INNSUITES HOSPITALITY TRUST

Previous wording

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and our audited consolidated Form 10-K for the fiscal year ended January 31, 2025.

Current wording

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.

Previous wording

Trust operations consist of one reportable segment – Hotel Ownership & Hotel 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 management services for the Trust’s two Hotels. As part of our management services, we also provide trademark and licensing services.

Current wording

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.

Previous wording

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 in the Fiscal Year starting February 1, 2020, 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.

Current wording

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.

Previous wording

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 extremely optimistic for the high profit potential from IBC management, and the five-year option to purchase at cost.

Current wording

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.

Previous wording

We expect the current Fiscal Year 2026 to be uncertain for the travel industry, stable high level Hotel occupancy, continued recovery and increases of room rates, as well as continuation of current cost control all leading to improved profitability of our hotels. 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 Internet access.

Current wording

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.

Previous wording

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. 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 listing on the NYSE AMERICAN.

Current wording

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.

Previous wording

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 approximately an additional up to 2 million 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.

Current wording

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.

Previous wording

Trust operations consist of one reportable segment – Hotel Ownership & Hotel 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. Hotel management services, provides management services for the Trust’s two Hotels. As part of our management services, we also provide trademark and licensing services.

Current wording

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.

Previous wording

Total Trust Equity decreased to $674,508 at the end of Fiscal First Quarter 2025, down approximately $1.9 million, from the $2,563,397 reported at the end of the prior Fiscal First Quarter 2024. Net Income before non-cash depreciation expense was $61,268 for the Fiscal First Quarter ended April 30, 2025, compared to $24,492 for the Fiscal First Quarter ended April 30, 2024, which is a decrease of approximately $37,000.

Current wording

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.

Previous wording

Sales and marketing expense increased approximately $11,000, or 10%, to approximately $127,000 for the three months ended April 30, 2025 from approximately $116,000 for the three months ended April 30, 2024. Increased focus on sales and marketing drove the increase.

Current wording

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.

Previous wording

For the First Fiscal Quarter three months ended April 30, 2025, we had total revenue of approximately $2.21 million compared to approximately $2.29 million for the three months ended April 30, 2024, a decrease 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, 2025, we had an increase in total revenue resulting from the recovery of demand, and benefitting from prior refurbishments.

Current wording

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.

Previous wording

Total Consolidated Net Income for the three months ended April 30, 2025 was approximately $39,000 which is a decrease of approximately $48,000 compared to the same prior Fiscal Quarter for the same period of approximately $87,000. Earnings Per Share based on this Consolidated Net Income amount were $0.00, down $0.01 from the prior year of $0.01. Loss Per Share based on net loss attributable to Controlling Interest was $0.01, up from the prior year similar three month period of $0.02.

Current wording

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.

Previous wording

We realized a 5% decrease in room revenues during the three months ended April 30, 2025 as room revenues were approximately $2.12 million for the three months ending April 30, 2025 as compared to approximately $2.24 million for the three months ending April 30, 2024. Despite decreased occupancy, food and beverage revenue increased 35% to approximately $30,000 for the three months ending April 30, 2025 as compared to approximately $23,000 during the three months ending April 30, 2024, an increase of approximately $7,000. 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 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.

Previous wording

Total expenses net of interest expense was approximately $2.0 million for the three months ended April 30, 2025 reflecting a decrease of approximately $0.1 million, or 6%, compared to total expenses net of interest expense of approximately $2.1 million for the three months ended April 30, 2024.

Current wording

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.

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 $661,000 for the three months ended April 30, 2025 compared to approximately $665,000 in the prior year three month period for a decrease of approximately $4,000, or 1%. Room expenses decreased as occupancy at the hotels decreased, and decreased expenses were incurred with the decreased 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 $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.

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, 2025, food and beverage expenses remained relatively flat at $26,000 for the three months ended April 30, 2025, compared to approximately $28,000 for the three months ended April 30, 2024. 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, 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.

Previous wording

General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $468,000 for the three months ended April 30, 2025, decreased approximately $138,000 from approximately $606,000 for the three months ended April 30, 2024 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 $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.

Previous wording

Repairs and maintenance expense increased by approximately $3,000, or 3%, from approximately $106,000 reported for the three months ended April 30, 2024 compared to approximately $109,000 for the three months ended April 30, 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.

Current wording

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.

Previous wording

Hospitality expenses, which includes the cost associated with our complimentary hot breakfast, increased by approximately $4,000, or 3%, from $155,000 for the three months ended April 30, 2024 to approximately $158,000 for the three months ended April 30, 2025. 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 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.

Previous wording

Hotel property non-cash depreciation expenses increased by approximately $9,000 from approximately $173,000 reported for the three months ended April 30, 2024 compared to approximately $182,000 for the three months ended April 30, 2025.

Current wording

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.

Previous wording

Real estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $5,000, or 2%, to approximately $158,000 reported for the three months ended April 30, 2025 compared with approximately $163,000 for the three months ended April 30, 2024.

Current wording

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.

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 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.

Previous wording

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 Fiscal Quarter of Fiscal 2026, ended April 30, 2025, as the travel industry momentum stabilizes.

Current wording

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.

Previous wording

With approximately $13,000 of cash as of April 30, 2025 and the availability of three $250,000 bank lines of credit, and approximately $700,000 available from the $2,000,000 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 at least the next twelve months 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 investment cash flow as our diversification investment matures. However, such transactions may not be available on terms that are favorable to us, or at all.

Current wording

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.

Previous wording

We anticipate stable leisure travel demand, and limited additional new-build hotel supply in our markets during the current Fiscal Year 2025, and accordingly we anticipate stable revenues and operating margins. We expect challenges for the remaining Fiscal Year to be the economy, tariffs affecting travel, inflation, and cost control.

Current wording

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.

Previous wording

Cash provided by operating activities from continuing operations totaled approximately $280,000 during the three months ended April 30, 2025 as compared to net cash used of approximately $459,000 during the three months ended April 30, 2024. Consolidated net income was approximately $39,000 for the three months ended April 30, 2025 as compared to consolidated net income for the three months ended April 30, 2024 of approximately $87,000. Explanation of the differences between these fiscal years are explained above in the results of operations of the Trust.

Current wording

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.

Previous wording

Changes in the adjustments to reconcile net income for the three months ended April 30, 2025 and 2024, respectively, consist primarily of operating lease costs, stock-based compensation, hotel property depreciation, and changes in assets and liabilities. Hotel property depreciation was approximately $182,000 during the three months ended April 30, 2025 compared to approximately $173,000 during the three months ended April 30, 2024, an increase of $9,000 as the Trust recognized more depreciation due to increased hotel property investment.

Current wording

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.

Previous wording

Changes in assets and liabilities for accounts receivable, prepaid expenses and other assets and accounts payable and accrued expenses totaled approximately $58,000 and $719,000 for the three months ended April 30, 2025 and 2024, respectively. This significant decrease in changes in assets and liabilities for the three months ended April 30, 2025 compared to the three months ended April 30, 2024 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 $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.

Previous wording

Net cash used in investing activities totaled approximately $196,000 for the three months ended April 30, 2025 compared to net cash used in investing activities of approximately $186,000 for the three months ended April 30, 2024. The increase in net cash used in activities during the three months ended April 30, 2025 was due primarily due to capital improvements in the hotels.

Current wording

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.

Previous wording

Net cash used in financing activities totaled approximately ($164,000) and ($243,000), respectively, for the three months ended April 30, 2025 and 2024. The decrease of approximately $79,000 was primarily due to deferring the payment of distributions to non-controlling interest holders.

Current wording

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.

Previous wording

Principal payments on mortgage notes payable for continuing operations was approximately $87,000 and $65,000 during the three months ended April 30, 2025 and 2024, respectively.

Current wording

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.

Previous wording

Payments on notes payable–related party, was approximately $67,000 and $0 of cash used in financing activities during the three months ended April 30, 2025 and 2024, respectively.

Current wording

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.

Previous wording

During the three months ended April 30, 2025, our distributions to non-controlling interest holders was approximately $0 compared with approximately $153,000 for the three months ended April 30, 2024. We anticipate a reduction in distributions to non-controlling interest holders for the balance of the current Fiscal Year 2026.

Current wording

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.

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, 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 three months ended April 30, 2025 and 2024, the Hotel spent approximately $196,000 and $151,000 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 2025 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 $109,000 and $106,000 for the three months ended April 30, 2025 and 2024, 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, 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.

Previous wording

We have minimum debt payments, net of debt discounts, of approximately $656,000 and approximately $1,345,000 due during Fiscal Years 2026 and 2027, respectively. Minimum debt payments due during Fiscal Year 2025 and 2026 include approximately $186,000 and $261,000 of mortgage notes payable, approximately $470,000 of other notes payable, which are unsecured promissory notes outstanding to unrelated third parties, and approximately $1,084,000 of notes payable-related party.

Current wording

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.

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 2025 (February 1, 2024 to January 31, 2025), substantially higher than both Covid and Pre-Covid GOP Profits. Fiscal 2026 is uncertain, but appears 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 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 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.

Previous wording

Hotel property refurbishments have been completed by 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.

Current wording

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.

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. Occupancy, rates, and cost control are stable at our hotels in the First Fiscal Quarter of 2026, (February 1, 2025 to April 30, 2025). This is expected to continue for the balance of Fiscal Year 2026, through January 31, 2026.

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. 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.

Previous wording

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 at cost, and its 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.

Current wording

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.

Previous wording

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. See Note 2 of the unaudited consolidated financial statements for discussion on UniGen.

Current wording

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.