INNSUITES HOSPITALITY TRUST

Previous wording

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.

Current wording

Our expenses consist primarily of labor, property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees, depreciation of the Hotels and hotel operating expenses. Hotel operating expenses consist primarily of payroll, guest and maintenance supplies, marketing, and utilities expenses. Under the terms of its Partnership Agreement, the Partnership is required to reimburse us for all such expenses. Accordingly, 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.

Previous wording

For the First Fiscal Quarter three months ended April 30, 2024, we had total revenue of approximately $2.29 million compared to approximately $2.21 million for the three months ended April 30, 2023, an increase of approximately $0.08 million. In the prior fiscal years ended January 31, 2024, 2020 and 2019, we made significant improvements to our Albuquerque, New Mexico and Tucson, Arizona hotels. During the three months ended April 30, 2024, we had an increase in total revenue resulting from the recovery of demand, and benefitting from prior refurbishments.

Current wording

For the six months ended July 31, 2024, we had total revenue of approximately $4.01 million compared to approximately $3.65 million for the six months ended July 31, 2024, an increase of approximately $0.1 million. In the prior fiscal years ended January 31, 2024, 2020 and 2019, we made significant improvements to our Albuquerque, New Mexico and Tucson, Arizona hotels. During the six months ended July 31, 2024, we had an increase in total revenue resulting from the recovery of demand, and benefitting from prior refurbishments.

Previous wording

Total Trust Equity decreased to $2,563,397 at the end of Fiscal First Quarter 2024, down approximately $1.4 million, from the $4,017,911 reported at the end of the prior Fiscal First Quarter 2023. Net Income before non-cash depreciation expense was $24,492 for the Fiscal First Quarter ended April 30, 2024, compared to $404,786 for the Fiscal First Quarter ended April 30, 2023, which is a decrease of approximately $380,000.

Current wording

Total Trust Equity decreased to approximately $1,959,000 at the end of Fiscal Second Quarter 2024, down approximately $1.6 million, from the approximately $3,574,000 reported at the end of the first 6 months in the prior fiscal year 2023. Net Loss before non-cash depreciation expense was approximately $181,000 for the six months ended July 31 2024, compared to Net Income before non-cash depreciation expense of approximately $580,000 for the six months ended July 31, 2023, which is an decrease of approximately $762,000.

Previous wording

Sales and marketing expense increased approximately $18,000, or 19%, to approximately $116,000 for the three months ended April 30, 2024 from approximately $97,000 for the three months ended April 30, 2023. Increased focus on sales and marketing due to the rebound in hotel occupancy drove the increase.

Current wording

Sales and marketing expense increased approximately $52,000, or 26%, to approximately $250,000 for the six months ended July 31, 2024 from approximately $198,000 for the six months ended July 31, 2023. Increased focus on sales and marketing due to the rebound in hotel occupancy drove the increase.

Previous wording

Total Consolidated Net Income for the three months ended April 30, 2024 was approximately $87,000 which is an increase of approximately $379,000 compared to the same prior Fiscal Quarter for the same period of approximately $465,000. Earnings Per Share based on this Consolidated Net Income amount were $0.01, down $0.04 from the prior year of $0.05. Loss Per Share based on net loss attributable to Controlling Interest was $0.02, down from the prior year similar three month period of $0.03.

Current wording

Total Consolidated Net Loss for the three months ended July 31, 2024 was approximately $410,000 compared to Total Consolidated Net Income of approximately $76,000 for the three months ended July 31, 2023, a decrease of approximately $486,000. Earnings Per Share based on this Consolidated Net Loss amount were $0.04, down $0.04 from the prior year of $0.00. Earnings Per Share based on net loss attributable to Controlling Interest was $0.04, down from the prior year similar three month period of $0.00.

Previous wording

We realized a 3% increase in room revenues during the three months ended April 30, 2024 as room revenues were approximately $2.24 million for the three months ending April 30, 2023 as compared to approximately $2.18 million for the three months ending April 30, 2022. Due to increased demand as the hospitality and travel industry recovers, food and beverage revenue increased 29% to approximately $23,000 for the three months ending April 30, 2024 as compared to approximately $18,000 during the three months ending April 30, 2023, an increase of approximately $5,000. During Fiscal Year 2025, we expect additional modest improvements in occupancy, modest improvements in rates and steady food and beverage revenues.

Current wording

We realized a 5% increase in room revenues during the three months ended July 31, 2024 as room revenues were approximately $1.77 million for the three months ending July 31, 2024 as compared to approximately $1.69 million for the three months ending July 31, 2023. During Fiscal Year 2024, we expect additional improvements in occupancy, modest improvements in rates and steady food and beverage revenues.

Previous wording

Total expenses net of interest expense was approximately $2.1 million for the three months ended April 30, 2024 reflecting an increase of approximately $0.1 million, or 5%, compared to total expenses net of interest expense of approximately $2.0 million for the three months ended April 30, 2023.

Current wording

Total expenses net of interest expense was approximately $2.13 million for the three months ended July 31, 2024 reflecting a increase of approximately $0.26 million, or 14%, compared to total expenses net of interest expense of approximately $1.87 million for the three months ended July 31, 2023.

Previous wording

Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $665,000 for the three months ended April 30, 2024 compared to approximately $630,000 in the prior year three month period for an increase of approximately $35,000, or 5%. Room expenses increased as occupancy at the hotels increased, and increased expenses were incurred with the increased occupancy.

Current wording

Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $700,000 for the three months ended July 31, 2024 compared to approximately $631,000 in the prior year three month period for an increase of approximately $69,000, or 11%. Room expenses increased as occupancy at the hotels increased, and increased expenses were incurred with the increased occupancy.

Previous wording

Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the three months ended April 30, 2024, food and beverage expenses remained relatively flat at $28,000 for the three months ended April 30, 2024, compared to approximately $30,000 for the three months ended April 30, 2023. There were several cost savings initiatives to offset rising food and beverage purchasing costs.

Current wording

Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the three months ended July 31, 2024, food and beverage expenses decreased approximately $22,000, or 49%, to approximately $23,000 for the three months ended July 31, 2024, compared to approximately $45,000 for the three months ended July 31, 2023.

Previous wording

General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $606,000 for the three months ended April 30, 2024, decreased approximately $14,000 from approximately $620,000 for the three months ended April 30, 2023 primarily due to cost savings efforts in corporate overhead costs.

Current wording

General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $519,000 for the three months ended July 31, 2024, decreased approximately $85,000 from approximately $604,000 for the three months ended July 31, 2023 primarily due to cuts charges in corporate staffing in support of the hotels and property sales efforts.

Previous wording

Repairs and maintenance expense decreased by approximately $10,000, or 9%, from approximately $116,000 reported for the three months ended April 30, 2023 compared to approximately $106,000 for the three months ended April 30, 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.

Current wording

Repairs and maintenance expense increased from approximately $95,000 reported for the three months ended July 31, 2023 compared to approximately $110,000 for the three 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.

Previous wording

Hospitality expenses, which includes the cost associated with our complimentary hot breakfast, increased by approximately $16,000, or 12%, from $139,000 for the three months ended April 30, 2023 to approximately $155,000 for the three months ended April 30, 2024. The increase was primarily due to COVID-19 regulations minimizing and once again increasing food service availability, expanding our complimentary breakfast and social hour offerings.

Current wording

Hospitality expense increased by approximately $43,000, or 39%, from $111,000 for the three months ended July 31, 2023 to approximately $154,000 for the three months ended July 31, 2024. The increase was primarily due to COVID-19 reduction of regulations minimizing and reducing food service availability, restricting our complimentary breakfast and social hour offerings.

Previous wording

Hotel property non-cash depreciation expenses increased by approximately $5,000 from approximately $168,000 reported for the three months ended April 30, 2023 compared to approximately $173,000 for the three months ended April 30, 2024.

Current wording

Hotel property depreciation expenses increased by approximately $6,000 from approximately $167,000 reported for the three months ended July 31, 2023 compared to approximately $173,000 for the three months ended July 31, 2024. Increased depreciation resulted from additional capital expenditures.

Previous wording

Real estate and personal property taxes, Insurance and Ground Rent expenses increased approximately $48,000, or 42%, to approximately $173,000 reported for the three months ended April 30, 2024 compared with approximately $163,000 for the three months ended April 30, 2023. Increased real estate and property taxes, insurance and ground rent expense resulted from changes in insurance policies, along with decreased personal property valuations.

Current wording

Real estate and personal property taxes, Insurance and Ground Rent expenses increased approximately $200,000, or 100%, to approximately $202,000 reported for the three months ended July 31, 2024 compared with approximately $2,000 for the three months ended July 31, 2023 due to adjustments in our operating lease accounts.

Previous wording

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 sales, and potential returns on diversified investments. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns 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 including repayment of intercompany loan from Tucson.

Current wording

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 potential intercompany loan repayments, potential future real estate hotel sales, and potential returns on diversified investments. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns 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 including repayment of intercompany loan from Tucson.

Previous wording

Hotel operations were positively affected by improved occupancy and substantially increased room rates at the Hotels in the Fiscal Year 2024, and the First Fiscal Quarter of Fiscal 2025, ended April 30, 2024, as the travel industry continued to rebound.

Current wording

Hotel operations were positively affected by improved occupancy and substantially increased room rates at the Hotels in the Fiscal Year 2024, and the First Two Fiscal Quarters of Fiscal 2025, ended July 31, 2024, as the travel industry continued to rebound.

Previous wording

We anticipate strong leisure travel demand, and limited additional new-build hotel supply in our markets during the current Fiscal Year 2025, and accordingly we anticipate a continued increase of revenues and operating margins. We expect challenges for the remaining Fiscal Year to be the economy, inflation, and cost control. Travel, leisure, corporate, group, and government business continued to grow and may further increase room rates while maintaining and/or building market share in Fiscal Year 2025.

Current wording

We anticipate steady leisure travel demand, and limited additional new-build hotel supply in our markets during the current Fiscal Year 2025, and accordingly we anticipate a continued increase of revenues. We expect challenges for the remaining Fiscal Year to be the economy, inflation, and cost control. Travel, leisure, corporate, group, and government business continued to grow and may further increase room rates while maintaining and/or building market share in Fiscal Year 2025.

Previous wording

Cash used in operating activities from continuing operations totaled approximately $459,000 during the three months ended April 30, 2024 as compared to net cash provided of approximately $37,000 during the three months ended April 30, 2023. Consolidated net income was approximately $87,000 for the three months ended April 30, 2024 as compared to consolidated net income for the three months ended April 30, 2023 of approximately $465,000. Explanation of the differences between these fiscal years are explained above in the results of operations of the Trust.

Current wording

Cash used in operating activities from continuing operations totaled approximately $504,000 during the six months ended July 31, 2024 as compared to net cash provided of approximately $1,439,000 during the six months ended July 31, 2023. Consolidated net loss was approximately $331,000 for the six months ended July 31, 2024 as compared to consolidated net income for the six months ended July 31, 2023 of approximately $532,000. Explanation of the differences between these fiscal years are explained above in the results of operations of the Trust.

Previous wording

Changes in the adjustments to reconcile net income for the three months ended April 30, 2024 and 2023, respectively, consist primarily of operating lease costs, stock-based compensation, hotel property depreciation, and changes in assets and liabilities. Hotel property depreciation was approximately $173,000 during the three months ended April 30, 2024 compared to approximately $168,000 during the three months ended April 30, 2023, an inrease of $5,000 as the Trust recognized less depreciation as capitalized fixed assets became fully depreciated.

Current wording

Changes in the adjustments to reconcile net income for the six months ended July 31, 2024 and 2023, respectively, consist primarily of operating lease costs, stock-based compensation, hotel property depreciation, and changes in assets and liabilities. Hotel property depreciation was approximately $346,000 during the six months ended July 31, 2024 compared to approximately $335,000 during the six months ended July 31, 2023, an increase of $11,000 as the Trust recognized additional depreciation due to capital expenditures.

Previous wording

Changes in assets and liabilities for accounts receivable, prepaid expenses and other assets and accounts payable and accrued expenses totaled approximately $719,000 and $265,000 for the three months ended April 30, 2024 and 2023, respectively. This significant decrease in changes in assets and liabilities for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was due to the decrease in operating liabilities related to ongoing operations.

Current wording

Changes in assets and liabilities for accounts receivable, prepaid expenses and other assets and accounts payable and accrued expenses totaled approximately ($519,000) and ($574,000) for the six months ended July 31, 2024 and 2023, respectively. This significant decrease in changes in assets and liabilities for the six months ended July 31, 2024 compared to the six months ended July 31, 2023 was due to the decrease in operating liabilities related to ongoing operations.

Previous wording

Net cash used in investing activities totaled approximately $186,000 for the three months ended April 30, 2024 compared to net cash used in investing activities of approximately $123,000 for the three months ended April 30, 2023. The decrease in net cash used in activities during the three months ended April 30, 2024 was due primarily due to capital improvements in the hotels.

Current wording

Net cash used in investing activities totaled approximately $287,000 for the six months ended July 31, 2024 compared to net cash used in investing activities of approximately $277,000 for the six months ended July 31, 2023. The increase in net cash used in activities during the six months ended July 31, 2024 was due primarily due to improvements and additions to the hotel properties.

Previous wording

Net cash used in financing activities totaled approximately ($243,000) and ($321,000), respectively, for the three months ended April 30, 2024 and 2023. The decrease of approximately $78,000 was primarily due to repayments on the Rare Earth Note Payable – Related Party, and Other Notes Payable.

Current wording

Net cash used in financing activities totaled approximately ($116,000) and ($874,000), respectively, for the six months ended July 31, 2024 and 2023. The decrease of approximately ($758,000) was primarily due to borrowing on Notes Payable – Related Party.

Previous wording

Principal payments on mortgage notes payable for continuing operations was approximately $65,000 and $44,000 during the three months ended April 30, 2024 and 2023, respectively. Net payments and borrowings on other notes payable was approximately $0 and approximately ($100,000) during the three months ended April 30, 2024 and 2023, respectively.

Current wording

Principal payments on mortgage notes payable for continuing operations was approximately $117,000 and $112,000 during the six months ended July 31, 2024 and 2023, respectively.

Previous wording

Payments on notes payable–related party, was approximately $0 and ($27,000) of cash used in financing activities during the three months ended April 30, 2024 and 2023, respectively.

Current wording

Payments on notes payables–related party, netted against borrowings on note payable–related party, was approximately $365,000 and ($100,000) of cash used in financing activities during the six months ended July 31, 2024 and 2023, respectively.

Previous wording

During the three months ended April 30, 2024, our distributions to non-controlling interest holders was approximately $153,000 compared with approximately $149,000 for the three months ended April 30, 2023. We anticipate a reduction in distributions to non-controlling interest holders for the balance of the current Fiscal Year 2025.

Current wording

During the six months ended July 31, 2024, our distributions to non-controlling interest holders was approximately $229,000 compared with approximately $346,000 for the six months ended July 31, 2023.

Previous wording

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 April 30, 2024, and 2023, 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 three months ended April 30, 2024 and 2023, the Hotel spent approximately $151,000 and $108,000 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, both of which required significant amounts of capital improvements in prior periods. Repairs and maintenance were charged to expense as incurred and approximated $106,000 and $116,000 for the three months ended April 30, 2024 and 2023, respectively.

Current wording

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, 2024, and 2023, 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, 2024 and 2023, the Hotel spent approximately $252,000 and $247,000 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, both of which required significant amounts of capital improvements in prior periods. Repairs and maintenance were charged to expense as incurred and approximated $215,000 and $211,000 for the six months ended July 31, 2024 and 2023, respectively.

Previous wording

We have minimum debt payments, net of debt discounts, of approximately $646,000 and approximately $248,000 due during Fiscal Years 2025 and 2026, respectively. Minimum debt payments due during Fiscal Year 2025 and 2026 include approximately $176,000 and $248,000 of mortgage notes payable, and approximately $470,000 of other notes payable, which are secured promissory notes outstanding to unrelated third parties.

Current wording

We have minimum debt payments, net of debt discounts, of approximately $952,000 and approximately $248,000 due during Fiscal Years 2025 and 2026, respectively. Minimum debt payments due during Fiscal Year 2025 and 2026 include approximately $117,000 and $248,000 of mortgage notes payable, and approximately $470,000 of other notes payable, which are secured promissory notes outstanding to unrelated third parties.

Previous wording

The hotel industry is highly competitive. Both the Tucson and Albuquerque hotels experienced record high Gross Operating Profit (GOP Profits), in Fiscal Year 2024 (February 1, 2023 to January 31, 2024), substantially higher than both Covid and Pre-Covid GOP Profits. This gross operating profit is growing even more due to stringent cost control measures. The drastic impact of COVID-19 to the world economy and hospitality industry resulted in severely reduced occupancy and significant reduction in room rates, both of which have now fully recovered. Continued competition in corporate, leisure, group, and government business in the markets in which we operate, may affect our ability to maintain room rates and maintain market share. 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.

Current wording

The hotel industry is highly competitive. Both the Tucson and Albuquerque hotels experienced record high Gross Operating Profit (GOP Profits), in Fiscal Year 2024 (February 1, 2023 to January 31, 2024), substantially higher than both Covid and Pre-Covid GOP Profits. This gross operating profit is growing even more due to cost control measures. The drastic impact of COVID-19 to the world economy and hospitality industry resulted in severely reduced occupancy and significant reduction in room rates, both of which have now fully recovered. Continued competition in corporate, leisure, group, and government business in the markets in which we operate, may affect our ability to maintain room rates and maintain market share. 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.

Previous wording

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 during the next 18 months. 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. The continued recovery has and is benefiting our hotels in the First Fiscal Quarter of 2025, (February 1, 2024 to April 30, 2024). This improvement and continued upward trend is expected to continue for the balance of Fiscal Year 2025, through January 31, 2025.

Current wording

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 during the next 18 months. 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. The continued recovery has and is benefiting our hotels in the First Two Fiscal Quarters of 2025, February 1, 2024 to July 31, 2024. This improvement and continued upward trend is expected to continue for the balance of Fiscal Year 2025, through January 31, 2025.

Previous wording

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. We did not recognize a hotel properties impairment loss for the three months ended April 30, 2024 or 2023. As of April 30, 2024, our management does not believe that the carrying values of any of our hotel properties are impaired.

Current wording

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. We did not recognize a hotel properties impairment loss for the six months ended July 31, 2024 or 2023. As of July 31, 2024, our management does not believe that the carrying values of any of our hotel properties are impaired.

Previous wording

Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market 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 12-36 months. We believe that each of the assets is available at a price that is reasonable in relation to its current fair market value. The plan is to work to sell the remaining two hotel properties over the next 12-36 months, and if needed beyond.

Current wording

Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market 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.

Previous wording

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.

Current wording

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 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.

Previous wording

A reconciliation of net income (loss) attributable to controlling interests to Adjusted EBITDA for the three and three months ended April 30, 2024 and 2023 is approximately as follows:

Current wording

Results attributable to controlling interests to Adjusted EBITDA for the six and three months ended July 31, 2024 and 2023 is approximately as follows:

Previous wording

An approximate reconciliation of net income (loss) attributable to controlling interests to FFO for the three and three months ended April 30, 2024 and 2023:

Current wording

An approximate reconciliation of results attributable to controlling interests to FFO for the six and three months ended July 31, 2024 and 2023:

Previous wording

In viewing the hotel industry cycles, including the recent disruption of travel and hospitality, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for our two remaining Hotel properties. We continue to make our Tucson Hotel and Albuquerque Hotel available for sale at market value, on the website www.suitehotelsrealty.com.

Current wording

In viewing the hotel industry cycles, the Board of Trustees determined that it was appropriate to continue to actively 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.

Previous wording

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 12-36 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.

Current wording

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.

Previous wording

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 8, 2024. The stock and unit Repurchase Program was highly successful during Fiscal Year 2024 (February 1, 2023 to January 31, 2024). We plan to continue the stock and unit buy backs in the current Fiscal Year 2025.

Current wording

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 8, 2024.

Previous wording

We rely entirely on the performance of the Hotels and InnSuites ability to increase revenue to keep pace with inflation. Operators of hotels in general, and InnSuites in particular, can change and do change room rates often and quickly, but competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2024, ended January 31, 2024, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses. During the current Fiscal 2025, rates continue to increase although at a slower pace than the prior Fiscal Year.

Current wording

We rely entirely on the performance of the Hotels and InnSuites ability to increase revenue to keep pace with inflation. Operators of hotels in general, and InnSuites in particular, can change and do change room rates often and quickly, but competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2024, ended January 31, 2024, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses. During the current Fiscal 2025, rates are more stable.

Previous wording

UniGen has agreed to allow IHT to fund a $500,000 line of credit at the option of IHT convertible into 500,000 shares of UniGen stock at $1 per share. Currently, there is no outstanding balance at this time.

Current wording

UniGen had agreed to allow IHT to fund a $500,000 line of credit at the option of IHT convertible into 500,000 shares of UniGen stock at $1 per share. Currently, there is no outstanding balance at this time.

Previous wording

The total of all stock ownership upon conversion of the debenture and exercise of warrants could total up to 3 million UniGen shares, which could amount to approximately up to 20% or more of fully diluted UniGen equity.

Current wording

The total of all stock ownership upon conversion of the debenture and exercise of warrants could amount to approximately up to 20% of fully diluted UniGen equity.