{"url_path":"/sec/iht/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-19","source_url":"https://www.sec.gov/Archives/edgar/data/82473/0001493152-26-024361-index.html","accession_number":"0001493152-26-024361","cik":"0000082473","ticker":"IHT","issuer_name":"INNSUITES HOSPITALITY TRUST","edgar_url":"https://www.sec.gov/Archives/edgar/data/82473/0001493152-26-024361-index.html","primary_entity_key":"0000082473","primary_entity_name":"INNSUITES HOSPITALITY TRUST"},"word_count":5021,"has_tables":true,"body_markdown":"Item\n7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\n \n\nGENERAL\n\n \n\nThe\nfollowing discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in\nthis Form 10-K.\n\n \n\nWe\nare engaged in the ownership and operation of hotel properties. At January 31, 2026, the Trust had two moderate-service hotels, one in\nTucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements\nwith Best Western, and both are also trademarked as InnSuites Hotels and Suites. We are also involved in various operations incidental\nto the operation of hotels, such as the operation of a limited-service restaurant, and bar, as well as meeting/banquet room rentals.\n\n \n\nAt\nJanuary 31, 2026, and currently, the Trust owns a 79.18% sole general partner interest in the Partnership, which controls a 51.69% interest\nin the InnSuites hotel located in Tucson, Arizona. The Trust also holds a direct 21.90% interest in the InnSuites hotel located in Albuquerque,\nNew Mexico.\n\n \n\nTrust\noperations consist of one reportable segment – Hotel Ownership & Hotel Management Services. Hotel Ownership Operations derives\nits revenue from the operation of the Trust’s two hotel properties with an aggregate of 270 hotel suites in Arizona and New Mexico.\nHotel management services, provides management services for the Trust’s two Hotels. As part of our management services, we also\nprovide trademark and licensing services.\n\n \n\nThe\nTrust has chosen to focus its hotel investments on the southwest region of the United States. The Trust does not review assets by geographical\nregion; therefore, no income statement or balance sheet information by geographical region is provided.\n\n \n\nOur\nresults are significantly affected by the overall economy and travel, occupancy and room rates at the Hotels, our ability to manage costs,\nchanges in room rates, and changes in the number of available suites caused by the Trust’s disposition activities. Results are\nalso significantly impacted by overall economic conditions and conditions in the travel industry. Unfavorable changes in these factors,\nsuch as the virus-related travel slowdown in the Fiscal Year starting February 1, 2020, or uncertainty in the Fiscal Year starting February\n1, 2025, can and have negatively impacted hotel room demand and pricing, which reduces our profit margins. Additionally, our ability\nto manage costs has been and could be adversely impacted by significant inflationary increases in operating expenses, resulting in lower\noperating margins, and higher hourly labor costs. Further increases in area hotel supply, hourly labor cost, declines in demand, or\ndeclines in room rates, could result in increased competition, which could have an adverse effect on the rates, revenue, costs, and profits\nof the Hotels in their respective markets.\n\n \n\nOn\nFebruary 20, 2026, the IHT President, Secretary/Treasurer, and CFO, were all three elected to similar management positions of UniGen\nPower, Inc. With this new UniGen Management in place, we expect our UniGen diversification efficient clean energy generation investment\nto grow and potentially provide a substantial source of income in the future. In addition, our RRF Management subsidiary took over Management\nof InnDependent Boutique Collection, LLC (IBC Hotels), during the Fiscal Year just ended, January 31, 2026, raising expectations of additional\nprofits in the area of independent/boutique hotel reservations, and other hotel services for Global boutique and independent resorts\nand hotels. Independent hotels represent half the world’s hotels and resorts.\n\n \n\nWe\nexpect the current Fiscal Year 2027 to be stable in the domestic travel industry, stable high level Hotel occupancy, continued modest\nincreases of room rates, as well as continuation of current cost control all leading to stable profitability of our hotels. We believe\nthat we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments,\nby offering fully refurbished studios and two-room suites at each location, and by maintaining popular complementary guest items, including\ncomplimentary hot, healthy breakfast and free high-speed Internet access.\n\n \n\nOur\nstrategic plan is to continue to obtain the full benefit of our real estate equity, by ultimately obtaining full market value for our\ntwo Hotels at market value, which is believed by management to be substantially higher than lower book values, over the next 36 months.\nIn addition, the Trust is seeking further diversification including a larger private reverse merger partner that may benefit from a merger\nthat would afford that partner access to our listing on the NYSE AMERICAN.\n\n \n\n7\n\n \n\n \n\nIn\nthe process of reviewing merger opportunities, the Trust identified in December 2019, and invested $1 million in UniGen Power, Inc. (“UniGen”),\nan innovative efficient clean energy power generation company. The Trust has invested $1 million in debentures convertible into 1 million\nshares of UniGen Power Inc; the Trust has invested in 575,000 UniGen shares, and in addition acquired warrants to purchase up to approximately\nan additional 2 million UniGen shares over time, which could result in up to 15-20% or more ownership in UniGen. For more information\non our strategic plan, including information on our progress in disposing of our hotel properties and expanding energy diversification,\nsee “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations.\n\n \n\nWe\nexpect the current Fiscal Year 2027 to see modest increases in profitability and demand for the domestic travel industry, with a stable\nhigh-level occupancy, modestly increasing room rates, as well as continuation of current cost control all leading to steady and improving\nprofitability of our hotels. We believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson\nand Albuquerque hotel refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining\ncomplementary guest items, including complimentary hot, healthy breakfast and free high-speed Internet access.\n\n \n\nOur\nexpenses consist primarily of property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees, non-cash depreciation\nof the Hotels and hotel operating expenses. Hotel operating expenses consist primarily of payroll, guest and maintenance supplies, marketing,\nand utilities expenses. Management believes that a review of the historical performance of the operations of the Hotels, particularly\nwith respect to **Occupancy**, which is calculated as rooms sold divided by total rooms available, average daily rate (“**ADR**”),\ncalculated as total room revenue divided by number of rooms sold, and revenue per available room (“**REVPAR**”),\ncalculated as total room revenue divided by number of rooms available, is appropriate for understanding revenue from the Hotels. In Fiscal\nYear 2026, as compared with Fiscal 2025, occupancy increased approximately 2.40% to 76.98% from 74.58% in the prior Fiscal Year. ADR\ndecreased by $4.12, or 4.13%, to $95.57 in Fiscal Year 2026 from $99.69 in Fiscal Year 2025. The decreased ADR resulted in a decrease\nin REVPAR of $0.77, or 1.03%, to $73.57 in Fiscal Year 2026 from $74.34 in Fiscal Year 2025. The decrease in ADR and REVPAR reflect the\nlower average daily rates despite improved occupancy.\n\n \n\nFor\nthe Fiscal Year 2026, ending January 31, 2026, we experienced stable revenue to prior year. For Fiscal 2027, (February 1, 2026 to January\n31, 2027), we expect stable rates, and continued stable revenues compared to both prior levels, despite an intermittent slowdown in demand\nbased on economic uncertainty.\n\n \n\nFor\nthe 2025 Fiscal Year (February 1, 2024 to January 31, 2025), InnSuites and the entire hotel industry in general experienced strong improvements\nand increased travel, resulting in much improved revenues and profits. For the 2026 Fiscal Year ended January 31, 2026, InnSuites continued\nthis upward trend achieving record revenues, and near record Gross Operating Profit.\n\n \n\n8\n\n \n\n \n\nThe\nfollowing table shows certain historical financial and other information for the periods indicated:\n\n \n\nNo\nassurance can be given that occupancy, ADR and/or REVPAR will or will not increase or decrease as a result of changes in national or\nlocal economy and travel, or hospitality industry conditions.\n\n \n\n  \nFor the Years Ended \n\nAlbuquerque \nJanuary 31, \n\n  \n2026  \n2025  \nChange  \n%-Incr/Decr \n\nOccupancy \n 87.57% \n 86.23% \n 1.34% \n 1.55%\n\nAverage Daily Rate (ADR) \n$101.48  \n$101.01  \n$0.47  \n 0.46%\n\nRevenue Per Available Room (REVPAR) \n$88.86  \n$87.10  \n$1.76  \n 2.02%\n\n \n\n  \nFor the Years Ended \n\nTucson \nJanuary 31, \n\n  \n2026  \n2025  \nChange  \n%-Incr/Decr \n\nOccupancy \n 69.48% \n 66.31% \n 3.17% \n 4.78%\n\nAverage Daily Rate (ADR) \n$90.30  \n$98.44  \n$(8.14) \n -8.27%\n\nRevenue Per Available Room (REVPAR) \n$62.74  \n$65.28  \n$(2.54) \n -3.90%\n\n \n\n  \nFor the Years Ended \n\nCombined \nJanuary 31, \n\n  \n2026  \n2025  \nChange  \n%-Incr/Decr \n\nOccupancy \n 76.98% \n 74.58% \n 2.40% \n 3.22%\n\nAverage Daily Rate (ADR) \n$95.57  \n$99.69  \n$(4.12) \n -4.13%\n\nRevenue Per Available Room (REVPAR) \n$73.57  \n$74.34  \n$(0.77) \n -1.03%\n\n \n\nWe\nenter into transactions with certain related parties from time to time. For information relating to such related party transactions see\nthe following:\n\n \n\n \n●\n\nFor\na discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management\nand Licensing Contracts.”\n\n \n \n \n\n \n●\nFor\na discussion of guarantees of our mortgage notes payable by certain related parties, see Note 11 to our Consolidated Financial Statements\n– “Mortgage Notes Payable.”\n\n \n \n \n\n \n●\n\nFor\na discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, and 4 to our Consolidated\nFinancial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” and “Sale of Ownership Interests\nin Tucson Hospitality Properties Subsidiary,” respectively.\n\n \n \n \n\n \n●\nFor\na discussion of other related party transactions, see Note 19 to our Consolidated Financial Statements – “Other Related\nParty Transactions.”\n\n** **\n\n**Results\nof operations of the Trust for the Fiscal Year ended January 31, 2026 compared to the Fiscal Year ended January 31, 2025.**\n\n \n\n**Overview**\n\n \n\nA\nsummary of total Trust operating results for the Fiscal Years ended January 31, 2026 and 2025 is as follows:\n\n \n\n  \nFor the Years Ended January 31,  \n   \n  \n\n  \n2026  \n2025  \nChange  \n% Change \n\nTotal Revenues \n$7,567,275  \n$7,593,516  \n$(26,241) \n (0)%\n\nOperating Expenses \n 8,127,434  \n 8,336,258  \n (208,824) \n (3)%\n\nOperating Loss \n (560,159) \n (742,742) \n 182,583  \n 25%\n\nInterest Income and Other \n 3,000  \n 36,269  \n (33,269) \n (92)%\n\nInterest Expense \n (523,993) \n (476,046) \n (47,947) \n (10)%\n\nUnigen Impairment \n (222,917) \n -  \n (222,917) \n 0%\n\nBW Rewards Credit \n (86,619) \n (208,758) \n 122,139  \n 59%\n\nIncome Tax Benefits \n 140  \n (355) \n 495  \n 139%\n\nConsolidated Net Loss \n (1,390,548) \n (1,391,632) \n 1,084  \n 0%\n\n  \n\n9\n\n \n\n \n\nREVENUE\n\n \n\nFor\nthe twelve months ended January 31, 2026, we had total revenue of approximately $7,567,000 compared to approximately $7,594,000 for the\ntwelve months ended January 31, 2025, a decrease of approximately $26,000, or less than 1%. This is near record-breaking, and second\nall-time high revenue from our Hotels, which we believe could continue in the current Fiscal 2027 year ahead.\n\n \n\nWe\nrealized a 1% decrease in room revenues during Fiscal Year 2026 as room revenues were approximately $7,254,000 for the Fiscal Year ending\nJanuary 31, 2026 as compared to approximately $7,336,000 for the Fiscal Year ending January 31, 2025. Our food and beverage revenue increased\nfor Fiscal Year 2026 to approximately $104,000 from approximately $90,000 in Fiscal Year 2025, an increase of approximately $13,000,\nor 14%. Other Revenue was approximately $210,000 for the Fiscal Year ending January 31, 2026 as compared to approximately $167,000 for\nthe Fiscal Year ending January 31, 2025, an increase of approximately $43,000, or 26%. The increase in Other Revenue was primarily due\nto a focused increase on guest fees.\n\n \n\nEXPENSES\n\n \n\nTotal\nexpenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision were approximately $8,127,000\nfor the twelve months ended January 31, 2026 reflecting a decrease of approximately $209,000 compared to total expenses before interest\nexpense, employee retention credit, sales and occupancy taxes and income tax provision of approximately $8,336,000 for the twelve months\nended January 31, 2025. The decrease was primarily due to decreases in room expenses, general and administrative expenses, and real estate\nand personal property taxes. Specific expense comparisons to the prior Fiscal Year are detailed in the following categories.\n\n \n\nRoom\nexpenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation\nfees and room supplies were approximately $2,549,000 for the Fiscal Year ended January 31, 2026 compared to approximately $2,614,000\nin the prior year period for a decrease of approximately $65,000, or 2%. Room expenses decreased due to cost management initiatives.\n\n \n\nGeneral\nand administrative expenses include overhead charges for management, accounting, shareholder, and legal services. General and administrative\nexpenses of approximately $2,179,000 for the twelve months ended January 31, 2026, decreased approximately $39,000 from approximately\n$2,218,000 for the twelve months ended January 31, 2025 primarily due to cost cutting initiatives at the Corporate office.\n\n \n\nSales\nand marketing expense remained flat at approximately $453,000 for the twelve months ended January 31, 2026 compared to approximately\n$453,000 for the twelve months ended January 31, 2025.\n\n \n\nRepairs\nand maintenance expense decreased by approximately $2,000, or less than 1%, to approximately $428,000 for the twelve months ended January\n31, 2026 from approximately $430,000 for the twelve months ended January 31, 2025. Having completed the property improvements at our\nTucson, Arizona hotel Management anticipates the improvements which complies with the increasing Best Western standards, will lead to\nimprovement in guest satisfaction and will drive additional revenue growth through increased occupancy and increased rates in the year\nahead.\n\n \n\nHospitality\nexpense increased by approximately $3,000, or less than 1%, to approximately $611,000 for the twelve months ended January 31, 2026 from\napproximately $608,000 for the twelve months ended January 31, 2025. The increase was primarily due to increased breakfast and social\nhours offerings at the hotel properties, with competitive pressures on complimentary breakfast, which is our number one most popular\nguest amenity.\n\n \n\nUtility\nexpenses decreased approximately $3,000, or less than 1%, to approximately $398,000 reported for the twelve months ended January 31,\n2026 from approximately $402,000 for the twelve months ended January 31, 2025.\n\n \n\nHotel\nproperty depreciation expenses increased by approximately $68,000 to approximately $774,000 for the twelve months ended January 31, 2026\nfrom approximately $706,000 for the twelve months ended January 31, 2025. Increased depreciation resulted from continued capital expenditure\ninvestments in the hotels.\n\n \n\nReal\nestate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $177,000, or 23%, to approximately $602,000\nfor the twelve months ended January 31, 2026 from approximately $780,000 for the twelve months ended January 31, 2025. Insurance expense,\nwhich increased sharply in Fiscal Year 2025, has been reduced substantially for Fiscal Year 2026 (February 1, 2025 through January 31,\n2026).\n\n \n\n10\n\n \n\n \n\nLIQUIDITY\nAND CAPITAL RESOURCES\n\n \n\nOverview\n– Hotel Operations & Corporate Overhead\n\n \n\nTwo\nprincipal sources of cash to meet our cash requirements, include monthly management fees from our two hotels and distributions of our\nshare of the Partnership’s cash flow of the Tucson hotel and quarterly distributions from the Albuquerque, New Mexico properties.\nAdditional sources of cash include potential intercompany loans, potential future real estate hotel sales, and potential returns on diversified\ninvestments. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona.\nOur liquidity, including our ability to make distributions to our shareholders, will depend upon our ability, and the Partnership’s\nability, to generate sufficient cash flow from hotel operations, from management fees, and from the potential sale and/or refinance of\nthe hotel, and to service our debt including repayment of an intercompany loan from Tucson.\n\n \n\nHotel\noperations were positively affected by increased room rates at the Hotels in the Fiscal Years 2025 and 2026, respectively.\n\n \n\nWith\napproximately $350,000 of cash as of January 31, 2026 and the availability of three $250,000 bank lines of credit, and approximately\n$850,000 available funds from the $2,500,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of Advances\nto Affiliate credit facilities and available Bank line of Credit, we believe that we will have enough cash on hand to meet all of our\nfinancial obligations as they become due for at least the next twelve months from the issuance date of the these consolidated financial\nstatements. Our management is analyzing other strategic options available to us, including raising additional funds, asset sales, and\nbenefiting from clean energy investment cash flow as our diversification investment progresses. However, such transactions may not be\navailable on terms that are favorable to us, or at all.\n\n \n\nIHT\nand InnDependent Boutique Collections Hotels (IBC), previously agreed to extend the payment schedule on IBC’s note receivable to\nallow IBC to rebuild operations as the hotel industry rebounds. Management believes that with an additional extension repayment term,\nthat the future collectability of the current carrying value of the note is probable and not subject to further impairment, or allowance\nfor the Fiscal Year ended January 31, 2026.\n\n \n\nRefer\nto Note 6 – “Note Receivable” for information related to the Sale of IBC Hospitality Technologies (IBC).\n\n \n\nThere\ncan be no assurance that we will be successful fully collecting receivables, in refinancing debt, or raising additional or replacement\nfunds, or that these funds may be available on terms that are favorable to us. If we are unable to raise additional or replacement funds,\nwe may be required to sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable.\n\n \n\nFor\nthe Fiscal year 2027 ahead, we expect stable occupancy, modestly increased hotel rates, and limited additional new-build hotel supply\nin our markets, and accordingly we anticipate continued solid revenues. We expect challenges for the remaining Fiscal Year to be the\neconomy, international uncertainty, tariffs, inflation, and cost control. Added strength in travel, leisure, corporate, and group business\nmay further increase room rates while maintaining and/or building market share in Fiscal Year 2026. Government travel levels are uncertain,\nbut may start to rebound in the remainder of the current 2027 Fiscal Year.\n\n \n\nCash\nused in operating activities totaled approximately $11,000 during the twelve months ended January 31, 2026 as compared to net\ncash used of approximately $1,059,000 during the twelve months ended January 31, 2025. Consolidated net loss was approximately\n$1,391,000 for the twelve months ended January 31, 2026 as compared to consolidated net loss for the twelve months ended January 31,\n2025 of approximately $1,392,000. Explanation of the differences between these Fiscal Years are explained above in the results of\noperations of the Trust.\n\n \n\nThe\nTrust’s Management received communication from the NYSE-American on August 29, 2022, indicating IHT is fully compliant with all\nof the Continued Listing Standards Equity Requirements set forth in Part 10 of the NYSE American Company Guide, of the NYSE-American.\n\n \n\nNON-GAAP\nFINANCIAL MEASURES\n\n \n\nThe\nfollowing non-GAAP presentations of earnings before interest, taxes, non-cash depreciation, and amortization (“**EBITDA**”)\nand funds from operations (“**FFO**”) are made to assist our investors in evaluating our operating performance.\n\n \n\nAdjusted\nEBITDA is defined as earnings before interest expense, amortization of loan costs, interest income, income taxes, non-cash depreciation\nand amortization, and non-controlling interests in the Trust. We present Adjusted EBITDA because we believe these measurements (a) more\naccurately reflect the ongoing performance of our hotel assets and other investments, (b) provide more useful information to investors\nas indicators of our ability to meet our future debt payments and working capital requirements, and (c) provide an overall evaluation\nof our financial condition. Adjusted EBITDA as calculated by us may not be comparable to Adjusted EBITDA reported by other companies\nthat do not define Adjusted EBITDA exactly as we define the term. Adjusted EBITDA does not represent cash generated from operating activities\ndetermined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of\nour financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity.\n\n \n\n11\n\n \n\n \n\nA\nreconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the Fiscal Years ended January 31, 2026 and 2025\napproximate follows:\n\n \n\n  \nFor the Years Ended January 31, \n\n  \n2026  \n2025 \n\nNet loss income attributable to controlling interests \n$(1,426,000) \n$(1,391,000)\n\nAdd back: \n    \n   \n\nDepreciation \n 774,000  \n 706,000 \n\nInterest expense \n 524,000  \n 476,000 \n\nLess: \n    \n   \n\nInterest Income \n -  \n (36,000)\n\nAdjusted EBITDA \n$(128,000) \n$(245,000)\n\n \n\nFFO\nis calculated on the basis defined by the National Association of Real Estate Investment Trusts (“**NAREIT**”),\nwhich is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales\nof properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus non-cash depreciation and amortization\nof real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership.\nNAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically\nhas not depreciated on the basis determined by GAAP. The Trust is an unincorporated Ohio business investment, (real estate investment\ntrust); however, the Trust is not a real estate investment trust for federal taxation purposes. Management uses this measurement to compare\nitself to REITs with similar depreciable assets. We consider FFO to be an appropriate measure of our ongoing normalized operating performance.\nWe compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported\nby other companies that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition\ndifferently than us. FFO does not represent cash generated from operating activities as determined by GAAP and should not be considered\nas an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating\nactivities as a measure of our liquidity, nor is it indicative of funds available to satisfy our cash needs, including our ability to\nmake cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO should\nbe considered along with our net income or loss and cash flows reported in the consolidated financial statements.\n\n \n\nA\nreconciliation of FFO to net income (loss) attributable to controlling interests for Fiscal Year ended January 31, 2026 and 2025 are\nas follows:\n\n \n\n  \nFor the Years Ended January 31, \n\n  \n2026  \n2025 \n\nNet loss attributable to controlling interests \n$(1,426,000) \n$(1,391,000)\n\nAdd back: \n    \n   \n\nDepreciation \n 774,000  \n 706,000 \n\nNon-controlling interest \n 36,000  \n (1,000)\n\nFFO \n$(616,000) \n$(686,000)\n\n \n\nThe\nTrust reported Consolidated Net Loss from operations of approximately $434,000 for the Fiscal Year ended January 31, 2026 compared to\nConsolidated Net Loss from operations before other income, interest expense, and the Employee Retention Credit of approximately $743,000\nfor the Fiscal Year ended January 31, 2025. Fiscal 2026 and 2025 Consolidated Net Loss from operations included non-cash depreciation\nof approximately $774,000 and $706,000, respectively. Fiscal 2026 Consolidated Net Loss from operations before non-cash depreciation\nwas approximately $303,000 as compared to Consolidated Net Loss from operations before non-cash depreciation of approximately $686,000\nfor Fiscal 2025.\n\n \n\n12\n\n \n\n \n\nFUTURE\nPOSITIONING\n\n \n\nIn\nviewing the hotel industry cycles, the Board of Trustees determined that it was appropriate to continue to seek buyers for one or both\nof our two remaining Hotel properties. We continue to make our Tucson Hotel and Albuquerque Hotel available for sale at market value,\non the website www.suitehotelsrealty.com.\n\n \n\nThe\ntable below provides book values, mortgage balances and Estimated Market Asking Price for the Hotels.\n\n \n\n  \n   \n   \nEstimated Market \n\nHotel Property \nBook Value  \nMortgage Balance  \n**Asking Price** \n\nAlbuquerque \n$837,396  \n$1,114,598  \n 9,500,000 \n\nTucson Oracle \n 5,898,046  \n 7,697,430  \n 18,500,000 \n\n  \n$6,735,442  \n$8,812,028  \n$28,000,000 \n\n \n\nThe\n“Estimated Market Asking Price” is the amount at which we believe we may be able to sell each of the Hotels and is adjusted\nto reflect hotel sales in the Hotels’ areas of operation and projected upcoming 12 month earnings of each of the Hotels. The Estimated\nMarket Asking Price is not based on appraisals of the properties.\n\n \n\nWe\nhave from time to time listed hotel properties with a long time highly successful local real estate hotel broker who has successfully\nsold four of our hotel properties. We believe that each of the assets, the Tucson and Albuquerque hotels, have an estimated market asking\nprice that is reasonable in relation to its current fair market value. We plan to sell one or both of our remaining two Hotel properties\nwithin 36 months. We can provide no assurance that we will be able to sell either or both of the Hotel properties on terms favorable\nto us or within our expected time frame, or at all.\n\n \n\nAlthough\nbelieved feasible, we may be unable to realize the asking price for the individual Hotel properties or to sell and/or refinance one or\nboth. However, we believe that the asking price values are reasonable based on current local market conditions, comparable sales, and\nanticipated occupancy, rates, and profits per hotel. Changes in market conditions have in part resulted, and may in the future result,\nin our changing one or all of the asking prices.\n\n \n\nOur\nlong-term strategic plan is to obtain the full benefit of our real estate equity, to benefit from our UniGen Power, Inc., (UniGen) clean\nelectricity energy operation diversified investment, to benefit from IBC independent hotel services potential operations and branding\ndiversification, and to pursue a merger with another company, likely a private larger entity that seeks to go public to list on the NYSE\nAMERICAN Exchange. We are experiencing increased interest from reverse merger candidates.\n\n \n\nSHARE\nREPURCHASE PROGRAM\n\n \n\nFor\ninformation on the Trust’s Share Repurchase Program, see Part II, Item 5. “Market for the Registrant’s Common Equity,\nRelated Stockholder Matters and Issuer Purchases of Equity Securities.” Effective in April of 2026, IHT once again aggressively\nbegan participating in the Share Repurchase Program, which management believes to have strong value potential available in the IHT Stock.\n\n \n\nOFF-BALANCE\nSHEET ARRANGEMENTS\n\n \n\nWe\ndo not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned or controlled subsidiaries\nthat are not included in our consolidated financial statements.\n\n \n\nCRITICAL\nACCOUNTING POLICIES AND ESTIMATES\n\n \n\nAs\na partial balance to the current hotel industry exposure, the Trust looks to benefit from, and expand, its UniGen clean energy operation\ndiversification investment, and the IBC diversification option to purchase at cost, in the years ahead. See Note 6 of the audited consolidated\nfinancial statements for discussion IBC, and Note 7 for discussion on UniGen.\n\n \n\nAsset\nImpairment\n\n \n\nWe\nbelieve that the policies we follow for the valuation of our hotel properties, which constitute the majority of our assets, are our most\ncritical policies. The Financial Accounting Standards Board (“FASB”) has issued authoritative guidance related to the impairment\nor 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\nfor recoverability. On an events and circumstances basis, we review the carrying value of our hotel properties. We will record an impairment\nloss and reduce the carrying value of a property when anticipated undiscounted future cash flows and the current market value of the\nproperty do not support its carrying value. In cases where we do not expect to recover the carrying cost of hotel properties held for\nuse, we will reduce the carrying value to the fair value of the hotel, as determined by a current appraisal or other acceptable valuation\nmethods. We did not recognize a hotel properties impairment loss in Fiscal Years 2026 or 2025. As of January 31, 2026, our management\ndoes not believe that the carrying values of any of our hotel properties are impaired.\n\n \n\n13\n\n \n\n \n\nSale\nof Hotel Assets\n\n \n\nManagement\nbelieves that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market value. At\nthis time, the Trust is unable to predict when, and if, either of its Hotel properties will be sold. The Trust seeks to sell one or both\nhotels 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\nfair market value.\n\n \n\nRevenue\nRecognition\n\n \n\nRevenues\nare primarily derived from the sources below and are recognized as services are rendered and it is probable that the entity will collect substantially all of the consideration.\nAmounts received in advance of revenue recognition are considered deferred liabilities and are generally not significant.\n\n \n\nRevenues\nprimarily consist of room rentals, food and beverage sales, management and trademark fees and other miscellaneous revenues from our properties.\nRevenues are recorded when rooms are occupied and when food and beverage sales are delivered.\n\n \n\nEach\nroom night consumed by a guest with a cancellable reservation represents a contract whereby the Trust has a performance obligation to\nprovide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation\n(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\na non-cancellable reservation, the entire reservation period represents the contract term whereby the Trust has a performance obligation\nto provide the room night or nights at an agreed upon price. For non-cancellable reservations, the Trust recognizes revenue over the\nterm of the performance period (i.e., the reservation period) as room nights are consumed. For these reservations, the room rate is typically\nfixed over the reservation period. The Trust uses an output method based on performance completed to date (i.e., room nights consumed)\nto determine the amount of revenue it recognizes on a daily basis if the length of a non-cancellable reservation exceeds one night since\nconsumption of room nights indicates when services are transferred to the guest. In certain instances, variable consideration may exist\nwith respect to the transaction price, such as discounts, coupons and price concessions made upon guest checkout.\n\n \n\nIn\nevaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such\nas free Wi-Fi, grab and go or hot breakfast, access to on-site laundry facilities and parking), as the other obligations are not distinct\nand separable because the guest cannot benefit from the additional amenities without the consumed room night. The Trust’s obligation\nto provide the additional items or services is not separately identifiable from the fundamental contractual obligation (i.e., providing\nthe room and its contents). The Trust has no performance obligations once a guest’s stay is complete.\n\n \n\nWe\nare required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable\ngovernmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and\nfees and, therefore, they are not included in revenues. We record a liability when the amounts are collected and relieve the liability\nwhen payments are made to the applicable taxing authority or other appropriate governmental agency.\n\n \n\nSEASONALITY\n\n \n\nSee"}