 public 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. (“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., the Trust has invested in 575,000 UniGen shares, and in addition has acquired warrants to purchase additional UniGen shares, which could result in up to 15-20% or more ownership in UniGen. For more information on our strategic plan, including information on our progress in disposing of our hotel properties, benefits from the IBC Hotels services, and expanding energy diversification, see “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations.
| 29 |
HOTEL OPERATIONS
Our expenses consist primarily of property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees, non-cash depreciation of the Hotels and hotel operating expenses. Hotel operating expenses consist primarily of payroll, guest and maintenance supplies, marketing, and utilities expenses. Management believes that a review of the historical performance of the operations of the Hotels, particularly with respect to Occupancy, which is calculated as rooms sold divided by total rooms available, Average Daily Rate (“ADR”), calculated as total room revenue divided by number of rooms sold, and Revenue Per Available Room (“REVPAR”), calculated as total room revenue divided by number of rooms available, is appropriate for understanding revenue from the Hotels.
The following tables show historical financial and other information for the periods indicated:
| For the Six Months Ended | ||||||||||||||||
| Albuquerque | July 31, | |||||||||||||||
| 2025 | 2024 | Change | %-Incr/Decr | |||||||||||||
| Occupancy | 91.97 | % | 89.86 | % | 2.11 | % | 2.35 | % | ||||||||
| Average Daily Rate (ADR) | $ | 99.55 | $ | 101.88 | $ | (2.33 | ) | -2.29 | % | |||||||
| Revenue Per Available Room (REVPAR) | $ | 91.55 | $ | 91.55 | $ | - | 0.00 | % | ||||||||
| For the Six Months Ended | ||||||||||||||||
| Tucson | July 31, | |||||||||||||||
| 2025 | 2024 | Change | %-Incr/Decr | |||||||||||||
| Occupancy | 73.11 | % | 77.42 | % | -4.31 | % | -5.57 | % | ||||||||
| Average Daily Rate (ADR) | $ | 94.62 | $ | 96.23 | $ | (1.61 | ) | -1.67 | % | |||||||
| Revenue Per Available Room (REVPAR) | $ | 69.17 | $ | 74.50 | $ | (5.33 | ) | -7.15 | % | |||||||
| For the Six Months Ended | ||||||||||||||||
| Combined | July 31, | |||||||||||||||
| 2025 | 2024 | Change | %-Incr/Decr | |||||||||||||
| Occupancy | 80.96 | % | 82.58 | % | -1.62 | % | -1.96 | % | ||||||||
| Average Daily Rate (ADR) | $ | 96.95 | $ | 98.78 | $ | (1.83 | ) | -1.85 | % | |||||||
| Revenue Per Available Room (REVPAR) | $ | 78.48 | $ | 81.57 | $ | (3.09 | ) | -3.79 | % | |||||||
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.
We enter transactions with certain related parties from time to time. For information relating to such related party transactions see the following:
| ● | For a discussion of management and licensing agreements with certain related parties, see Note 2 to our Unaudited Condensed Consolidated Financial Statements – “Summary of Significant Policies – Revenue Recognition – Hotel Operations” | |
| ● | For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 6 to our Unaudited Condensed Consolidated Financial Statements – “Mortgage Notes Payable.” | |
| ● | For a discussion of our equity sales and restructuring agreements involving certain related parties, see Note 3 to our Unaudited Condensed Consolidated Financial Statements – “Sale of Ownership Interests in Subsidiaries”. | |
| ● | For a discussion of other related party transactions, see Note 11 to our Unaudited Condensed Consolidated Financial Statements – “Related Party Transactions.” |
RESULTS OF OPERATIONS FOR THE FISCAL TWELVE MONTH TRAILING ENDED JULY 31, 2025 COMPARED TO THE FISCAL TWELVE MONTH TRAILING ENDED JULY 31, 2024.
A summary of total operating results of the Trust for the twelve month trailing periods ended July 31, 2025 and 2024 is as follows:
| FY 2025/2026 | FY 2024/2025 | Change | % Change | |||||||||||||
| Total Revenues | $ | 7,463,789 | $ | 7,691,676 | $ | (227,887 | ) | (3 | %) | |||||||
| Operating Expenses | 8,107,325 | 8,558,603 | (451,278 | ) | (5 | %) | ||||||||||
| Operating Loss | (643,536 | ) | (866,927 | ) | 223,391 | 26 | % | |||||||||
| Interest Income and Other | 7,790 | 74,122 | (66,332 | ) | (89 | %) | ||||||||||
| Interest Expense | (511,257 | ) | (494,913 | ) | (16,344 | ) | (3 | %) | ||||||||
| BW Rewards Guest Voucher Expense | (275,116 | ) | - | (275,116 | ) | 0 | % | |||||||||
| Employee Retention Benefit (ERTC) | - | 701,582 | (701,582 | ) | (100 | %) | ||||||||||
| Sales and Occupancy Taxes | - | - | - | 0 | % | |||||||||||
| Income Tax Benefit | (115 | ) | 100 | (215 | ) | (215 | %) | |||||||||
| Consolidated Net Loss | (1,422,234 | ) | (586,036 | ) | (836,198 | ) | (143 | %) | ||||||||
| 30 |
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 2025 COMPARED TO THE SIX MONTHS ENDED JULY 31, 2024
A summary of total operating results of the Trust for the six months ended July 31, 2025 and 2024 is as follows:
| For the Six Months Ended July 31, | ||||||||||||||||
| 2025 | 2024 | Change | % Change | |||||||||||||
| Total Revenues | $ | 4,004,635 | $ | 4,134,362 | $ | (129,727 | ) | (3 | %) | |||||||
| Operating Expenses | 4,020,939 | 4,249,872 | (228,933 | ) | (5 | %) | ||||||||||
| Operating Income | (16,304 | ) | (115,510 | ) | 99,206 | 86 | % | |||||||||
| Interest Income and Other | 1,500 | 29,979 | (28,479 | ) | (95 | %) | ||||||||||
| Interest Expense | (281,067 | ) | (245,856 | ) | (35,211 | ) | (14 | %) | ||||||||
| BW Rewards Guest Voucher Expense | (66,358 | ) | - | (66,358 | ) | 0 | % | |||||||||
| Income Tax Benefits | 240 | - | 240 | 0 | % | |||||||||||
| Consolidated Net Loss | (361,989 | ) | (331,387 | ) | (30,602 | ) | 9 | % | ||||||||
Trust operations consist of one reportable segment – Hotel Ownership & Management Services. Hotel Ownership Operations derives its revenue from the operation of the Trust’s two hotel properties with an aggregate of 270 hotel suites in Arizona and New Mexico. Management services, provides management services including for the Trust’s two Hotels. As part of our management services, we also provide trademark, licensing, and IBC services.
The Trust has chosen to focus its hotel investments on the southwest region of the United States. The Trust does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided.
REVENUE:
For the six months ended July 31, 2025, we had total revenue of approximately $4.0 million compared to approximately $4.1 million for the six months ended July 31, 2025, a decrease of approximately $0.1 million. In the prior fiscal years ended January 31, 2025, 2024 and 2023, we made significant improvements to our Albuquerque, New Mexico and Tucson, Arizona hotels. During the six months ended July 31, 2025, we had an increase in total revenue, benefitting from prior refurbishments.
Total Consolidated Net Loss for the six months ended July 31, 2025 was approximately $362,000 compared to Total Consolidated Net Loss of approximately $331,000 for the six months ended July 31, 2024, an increase of approximately $31,000. Earnings Per Share based on this Consolidated Net Loss amount were ($0.04), similar to the prior year of ($0.04). Earnings Per Share based on net loss attributable to Controlling Interest were ($0.06), similar to the prior year of ($0.06).
Total Trust Equity decreased to approximately $198,000 at the end of Fiscal Second Quarter 2025, down approximately $1.7 million, from the approximately $1.96 million reported at the end of the first 6 months in the prior fiscal year 2024. Net Loss before non-cash depreciation expense was approximately $142,000 for the six months ended July 31 2025, compared to Net Loss before non-cash depreciation expense of approximately $181,000 for the six months ended July 31, 2024, which is an improvement of approximately $39,000.
| 31 |
We realized a 4% decrease in room revenues during the six months ended July 31, 2025 as room revenues were approximately $3.85 million for the six months ending July 31, 2025 as compared to approximately $4.01 million for the six months ending July 31, 2024. During the balance of Fiscal Year 2025, we expect stable hotel occupancy, and modest improvements in hotel rates.
EXPENSES:
Total expenses net of interest expense was approximately $4.25 million for the six months ended July 31, 2025 reflecting an increase of approximately $0.35 million, or 9%, compared to total expenses net of interest expense of approximately $3.90 million for the six months ended July 31, 2024. The increase was primarily due to an increase in operating expenses related to increased occupancy and revenues at the hotel properties.
Room expenses consisting of payroll and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $1.31 million for the six months ended July 31, 2025 compared to approximately $1.36 million in the prior year six month period for a decrease of approximately $57,000, or 4%. Room expenses decreased as occupancy at the hotels decreased.
Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the six months ended July 31, 2025, food and beverage expenses increased approximately $4,000, or 8%, to approximately $55,000 for the six months ended July 31, 2025, compared to approximately $51,000 for the six months ended July 31, 2024. The increase in cost is consistent with the increase in food and beverage revenue.
General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $0.99 million for the six months ended July 31, 2025, decreased approximately $127,000 from approximately $1.12 million for the six months ended July 31, 2024 primarily due to cost cuts in corporate staffing in support of the hotels and property sales efforts.
Sales and marketing expense decreased approximately $17,000, or 7%, to approximately $233,000 for the six months ended July 31, 2025 from approximately $250,000 for the six months ended July 31, 2024. Increased focus on sales and marketing spend drove the decrease.
Repairs and maintenance expense remained relatively flat at approximately $217,000 for the six months ended July 31, 2025 compared to approximately $215,000 for the six months ended July 31, 2024. Having completed the property improvements at our Tucson, Arizona hotel Management anticipates the improvements which complies with the increasing Best Western standards, will (after the adverse effects of travel restrictions and slowdown), lead to improvement in guest satisfaction and will drive additional revenue growth through increased occupancy and increased rates.
Hospitality expense remained relatively flat at approximately $308,000 for the six months ended July 31, 2025, compared to approximately $309,000 for the six months ended July 31, 2024.
Utility expense decreased approximately $22,000 or 11% from approximately $208,000 reported for the six months ended July 31, 2024 compared to approximately $186,000 for the six months ended July 31, 2025.
| 32 |
Hotel property depreciation expenses increased by approximately $24,000 from approximately $346,000 reported for the six months ended July 31, 2024 compared to approximately $371,000 for the six months ended July 31, 2025. Increased depreciation resulted from additional capital expenditures.
Real estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $37,000, or 10%, to approximately $327,000 reported for the six months ended July 31, 2025 compared with approximately $364,000 for the six months ended July 31, 2024.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2025 COMPARED TO THE THREE MONTHS ENDED JULY 31, 2024
A summary of total operating results of the Trust for the three months ended July 31, 2025 and 2024 is as follows:
| For the Threee Months Ended July 31, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| Total Revenues | $ | 1,798,872 | $ | 1,840,392 | $ | (41,520 | ) | (2 | %) | |||||||
| Operating Expenses | 2,037,572 | 2,126,348 | 88,776 | 4 | % | |||||||||||
| Operating Loss | (238,700 | ) | (285,956 | ) | 47,256 | 17 | % | |||||||||
| Interest Income and Other | 750 | 4,200 | (3,450 | ) | (82 | %) | ||||||||||
| Interest Expense | (129,864 | ) | (128,246 | ) | (1,618 | ) | (1 | %) | ||||||||
| BW Rewards Guest Voucher Expense | (33,205 | ) | - | (33,205 | ) | 0 | % | |||||||||
| Income Tax Benefits | - | - | - | 0 | % | |||||||||||
| Consolidated Net Loss | (401,019 | ) | (410,002 | ) | 8,983 | 2 | % | |||||||||
REVENUE:
For the three months ended July 31, 2025, we had total revenue of approximately $1.79 million compared to approximately $1.84 million for the three months ended July 31, 2024, a decrease of approximately $0.05 million. In the prior fiscal years ended January 31, 2023, 2022 and 2020, we made significant improvements to our Albuquerque, New Mexico and Tucson, Arizona hotels. During the three months ended July 31, 2025, we had an increase in total revenue benefitting from prior refurbishments, and increased internet marketing.
Total Consolidated Net Loss for the three months ended July 31, 2025 was approximately $401,000 compared to approximately $410,000 for the three months ended July 31, 2024, an improvement of approximately $9,000. Earnings Per Share based on this Consolidated Net Loss amount were $0.05, slightly higher than the prior year of $0.04. Earnings Per Share based on net loss attributable to Controlling Interest were $0.04, similar to the prior year similar three month period of $0.04.
Net Loss before non-cash depreciation expense was approximately $213,000 for the three months ended July 31 2025, compared to Net Loss before non-cash depreciation expense of approximately $237,000 for the three months ended July 31, 2024, which is an improvement of approximately $24,000.
We realized a 3% decrease in room revenues during the three months ended July 31, 2025 as room revenues were approximately $1.72 million for the three months ending July 31, 2025 as compared to approximately $1.77 million for the three months ending July 31, 2024. During Fiscal Year 2024, we expect additional improvements in occupancy, modest improvements in rates and steady food and beverage revenues.
EXPENSES:
Total expenses net of interest expense was approximately $2.04 million for the three months ended July 31, 2025 reflecting a decrease of approximately $0.89 million, or 4%, compared to total expenses net of interest expense of approximately $2.13 million for the three months ended July 31, 2024.
Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $647,000 for the three months ended July 31, 2025 compared to approximately $700,000 in the prior year three month period for a decrease of approximately $53,000, or 8%. Room expenses decreased as occupancy at the hotels decreased, and decreased expenses were incurred with the decreased occupancy.
| 33 |
Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the three months ended July 31, 2025, food and beverage expenses decreased approximately $6,000, or 26%, to approximately $29,000 for the three months ended July 31, 2025, compared to approximately $23,000 for the three months ended July 31, 2024.
General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $531,000 for the three months ended July 31, 2025, decreased approximately $12,000 from approximately $519,000 for the three months ended July 31, 2024 primarily due to reduction in corporate staffing in support of the hotels and property sales efforts.
Sales and marketing expense decreased approximately $28,000, or 21%, to approximately $107,000 for the three months ended July 31, 2025 from approximately $135,000 for the three months ended July 31, 2024.
Repairs and maintenance expense remained relatively flat at $110,000 reported for the three months ended July 31, 2024 compared to approximately $108,000 for the three months ended July 31, 2025. Having completed the property improvements at our Tucson, Arizona hotel Management anticipates the improvements which complies with the increasing Best Western standards, will (after the adverse effects of travel restrictions and slowdown), lead to improvement in guest satisfaction and will drive additional revenue growth through increased occupancy and increased rates.
Hospitality expense decreased by approximately $5,000, or 3%, from $154,000 for the three months ended July 31, 2024 to approximately $149,000 for the three months ended July 31, 2025. The decreased was primarily due to COVID-19 reduction of regulations minimizing and reducing food service availability, restricting our complimentary breakfast and social hour offerings.
Utility expense decreased by approximately $10,000 or 9% from approximately $110,000 reported for the three months ended July 31, 2024 compared to approximately $100,000 for the three months ended July 31, 2025.
Hotel property depreciation expenses increased by approximately $15,000 from approximately $173,000 reported for the three months ended July 31, 2024 compared to approximately $188,000 for the three months ended July 31, 2025. Increased depreciation resulted from additional capital expenditures.
Real estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $33,000, or 16%, to approximately $169,000 reported for the three months ended July 31, 2025 compared with approximately $202,000 for the three months ended July 31, 2024.
LIQUIDITY AND CAPITAL RESOURCES
Overview – Hotel Operations & Corporate Overhead
Two principal sources of cash to meet our cash requirements, include monthly management fees from our two hotels and distributions of our share of the Partnership’s cash flow of the Tucson hotel and quarterly distributions from the Albuquerque, New Mexico properties. Additional sources of cash include intercompany loan repayments, potential future real estate hotel refinance or sales, potential increase of affiliate line of credit financing, and potential returns on diversified investments. The Partnership’s principal source of revenue is hotel operations for the hotel property we own in Tucson, Arizona. 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.
Hotel operations were positively affected by improved occupancy and substantially increased room rates at the Hotels in the Fiscal Year 2025, and stable occupancy, rates, and cost controls the First Two Fiscal Quarters of Fiscal 2026, ended July 31, 2025, as the travel industry momentum stabilizes.
| 34 |
With approximately $0.2 million of cash as of July 31, 2025, hotel and management fee income, the availability of three bank lines of credit, approximately $300,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability 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 the next twelve months and beyond, from the issuance date of the these consolidated financial statements. Our management is analyzing other strategic options available to us, including raising additional funds, asset sales, and benefitting from clean energy and/or IBC investments, potential increase of affiliate line of credit financing, and cash flow as our diversification investment matures. However, such transactions may not be available on terms that are favorable to us, or at all.
IHT and InnDependent Boutique Collections Hotels (IBC), agreed to extend the payment schedule on IBC’s note receivable to June 30, 2030, as RRF, the IHT Management Subsidiary, took over IBC Management, as of March 7, 2025, and obtained a five-year option to purchase IBC Hotels, LLC, at cost.
There can be no assurance that we will be successful fully collecting receivables, in refinancing debt, or raising additional or replacement funds, or that these funds may be available on terms that are favorable to us. If we are unable to raise additional or replacement funds, we may be required to sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable.
We anticipate stable leisure travel demand, and limited additional new-build hotel supply in our markets during the current Fiscal Year 2026, and accordingly we anticipate stable revenues. We expect challenges for the remaining Fiscal Year to be the economy, tariffs affecting travel, inflation, and cost control.
Cash provided by operating activities from continuing operations totaled approximately $127,000 during the six months ended July 31, 2025 as compared to net cash used of approximately 504,000 during the six months ended July 31, 2024. Consolidated net loss was approximately $362,000 for the six months ended July 31, 2025 as compared to consolidated net loss for the six months ended July 31, 2024 of approximately $331,000. Explanation of the differences between these fiscal years are explained above in the results of operations of the Trust.
Changes in the adjustments to reconcile net income for the six months ended July 31, 2025 and 2024, respectively, consist primarily of operating lease costs, stock-based compensation, hotel property depreciation, and changes in assets and liabilities. Hotel property non-cash depreciation was approximately $371,000 during the six months ended July 31, 2025 compared to approximately $346,000 during the six months ended July 31, 2024, an increase of $25,000 as the Trust recognized additional depreciation due to capital expenditures.
Changes in assets and liabilities for accounts receivable, prepaid expenses and other assets and accounts payable and accrued expenses totaled approximately $105,000 and ($519,000) for the six months ended July 31, 2025 and 2024, respectively. This significant increase in changes in assets and liabilities for the six months ended July 31, 2025 compared to the six months ended July 31, 2024 was due to the increase in operating liabilities related to ongoing operations.
Net cash used in investing activities totaled approximately $415,000 for the six months ended July 31, 2025 compared to net cash used in investing activities of approximately $287,000 for the six months ended July 31, 2024. The increase in net cash used in activities during the six months ended July 31, 2025 was due primarily due to improvements and additions to the hotel properties.
Net cash provided by (used in) financing activities totaled approximately $402,000 and ($116,000), respectively, for the six months ended July 31, 2025 and 2024. The increase of approximately $518,000 was primarily due to borrowing on Notes Payable – Related Party.
Principal payments on mortgage notes payable for continuing operations was approximately $144,000 and $117,000 during the six months ended July 31, 2025 and 2024, respectively.
Net payments and borrowings on other notes payable was $0 during the six months ended July 31, 2025 and 2024.
| 35 |
Payments on notes payables–related party, netted against borrowings on note payable–related party, was approximately $564,000 and $365,000 of cash provided in financing activities during the six months ended July 31, 2025 and 2024, respectively.
During the six months ended July 31, 2025, our repurchase of treasury stock was $0 compared with approximately $45,000 for the six months ended July 31, 2024.
During the six months ended July 31, 2025, our distributions to non-controlling interest holders was $0 compared with approximately $229,000 for the six months ended July 31, 2024.
We continue to contribute to a Capital Expenditures Fund (the “Fund”) an amount equal to 4% of our Tucson InnSuites Hotel revenues from operation of the Hotel. The Fund is restricted by the mortgage lender for our Tucson property. As of July 31, 2025, and 2024, there were no monies held in these accounts reported on our unaudited condensed consolidated Balance Sheet as “Restricted Cash.” The Fund is intended to be used for capital improvements to the Hotels and refurbishment and replacement of furniture, fixtures and equipment. During the six months ended July 31, 2025 and 2024, the Hotel spent approximately $415,000 and $252,000 respectively, for capital expenditures. The capital expenditures were primarily associated with the property improvements at the Hotel, as required to meet continuing Best Western standards. We consider most of these improvements to be revenue producing. Therefore, these amounts are capitalized and depreciated over their estimated useful lives. For the remaining Fiscal Year 2024 capital expenditures, we plan on spending less on capital improvements as we have completed our property improvements at our Tucson, Arizona hotel and our Albuquerque hotel. Repairs and maintenance are charged to expense as incurred and approximated $308,000 and $309,000 for the six months ended July 31, 2025 and 2024, respectively.
We have minimum debt payments, net of debt discounts, of approximately $673,000 and approximately $1,976,000 due during Fiscal Years 2026 and 2027, respectively. Minimum debt payments due during Fiscal Year 2026 and 2027 include approximately $123,000 and $261,000 of mortgage notes payable, approximately $470,000 of other notes payable which are secured promissory notes outstanding to unrelated third parties, approximately $80,000 of notes payable to banks, and approximately $1,716,000 of notes payable to a related party.
We may seek to negotiate additional credit facilities refinancing one or both hotels, or issue debt instruments. Any debt incurred or issued by us may be secured or unsecured, long-term, medium-term, or short-term, bear interest at a fixed or variable rate and be subject to such other terms as we consider prudent.
COMPETITION IN THE HOTEL INDUSTRY
The hotel industry is highly competitive. Both the Tucson and Albuquerque hotels experienced record high Gross Operating Profit (GOP Profits), in Fiscal Year 2025 (February 1, 2024 to January 31, 2025). Fiscal 2026 is down slightly, but appears relatively stable thus far. Continued competition in corporate, leisure, group, and government business in the markets in which we operate, may affect our ability to maintain room rates, occupancy, and market share. Each of the Hotels faces competition primarily from other mid-market hotels located in its immediate vicinity, but also competes with hotel properties located in other geographic markets, and increasingly from alternative lodging facilities, such as Airbnb. While none of the Hotels’ competitors dominate any of their geographic markets, some of those competitors may have greater marketing and/or financial resources than the Trust.
Hotel property refurbishments have been completed by InnSuites and competitors in both Hotels’ markets, and additional hotel property developments may be built in the future. Such hotel developments could have an adverse effect on the revenue of our Hotels in their respective markets.
The Trust’s hotel investments are located in Arizona and New Mexico. 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. Supply has been relatively steady in those respective markets. Either an increase in supply or a decline in demand could result in increased competition, which could have an adverse effect on occupancy, room rates and revenues of our Hotels in their respective markets. Room revenue was stable or down slightly, at our hotels in the First Fiscal Half of 2026, (February 1, 2025 to July 31, 2025). This is expected to continue for the balance of Fiscal Year 2026, through January 31, 2026.
| 36 |
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. (UniGen), efficient clean energy power generation company; or the March 7, 2025 opportunity to manage and potentially eventually purchase IBC Hotels, LLC, at cost, offering independent hotel reservation systems and services. The Trust may continue to seek further diversification through a merger or reverse merger with a larger non-public entity seeking an NYSE-American public stock market listing.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
As a partial balance to the current hotel industry, the Trust looks to benefit from, and expand, its UniGen clean energy operation diversification investments in the years ahead, and its diversification with IBC. See Note 2 of the unaudited consolidated financial statements for discussions on UniGen and IBC.
In our Annual Report on Form 10-K for the Fiscal Year ended January 31, 2025, filed with the SEC on April 30, 2025, we identified the critical accounting policies that affect our more significant estimates and assumptions used in preparing our condensed consolidated financial statements. We believe that the policies we follow for the valuation of our Hotel properties, which constitute a major part of our assets, are our most critical policies which has not changed in the period ended July 31, 2025. Those policies include methods used to recognize and measure any identified impairment of our Hotel property assets.
Asset Impairment
We believe that the policies we follow for the valuation of our hotel properties, which constitute most of our assets, are our most critical policies. The Financial Accounting Standards Board (“FASB”) has issued authoritative guidance related to the impairment or disposal of long-lived assets, codified in ASC Topic 360-10-35, which we apply to determine when it is necessary to test an asset for recoverability. On an events and circumstances basis, we review the carrying value of our hotel properties. We will record an impairment loss and reduce the carrying value of a property when anticipated undiscounted future cash flows and the current market value of the property do not support it carrying value. In cases where we do not expect to recover the carrying cost of hotel properties held for use, we will reduce the carrying value to the fair value of the hotel, as determined by a current appraisal or other acceptable valuation methods. As of July 31, 2025, our management does not believe that the carrying values of any of our hotel properties are impaired.
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 each case, we believe current market value of each hotel is significantly higher than the depreciated book value. At this time, the Trust is unable to predict when, and if, either of its Hotel properties will be sold. The Trust seeks to sell both hotels over the next 36 months. We believe that each of the assets is available at a price that is reasonable in relation to its current fair market value.
Revenue Recognition
Revenues are primarily derived from the sources below and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities and are generally not significant.
Revenues primarily consist of room rentals, food and beverage sales, management fees, and other miscellaneous revenues from our properties. Revenues are recorded when rooms are occupied and when food and beverage sales are delivered.
Each room night consumed by a guest with a cancelable reservation represents a contract whereby the Trust has a performance obligation to provide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation (i.e., each room night) is met. Such contract is renewed if the guest continues their stay. For room nights consumed by a guest with a non-cancellable reservation, the entire reservation period represents the contract term whereby the Trust has a performance obligation to provide the room night or nights at an agreed upon price. For non-cancellable reservations, the Trust recognizes revenue over the term of the performance period (i.e., the reservation period) as room nights are consumed. For these reservations, the room rate is typically fixed over the reservation period. The Trust uses an output method based on performance completed to date (i.e., room nights consumed) to determine the amount of revenue it recognizes on a daily basis if the length of a non-cancellable reservation exceeds one night since consumption of room nights indicates when services are transferred to the guest. In certain instances, variable consideration may exist with respect to the transaction price, such as discounts, coupons and price concessions made upon guest checkout.
| 37 |
In evaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such as free Wi-Fi, breakfast, access to on-site exercise facilities and parking), as the other obligations are not distinct and separable because the guest cannot benefit from the additional amenities without the consumed room night. The Trust’s obligation to provide the additional items or services is not separately identifiable from the fundamental contractual obligation (i.e., providing the room and its contents). The Trust has no performance obligations once a guest’s stay is complete.
We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in revenues. 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.
COMPLIANCE WITH CONTINUED LISTING STANDARDS OF NYSE AMERICAN
The Trust’s Management received communication from the NYSE-American on August 29, 2022, indicating IHT is fully compliant with all of the Continued Listing Standards Equity Requirements set forth in Part 10 of the NYSE American Company Guide, of the NYSE-American.
NON-GAAP FINANCIAL MEASURES
The following non-GAAP presentations of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and funds from operations (“FFO”) are made to assist our investors in evaluating our operating performance.
Adjusted EBITDA is defined as earnings before interest expense, amortization of loan costs, interest income, income taxes, depreciation and amortization, and non-controlling interests in the Trust. We present Adjusted EBITDA because we believe these measurements (a) more accurately reflect the ongoing performance of our hotel real estate assets and other investments, (b) provide more useful information to investors as indicators of our ability to meet our future debt payments and working capital requirements, and (c) provide an overall evaluation of our financial condition. Adjusted EBITDA as calculated by us may not be comparable to Adjusted EBITDA reported by other companies that do not define Adjusted EBITDA exactly as we define the term. 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.
A reconciliation of net income (loss) attributable to controlling interests to Adjusted EBITDA for the six and three months ended July 31, 2025 and 2024 is approximately as follows:
For the Six Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss income attributable to controlling interests | $ | (512,000 | ) | $ | (527,000 | ) | ||
| Add back: | ||||||||
| Depreciation | 371,000 | 346,000 | ||||||
| Interest expense | 281,000 | 246,000 | ||||||
| Less: | ||||||||
| Interest Income | - | (30,000 | ) | |||||
| Adjusted EBITDA | $ | 140,000 | $ | 35,000 | ||||
For the Three Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to controlling interests | $ | (391,000 | ) | $ | (371,000 | ) | ||
| Add back: | ||||||||
| Depreciation | 188,000 | 173,000 | ||||||
| Interest expense | 130,000 | 128,000 | ||||||
| Less: | ||||||||
| Interest Income | - | (4,000 | ) | |||||
| Adjusted EBITDA | $ | (73,000 | ) | $ | (74,000 | ) | ||
| 38 |
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. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. The Trust is an unincorporated Ohio business investment, (real estate investment trust); however, the Trust is not a real estate investment trust for federal taxation purposes. Management uses this measurement to compare itself to REITs with similar depreciable assets. We consider FFO to be an appropriate measure of our ongoing normalized operating performance. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other companies that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO does not represent cash generated from operating activities as determined by 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, nor is it indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements.
An approximate reconciliation of results attributable to controlling interests to FFO for the six and three months ended July 31, 2025 and 2024:
For the Six Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to controlling interests | $ | (512,000 | ) | $ | (527,000 | ) | ||
| Add back: | ||||||||
| Depreciation | 371,000 | 346,000 | ||||||
| Non-controlling interest | 150,000 | 196,000 | ||||||
| FFO | $ | 9,000 | $ | 15,000 | ||||
For the Three Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to controlling interests | $ | (391,000 | ) | $ | (371,000 | ) | ||
| Add back: | ||||||||
| Depreciation | 371,000 | 346,000 | ||||||
| Non-controlling interest | (10,000 | ) | (39,000 | ) | ||||
| FFO | $ | (30,000 | ) | $ | (64,000 | ) | ||
FUTURE POSITIONING
In viewing economic cycles and hotel industry cycles, the Board of Trustees determined that it was appropriate to continue to seek buyers for our two remaining Hotel properties. 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.
| Hotel Property | Book Value | Mortgage Balance | Estimated Market Asking Price | |||||||||
| Albuquerque | $ | 907,122 | $ | 1,135,926 | 9,500,000 | |||||||
| Tucson Oracle | 5,926,945 | 7,764,370 | 18,500,000 | |||||||||
| $ | 6,834,067 | $ | 8,900,296 | $ | 28,000,000 | |||||||
The “Estimated Market Asking Price” is the amount at which we believe we may be able to 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 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. We believe that each of the assets, the Tucson and Albuquerque hotels, have an estimated market asking price that is reasonable in relation to its current fair market value. We plan to sell our remaining two Hotel properties within 36 months. We can provide no assurance that we will be able to sell either or both of the Hotel properties on terms favorable to us or within our expected time frame, or at all.
Although believed feasible, we may be unable to realize the asking price for the individual Hotel properties or to sell and/or refinance one or both. However, we believe that the asking price values are reasonable based on current local hotel market conditions, comparable sales, and anticipated continued trends 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.
| 39 |
Our long-term strategic plan is to obtain the full benefit of our real estate equity, to benefit from our UniGen Power, Inc., (UniGen) clean energy operation diversified investment, to re-invigorate and benefit from IBC Hotels, and to pursue a merger with another company, likely a private larger entity that seeks to go public by reverse merger, to list on the NYSE AMERICAN Exchange.
SHARE REPURCHASE PROGRAM
For information on the Trust’s Share Repurchase Program, see Part II, Item 5. “Market for the Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities.” of our most recent 10-K Annual Report filed on April 30, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned or controlled subsidiaries that are not included in our consolidated financial statements.
SEASONALITY
The Hotels’ operations historically have been somewhat seasonal. The Tucson Arizona Hotel historically experiences the highest occupancy in the first Fiscal Quarter (the winter high season) and, to a lesser extent, the fourth Fiscal Quarter. The second Fiscal Quarter (summer low season) historically tends to be the lowest occupancy period at this Arizona Hotel. This seasonality pattern can be expected to cause fluctuations in the Trust’s quarterly revenues. The Hotel located in Albuquerque, New Mexico historically experiences its most profitable periods during the second and third Fiscal Quarters (the summer high season), providing some 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 travel disruptions, labor force shortages and cash flow issues. Further, if an adverse event such as an actual or threatened virus pandemic, terrorist attack, international conflict, data breach, regional economic downturn or poor weather should occur at either of its two hotels, the adverse impact to the Trust’s revenues and profit could be significant.
INFLATION
We rely on the performance of the Hotels and InnSuites ability to increase revenue to keep pace with inflation. Operators of hotels in general, based on supply and demand, and InnSuites in particular, can change and do change room rates often and quickly, but going forward, competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2025, ended January 31, 2025, InnSuites did generally experience increases in rates to offset the inflationary increase in labor and other expenses. During the current Fiscal 2026, rates are generally stable.
| 40 |
INVESTMENT IN UNIGEN POWER, INC.
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. The initial investment was made December 16, 2019, with positive progress to date despite the virus, setbacks, international vendor travel disruptions, cost overruns, and delays. The investment includes convertible bonds, stocks, and warrants to purchase 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. There is no Investment Commitment to UniGen requiring any restriction of cash.
The market for the innovative UniGen product in development is strong. The total market demand for electricity is projected to double in the U.S. over the next five years due to sharply increased demand from data centers, electric vehicles, and projected Artificial Intelligence usage.
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% ($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. UniGen is delinquent on principal and on quarterly interest payments, and is currently seeking additional investors, including potential future investment by IHT.
The Trust has purchased in addition approximately 575,000 shares of UniGen stock.
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, if the expiration dates are extended as part of the current capital raising, 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.
The total of all stock ownership upon conversion of the debenture and exercise of warrants could amount to up to approximately 15-20% of fully diluted UniGen equity.
On the Trust’s balance sheet, the investment of the $1,668,750 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 $668,750 of UniGen Common Stock (575,000 shares), at cost. The value of the premium related to the fair value of the warrant accretes over the life of the debentures.
Privately held UniGen Power, Inc. (UniGen) is developing a patented high profit potential (high risk), new efficient clean energy generation innovation. The investment is valued at fair value (level 3), as defined in Note 2 of the Consolidated Financial Statements. There is no Investment Commitment to UniGen requiring any restriction of cash.
Engineering work is 61% complete, according to UniGen, on the prototype. UniGen is currently concentrating on its current round of capital raising. IHT may participate in an upcoming round of capital raising.
UniGen is a high risk investment offering high potential investment return if and when successful.
Based on a 96 core “super computer” simulated test together with advanced software, UniGen has confirmed that the UPI 1000TA engine with the addition of recent technological advancements, is approximately 33% more fuel efficient than first estimated and will emit only approximately 25% of the maximum admissions allowed by CARB, the strictest of the regulatory standards issued by the state of California. Recent projections of demand for electricity including data centers, electric vehicles and artificial intelligence indicates the market demand for electricity over the next five years in the U.S. may double.
The UniGen design is to produce generators fueled not only with abundant relatively clean natural gas but also with other even cleaner fuels such as ethanol and hydrogen (that emits only water).
James Wirth (IHT President) and Marc Berg (IHT Executive Vice President) both lack significant UniGen control. They have two of the five UniGen Board of Directors seats or 40% and were elected in December 2019 to serve on the board of UniGen to monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.
The Trust has valued UniGen investment as a level 3 fair value measurement, for the following reasons: The investment does not qualify for level 1 since there are no identical actively traded instruments or level 2 identical or similar unobservable markets.
| 41 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based on this evaluation, our Chief Executive Officer (CEO), and our Chief Financial Officer (CFO), concluded that our disclosure controls and procedures were fully effective as of July 31, 2025.
Our management, including our CEO and CFO, do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of the Trust’s Chief Executive Officer and Chief Financial Officer and effected by the Trust’s Board of Trustees, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Assessment of Internal Control over Financial Reporting
Our management assessed the effectiveness of our internal control over financial reporting as of January 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on management’s assessment, management concluded our internal control over financial reporting was fully effective as of July 31, 2025.
Management’s Remediation Initiatives
In an effort to remediate past deficiencies and enhance the Trust’s internal control over financial reporting, the Trust previously increased its technical accounting expertise through an increasingly seasoned Chief Financial Officer, and in Fiscal Years 2023/2024 promoting its Corporate Controller, and employing one or more full-time Senior Staff Accountants to assist with the Trust’s technical accounting and internal control issues. The CFO has extensive public company reporting experience, to further assist with the Trust’s technical accounting and internal controls.
We have taken several appropriate and reasonable additional steps, as outlined above, to make the necessary improvements to our Accounting staff and internal control over financial reporting, which resulted in management providing the support previously needed with the additional hiring and training of sufficient personnel with appropriate training and expertise in accounting principles generally accepted in the United States. This additional staffing and training has allowed us to make the necessary improvements, including:
| ● | Continuing to improve the control environment through (i) being staffed with sufficient number of personnel to address segregation of duties issues, controls, and to perform control monitoring activities, (ii) increasing the level of GAAP knowledge by retaining additional technical accountants, (iii) implementing formal process to account for non-standard transactions, and (iv) implementing and formalizing management oversight of financial reporting at regular intervals; | |
| ● | Continuing to update the documentation of our internal control processes, including implementing formal risk assessment processes and entity level controls; | |
| ● | Implementing control activities that address relevant risks and assure that all transactions are subject to such control activities; Ensure systems that impact financial information and disclosures have effective information technology controls; | |
| ● | Implementing plan to increase oversight and review of ad hoc spreadsheets while also working to reduce their use; | |
| ● | Further enhancing the supervisory procedures to include additional levels of analysis and quality control reviews within the accounting and financial reporting functions; | |
| ● | IHT previously strengthened the position of Chief Financial Officer (CFO), to assist with the Trust’s internal controls oversight; and
| |
| ● | IHT previously filled the position of Controller, which has further assisted with the Trust’s internal controls oversight, and process accounting. |
We believe that the remediation measures described above have and will continue to strengthen our internal control over financial reporting and remediate any material weaknesses. These remediation efforts were implemented throughout Fiscal Year 2025, and mid-year Fiscal 2026. Additional strengthening did take place in the balance of the current Fiscal Year 2025, as well as the current Fiscal Year 2026.
Our management believes that our financial statements included in this Quarterly Report on Form 10-Q for the three months ended July 31, 2025 fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented and that this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report.
Changes in Internal Control over Financial Reporting
There were continued positive changes in our internal control over financial reporting during the three months ended July 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. With the several new additions aforementioned above, these new additions should assist with the Trust’s stability, technical accounting, and internal control issues.
| 42 |
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Risks Relating to COVID
COVID-19 had a material detrimental impact on our business, financial results and liquidity, in Fiscal Year 2021, ended January 31, 2021. Its consequences had dramatically reduced travel and demand for hotel rooms, in Fiscal Year 2021. We believe that lodging demand and revenue level have now significantly recovered.
Risks Relating to Tariffs
Uncertainty regarding tariffs present in the current economy exist. Given time, it is anticipated that tariff issues will be resolved and governments will negotiate and lessen the impact imposed by such Tariffs. Over time, this should allow travel to resume to normal levels.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Holders of the Trust’s Shares of Beneficial Interest are entitled to receive dividends when and if declared by the Board of Trustees of the Trust out of funds legally available. The holders of Shares of Beneficial Interest, upon any liquidation, dissolution or winding-down of the Trust, are entitled to share ratably in any assets remaining after payment in full of all liabilities of the Trust. The Shares of Beneficial Interest possess ordinary voting rights, each share entitling the holder thereof to one vote. Holders of Shares of Beneficial Interest do not have cumulative voting rights in the election of Trustees and do not have preemptive rights.
For the six months ended July 31, 2025 and 2024, the Trust repurchased 0 and 28,337 Shares of Beneficial Interest at an average price of $0.00 and $1.59 per share, respectively. The average price paid includes brokerage commissions. The Trust intends to continue from time to time, repurchasing Shares of Beneficial Interest in compliance with applicable legal and NYSE AMERICAN requirements. The Trust’s management believes the Trust share price does not fully recognize the Trust’s full value and/or full potential, due to depreciated book values significantly below market value, continued strengthening of hotel operations and cost controls, with potential additional room rate increases and occupancy increases, the substantial potential of the UniGen efficient clean energy investment, and the profit potential of, and redevelopment of IBC Hotels for independent hotels, including its five-year option to purchase at cost, if successful. During the three months ended July 31, 2025, the Trust acquired 0 Shares of Beneficial Interest in open market transactions. During Fiscal Year 2025 (February 1, 2024 to January 31, 2025), the Trust repurchased 265,087 IHT Shares at an average price of $1.72 per share.
| 43 |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| Exhibit No. | Exhibit | |
| 31.1 | Section 302 Certification by Chief Executive Officer | |
| 31.2 | Section 302 Certification by Chief Financial Officer | |
| 32.1 * | Section 906 Certification of Principal Executive Officer and Principal Financial Officer | |
| 101 | Inline XBRL Exhibits | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Schema Document | |
| 101.CAL | Inline XBRL Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Labels Linkbase Document | |
| 101.PRE | Inline XBRL Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
+ Management contract or compensation plan or arrangement.
* Furnished, note filed.
| 44 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INNSUITES HOSPITALITY TRUST | |
| Date: September 12, 2025 | /s/ James F. Wirth |
| James F. Wirth | |
| Chairman and Chief Executive Officer | |
| (Principal Executive Officer) | |
| Date: September 12, 2025 | /s/ Sylvin R. Lange |
| Sylvin R. Lange | |
Sylvin Lange, Chief Financial Officer (Principal Financial and Accounting Officer) |
| 45 |
