IHT 10-K & 10-Q changes, risk factors and insider trading

We are engaged in the ownership and operation of hotel properties. At January 31, 2025,2026, the Trust had two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites. We are also involved in various operations incidental to the operation of hotels, such as the operation of a limited servicelimited-service restaurant, and bar, as well as meeting/banquet room rentals.

At January 31, 2025,2026, and currently, the Trust owns a 75.89%79.18% sole general partner interest in the Partnership, which controls a 51.62%51.69% interest in the InnSuites hotel located in Tucson, Arizona, andArizona. The Trust also holds a direct 21.90% interest in the InnSuites hotel located in Albuquerque, New Mexico.

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 the virus-related travel slowdown in the Fiscal Year starting February 1, 2020, or uncertainty in the Fiscal Year starting February 1, 2025, can and have negatively impacted hotel room demand and pricing, which reduces our profit margins. Additionally, our ability to manage costs has been and 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.

We expect expect the current Fiscal Year 20262027 to be stable in the domestic travel industry, stable high level Hotel occupancy, continued modest increases of room rates, as well as continuation of current cost control all leading to stable profitability of our hotels. We believe believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments, refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining popular complementary guest items, including complimentary hothot, healthy breakfast and free high-speed Internet access.

We expect expect the current Fiscal Year 20262027 to continuesee steadilymodest increases in profitability and demand for the domestic travel industry, with a stable high-level occupancyoccupancy, andmodestly increasing room rates, as well as continuation of current cost control all leading to steady and improving 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 hothot, healthy breakfast and free high-speed Internet access.

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. In Fiscal Year 2025,2026, as compared with Fiscal 2024,2025, occupancy decreasedincreased approximately 1.75%2.40% to 74.58%76.98% from 75.91%74.58% in the prior Fiscal Year. ADR increased decreased by $2.22,$4.12, or 2.28%, 4.13%, to $99.68$95.57 in Fiscal Year 20252026 from $97.46$99.69 in Fiscal Year 2024.2025. The increaseddecreased ADR resulted in ana increase decrease in REVPAR of $0.36,$0.77, or 0.49%, 1.03%, to $73.57 in Fiscal Year 2026 from $74.34 in Fiscal Year 2025 from $73.98 in Fiscal Year 2024.2025. The increasedecrease in ADR and REVPAR reflect the lower increasedaverage traveldaily andrates despite improved economy. occupancy.

For the Fiscal Year 2025,2026, ending January 31, 2025, 2026, we experienced astable revenue improvement.to prior year. For Fiscal 2026,2027, (February 1, 20252026 to January 31, 20262027), we expect stable rates, and continued stable revenues compared to both prior levels, indespite spitean of aintermittent slowdown in demand based on economic uncertainty.

For the 20242025 Fiscal Year (February 1, 20232024 to January 31, 20242025), InnSuites and the entire hotel industry in general experienced strong improvements and increased travel, resulting in much improved revenues and profits. For the 20252026 Fiscal Year ended January 31, 2025,2026, InnSuites continued this upward trend achieving record revenues.revenues, and near record Gross Operating Profit.

For the twelve months ended January 31, 2025, 2026, we had total revenue of approximately $7,594,000$7,567,000 compared to approximately $7,484,000$7,594,000 for the twelve months ended January 31, 2024,2025, an increasea decrease of approximately $109,000,$26,000, or less than 1%. This is near record-breaking, and second all-time high revenue from our Hotels, which we believe could continue in the current Fiscal 2027 year ahead.

We realized a 1% increasedecrease in room revenues during Fiscal Year 20252026 as room revenues were approximately $7,254,000 for the Fiscal Year ending January 31, 2026 as compared to approximately $7,336,000 for the Fiscal Year ending January 31, 20252025. asOur comparedfood and beverage revenue increased for Fiscal Year 2026 to approximately $104,000 from approximately $90,000 in Fiscal Year 2025, an increase of approximately $13,000, $7,292,000or 14%. Other Revenue was approximately $210,000 for the Fiscal Year ending January 31, 2024. As room revenue increased, our food and beverage revenue increased for Fiscal Year 2025 at approximately $90,000 during Fiscal Years 2025. Other Revenue was approximately $167,000 for the Fiscal Year ending January 31, 20252026 as compared to approximately $114,000$167,000 for the Fiscal Year ending January 31, 2024.2025, an increase of approximately $43,000, or 26%. The increase in Other Revenue was primarily due due to a focused increase on guest fees.

Total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision were approximately $8,336,000 $8,127,000 for the twelve months ended January 31, 20252026 reflecting ana increasedecrease of approximately $131,000$209,000 compared to total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision of approximately $8,205,000$8,336,000 for the twelve months ended January 31, 2024.2025. The increase decrease was primarily due to an increasedecreases in room expenses, general and admirativeadministrative expenses, and real estate and personal property taxes. Specific expense comparisons to the prior Fiscal Year are detailed in the following categories.

Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $2,614,000 $2,549,000 for the Fiscal Year ended January 31, 20252026 compared to approximately $2,525,000 $2,614,000 in the prior year period for ana increasedecrease of approximately $89,000,$65,000, or 4%.2%. Room expenses increaseddecreased due to risingcost economicmanagement costs.initiatives.

General and administrative expenses include overhead charges for management, accounting, shareholder, and legal services. General and administrative expenses of approximately $2,218,000$2,179,000 for the twelve months ended January 31, 2025,2026, decreased approximately $252,000$39,000 from approximately $2,470,000 $2,218,000 for the twelve months ended January 31, 20242025 primarily due to cost cutting initiatives at the Corporate office.

Sales and marketing expense increasedremained approximately $44,000,flat or 11%, toat approximately $453,000 for the twelve months ended January 31, 20252026 fromcompared to approximately $409,000 $453,000 for the twelve months ended January 31, 2024. Backfilled positions for sales and marketing resources accounted for the increase.2025.

Repairs and maintenance expense decreased by approximately $36,000, $2,000, or 8%,less than 1%, to approximately $428,000 for the twelve months ended January 31, 2026 from approximately $430,000 for the twelve months ended January 31, 2025 from approximately $466,000 for the twelve months ended January 31, 2024.2025. Having completed the property improvements at our Tucson, Arizona hotel Management anticipates the improvements which complies with the increasing Best Western standards, will lead to improvement in guest satisfaction and will drive additional revenue growth through increased occupancy and increased rates in the year ahead.

Hospitality expense increased by approximately $148,000, $3,000, or 32%,less than 1%, to approximately $611,000 for the twelve months ended January 31, 2026 from approximately $608,000 for the twelve months ended January 31, 2025 from approximately $459,000 for the twelve months ended January 31, 2024.2025. The increase was primarily due to increased breakfast and social hours offerings at the hotel properties, with competitive pressures on complimentary breakfast, which is our number one most popular guest amenity.

Utility expenses decreased approximately $22,000, $3,000, or 5%,less than 1%, to approximately $402,000$398,000 reported for the twelve months ended January 31, 2025 2026 from approximately $423,000$402,000 for the twelve months ended January 31, 2024.2025.

Real estate and personal property taxes, Insurance and Ground Rent expenses increaseddecreased approximately $226,000,$177,000, or 41%,23%, to approximately $779,000$602,000 for the twelve months ended January 31, 2026 from approximately $780,000 for the twelve months ended January 31, 2025 from approximately $553,000 for the twelve months ended January 31, 2024.2025. Insurance expense, which increased sharply in Fiscal Year 2025, has been reduced substantially for Fiscal Year 2026 (February 1, 2025 through January 1, 31, 2026).

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,loans, 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 an intercompany loan from Tucson.

With approximately $93,000$350,000 of cash as of January 31, 20252026 and the availability of three $250,000 bank lines of credit, and approximately $850,000 available funds from the $2,000,000$2,500,000 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 benefiting from clean energy investment cash flow as our diversification investment progresses. However, such transactions may not be available on terms that are favorable to us, or at all.

WeFor the anticipateFiscal steadyyear leisure2027 travel demand,ahead, we expect stable occupancy, modestly increased hotel rates, and limited additional new-build hotel supply in our markets during the current Fiscal Year 2026,markets, and accordingly we anticipate a continued solid revenues. We expect challenges for the remaining Fiscal Year to be the economy, international uncertainty, tariffs, inflation, and cost control. Travel,Added strength in travel, leisure, corporate, and group business may further increase room rates while maintaining and/or building market share in Fiscal Year 2026. Government travel levels are uncertainuncertain, but for may start to rebound in the remainder of the current 20262027 Fiscal Year.

Cash used in operating activities totaled approximately $11,000 during the twelve months ended January 31, 2026 as compared to net cash used of approximately $1,059,000 during the twelve months ended January 31, 2025 as compared to net cash provided of approximately $1,432,000 during the twelve months ended January 31, 2024.2025. Consolidated net loss was approximately $1,392,000 $1,391,000 for the twelve months ended January 31, 20252026 as compared to consolidated net incomeloss for the twelve months ended January 31, 2024 2025 of approximately $277,000.$1,392,000. Explanation of the differences between these Fiscal Years are explained above in the results of operations of the Trust.

Adjusted EBITDA is defined as earnings before interest expense, amortization of loan costs, interest income, income taxes, non-cash 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.

The Trust reported Consolidated Net Loss from operations of approximately $743,000$434,000 for the Fiscal Year ended January 31, 20252026 compared to Consolidated Net Loss from operations before other income, interest expense, and the Employee Retention Credit of approximately $721,000 $743,000 for the Fiscal Year ended January 31, 2024. 2025. Fiscal 20252026 and 20242025 Consolidated Net Loss from operations included non-cash depreciation of approximately $706,000$774,000 and $679,000, $706,000, respectively. Fiscal 20252026 Consolidated Net Loss from operations before non-cash depreciation was approximately $303,000 as compared to Consolidated Net Loss from operations before non-cash depreciation was approximately $685,000 as compared to Consolidated Net Income from operations before non-cash depreciation of approximately $883,000 $686,000 for Fiscal 2024.2025.

In viewing the hotel industry cycles, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for one or both of 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.

Our long-term strategic plan is to obtain the full benefit of our real estate equity, to benefit from our UniGen Power, Inc., (UniGen) clean electricity energy operation diversified investment, to benefit from aIBC independent hotel services potential operations and branding diversification, and to pursue a merger with another company, likely a private larger entity that seeks to go public to list on the NYSE AMERICAN Exchange. We are experiencing increased interest from reverse merger candidates.

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.” Effective in April of 2026, IHT once again aggressively began participating in the Share Repurchase Program, which management believes to have strong value potential available in the IHT Stock.

As a partial balance to the current hotel industry, industry exposure, the Trust looks to benefit from, and expand, its UniGen clean energy operation diversification investment, and the IBC diversification investmentsoption to purchase at cost, in the years ahead. See Note 2 6 of the unauditedaudited consolidated financial statements for discussion IBC, and Note 7 for discussion on UniGen.

Revenues are primarily derived from the sources below and are recognized as services are rendered and when collectabilityit is reasonablyprobable assured.that the entity will collect substantially all of the consideration. Amounts received in advance of revenue recognition are considered deferred liabilities and are generally not significant.

Each room night consumed by a guest with a cancelable cancellable reservation represents a contract whereby the Trust has a performance obligation to provide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation (i.e., each room night) is met. Such contract is renewed if the guest continues their stay. For room nights consumed by a guest with a non-cancellable reservation, the entire reservation period represents the contract term whereby the Trust has a performance obligation to provide the room night or nights at an agreed upon price. For non-cancellable reservations, the Trust recognizes revenue over the term of the performance period (i.e., the reservation period) as room nights are consumed. For these reservations, the room rate is typically fixed over the reservation period. The Trust uses an output method based on performance completed to date (i.e., room nights consumed) to determine the amount of revenue it recognizes on a daily basis if the length of a non-cancellable reservation exceeds one night since consumption of room nights indicates when services are transferred to the guest. In certain instances, variable consideration may exist with respect to the transaction price, such as discounts, coupons and price concessions made upon guest checkout.

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 2025,2026, ended January 31, 2025,2026, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses. During the current Fiscal 2026,2027, rates are more stable.

On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UniGen”). InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021. UniGen is in the process of developing a patented high profit potential new efficient clean energy generation innovation. The initial investment was made December 16, 2019, with positive some progress to date despite the virus, setbacks, international vendor travel disruptions, cost overruns, and delays. The investment includes convertible bonds, stocks, and warrants to purchase UniGen stock upon election of the Trust. The investment is valued at fair value (level 3), as defined in Note 2 of the Consolidated Financial Statements. There is no Investment Commitment to UniGen requiring any restriction of cash.

The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6% ($15,000 per quarter). The Debentures are convertible into 1,000,000 Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. UniGen is delinquent on quarterly interest payments,payments. Newly andelected isUniGen currentlymanagement seekingwas installed shortly after the end of the 2026 Fiscal Year, (Ending January 31, 2026), on February 20, additional investors, including potential future investment by IHT.2026.

The Trust has purchased in addition approximately 575,000 shares of UniGen stock.stock, and holds Warrants with expiration dates extended to June 30, 2029.

EngineeringUniGen announced that the engineering work is 61% complete, according to UniGen, on the prototype.first UniGentwo is currently concentrating on its current round of capital raising.prototypes. IHT may participate in an upcoming round of capital raising.raising, now that the new management team is in place.

Based on a 96 core “super computer” simulated test together with advanced software, UniGen has confirmed that the UPI 1000TA engine with the addition of recent potential technological advancements, is approximately 33% more fuel efficient than first estimated and will emit only approximately 25% of the maximum admissions allowed by CARB, the strictest of the regulatory standards issued by the state of California. Recent projections of demand for electricity including data centers, electric vehicles and artificial intelligence indicates the market demand for electricity over the next five years in the U.S. may double.

As of January 31, 2026, James Wirth (IHT President) and Marc Berg (IHT Executive Vice President) both lacklacked significant UniGen control. They havehad two of the five UniGen Board of Directors seats or 40% and were elected in December 2019 to serve on the board of UniGen to monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.

Certain statements in this Form 10-Q, including statements containing the phrases “believes,” “intends,” “expects,” “anticipates,” “predicts,” “projects,” “will be,” “should be,” “looking ahead,” “may” or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend that such forward-looking statements be subject to the safe harbors created by such Acts. These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our equity financing plans; (v) our position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) expansion of UniGen; (vii) our plans and expectations regarding future sales of hotel properties; and (viii) trends affecting our or any Hotel’s financial condition or results of operations; operations.and (ix) potential of a future merger or reverse merger.

We are engaged in the ownership and operation of hotel properties. On AprilJuly 30,31, 2026, the Trust had two moderate-service hotels, one in Tucson, Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites. We are also involved in various operations incidental to the operation of hotels, such as the operation of a limited-servicelimited restaurant,service restaurant and bar, as well as meeting/banquet room rentals.

At AprilJuly 30,31, 2026, we owned a direct 21.90% interest in the Albuquerque, New Mexico Hotel, and, together with the Partnership, owned an indirect indirect 51.69% interest in the Tucson, Arizona Hotel.

InWe addition,manage weInnSuites manageHotels and InnDependent Boutique Collection Hotels, (IBC Hotels, LLC), offering reservations and branding services to independent hotels, with new technology reservations and booking engine technology provided, and with an option to purchase IBC Hotels, LLC, at cost over the next five years. We hold a diversification investment in UniGen Power Inc., which is developing an efficient clean energy portable efficient electricity generator innovation.

Over time, we expect our high risk but also high profit potential UniGen diversification efficient clean energy generation investment, to grow and provide a substantialgrowing source of income in the future. We also expect profit potential from IBC management, and the five-year option to purchase IBC, LLC, at cost.

On February 20, 2026, the IHT President, Secretary/Treasurer, and CFO of InnSuites Hospitality Trust, were all three elected to similar management positions of UniGen Power, Inc. With this new UniGen Management in place, IHT expects our UniGen diversification efficient efficient clean energy generation investment to be reinvigorated to grow and potentially provide a substantialgrowing source of income in the future. In addition, our RRF Management subsidiary took over Management of InnDependent Boutique Collection, LLC (IBC Hotels), during the Fiscal Year just ended, January 31, 2026, raising expectations of additional profits in the area of independent/boutique hotel reservations, and other hotel services for Global boutique and independent resorts and hotels. Independent hotels represent half the world’s hotels and resorts.

We expect the current Fiscal Year 2027 to be stable in the domestic travel industry, stable relatively high level Hotel occupancy, modest increases ofstable room rates, as well as continuation of current cost control all leading to stable, or moderately increasing 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 popular complementary complementary guest amenities, including complimentary hot, healthy breakfast and free high-speed Internet access.

Our expenses consist primarily of property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees, hotel operating expenses, and non-cash depreciation of the Hotels.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, averageAverage dailyDaily rateRate (“ADR”), calculated as total room revenue divided by number of rooms sold, and revenue perRevenue availablePer roomAvailable Room (“REVPAR”), calculated as total room revenue divided by number of rooms available, is appropriate for understanding operationrevenue offrom the Hotels.

RESULTS OF OPERATIONS FOR THE FISCAL TWELVE MONTH TRAILING ENDED APRILJULY 30,31, 2026 COMPARED TO THE FISCAL TWELVE MONTH TRAILING ENDED APRILJULY 30, 31, 2025.

A summary of total operating results of the Trust for the twelve-monthtwelve month trailing periods ended AprilJuly 30,31, 2026 and 2025 is as follows:

RESULTS OF OPERATIONS FOR THE FISCAL THREESIX MONTHS ENDED APRILJULY 30,31, 2026 COMPARED TO THE FISCAL THREESIX MONTHS ENDED APRILJULY 30,31, 2025 A summary of total operating results of the Trust for the threesix months ended AprilJuly 30,31, 2026 and 2025 is as follows:

For the First Fiscal Quarter threesix months ended AprilJuly 30,31, 2026, we had total revenue of approximately $2.19$4.03 million compared to approximately $2.21 $4.00 million for the three six months ended AprilJuly 30,31, 2025, aan decreaseincrease of approximately $12,000.$26,000, or 1%. In the prior Fiscalfiscal Yearsyears ended January 31, 2026, 2025 and 2014, 2024, we made significant improvements to our Albuquerque, New Mexico and Tucson, Arizona hotels. During the three six months ended AprilJuly 30,31, 2026, 2026,we had an increase in total revenuerevenue, remained relatively stable, benefitingbenefitting from prior refurbishments.

Total operating expenses net of interest expense were approximately $2.02$4.04 million for the threesix months ended AprilJuly 30,31, 2026, reflecting an increase of approximately $37,000, $17,000, or 2%,less than 1%, compared to total operating expenses net of interest expense of approximately $1.98$4.02 million for the threesix months ended AprilJuly 30,31, 2025. The increase was primarily due to increases in sales and marketing and general and administrative expenses, partially offset by decreases in repairs and maintenance, food and beverage expenses, and real estate and personal property taxes, insurance and ground rent.

Room expenses consisting of salariespayroll and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $645,000$1.31 million for the threesix months ended AprilJuly 30,31, 2026 downcompared fromto $661,000approximately $1.31 million in the prior yearprior-year threesix-month month period forperiod, an improvementincrease of approximately $16,000,$5,000, or 2%.less than 1%. Room expenses decreasedremained relatively stable despite increased occupancy at the hotels,increase duein tohotel effective cost management.occupancy.

Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the threesix months ended AprilJuly 30,31, 2026, food and beverage expenses remained relatively flat atdecreased approximately $24,000$19,000, foror the34%, threeto monthsapproximately ended April 30, 2026,$37,000 compared to approximately $26,000 $55,000 for the threesix months ended AprilJuly 30,31, 2025. There were several cost savings initiatives to offset rising foodFood and beverage purchasingrevenue costs.increased approximately $5,000, or 8%, to approximately $60,000 from approximately $56,000 in the prior-year period.

General and administrative expenses include overhead charges for management, accounting, shareholder and legal services. General and administrative expenses of approximately $547,000$1.03 million for the threesix months ended AprilJuly 30,31, 2026,2026 increased approximately $79,000,$31,000, or 17%,3%, from approximately $468,000$1.00 million for the threesix months ended AprilJuly 30,31, 2025 primarily due to increased corporate overhead costs.2025.

Sales and marketing expense increased approximately $9,000,$35,000, or 7%,15%, to approximately $136,000$269,000 for the threesix months ended AprilJuly 30,31, 2026 from approximately $127,000$234,000 for the threesix months ended AprilJuly 30,31, 2025. Increased focus on sales and marketing spend drove the increase.

Repairs and maintenance expense decreased byapproximately $30,000, or 14%, to approximately $13,000, or 11%, from approximately $109,000 reported$188,000 for the threesix months ended AprilJuly 31, 2026 compared 30, 2025 to approximately $96,000$217,000 for the threesix months ended AprilJuly 30,31, 2026.2025. Having completed the property improvements at our Tucson, Arizona hotel hotel, Management anticipates thethat improvementsthese improvements, which compliescomply with the increasing Best Western standards, will (after the adverse effects of travel restrictions and slowdown), lead to improvement inimprove guest satisfaction and will drive support additional revenue growth through increased occupancy and increased rates.

HotelHospitality propertyexpense non-cashremained depreciationrelatively expensesflat increased byat approximately $13,000 from approximately $182,000 reported$311,000 for the threesix months ended AprilJuly 30,31, 20252026 compared to approximately $195,000 $308,000 for the threesix months ended AprilJuly 30,31, 2026.2025.

RealUtility estateexpense and personal property taxes, Insurance and Ground Rent expenses decreasedincreased approximately $25,000,$8,000, or 16%,4%, to approximately $133,000 reported$194,000 for the threesix months ended AprilJuly 30,31, 2026 compared withto approximately $158,000 $186,000 for the threesix months ended AprilJuly 30,31, 2025.

Two principal sources of cash to meet our cash requirements, include monthly management/accounting fees from our two hotels and distributions of our share of the Partnership’s cash flow of the Tucson hotel, as well as quarterly distributions from the Albuquerque, New Mexico properties. Additional sources of cash include potential newintercompany intercompany loans and hotel loan repayments, potential future real estate hotel sales/refinances, and potential returns on diversified investments. The Partnership’s Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona, as well as management fees from hotels and IBC reservations. Our liquidity, including our ability to make distributions to our Tucson Investors, will depend upon 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 an intercompany loan related to to Tucson.

Hotel operations were positively affected byexperienced stable room rates at the Hotels in the Fiscal Year 2026, and stable occupancy, rates, and/or cost controls the First Two Fiscal QuarterQuarters of Fiscal 2027, ended AprilJuly 30,31, 2026, as the travel industry momentum stabilizes.

With approximately $41,000$247,000 of cash as of AprilJuly 30, 202631, and2026, the availability ofunder three $250,000our bank lines of credit, potential funds available from the $2,500,000 related party Demand/Revolving Line of Credit/Promissory Note,credit and theother availabilitycredit offacilities, Advancesand access to Affiliaterelated-party credit facilities and available Bank lines of Credit,financing, we believe that we will have enoughsufficient cash on handliquidity 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 strategic options available to us, including raising additional funds, asset sales, benefittingbenefiting from clean energy investment,investments and IBC cash flow as our diversification investment matures, and a possible reverse merger. However, such transactions may not be available on terms that are favorable to us, or at all.

IHT and InnDependent Boutique Collections Hotels (IBC), agreed to extend the payment schedule on IBC’s note to June 30, 2030, as RRF, the IHT Management Subsidiary, took over IBC Management, Management as of March 7, 2025, and obtained a five-year option to purchase IBC Hotels, LLC, at cost.

There can be no assurance that we will be successful in fully collecting receivables, in refinancing debt, or raising additional or replacement funds, or that thesesuch funds maywill be available on terms that are favorable to us. If we are unable to raise additional or replacement funds, we may be required to sell or refinance certain of our assets to meet our liquidity needs, which may not be on terms that are favorable.favorable to us.

We anticipate stable leisure and business travel demand,demand and limited additional new-build hotel supply in our markets during the current Fiscal Year 2027, and accordingly we anticipate stable revenues orto moderately improving, improving revenues and operating margins. We expect challenges,both butchallenges and also optimism,opportunities for the remainingremainder Fiscalof Year,the fiscal year based on fluctuating oil prices, a stronggeneral economy,economic inflation,conditions, both up and down,inflation and internal cost control.controls Net cash used in operating activities totaled approximately $147,000 during the six months ended July 31, 2026 compared to net cash provided by operating activities of approximately $127,000 during the six months ended July 31, 2025, a decrease in operating cash flow of approximately $274,000. Consolidated Net Loss was approximately $222,000 for the six months ended July 31, 2026 compared to approximately $362,000 for the six months ended July 31, 2025, an improvement of approximately $140,000. The differences between these fiscal periods are discussed above in the Results of Operations of the Trust.

ChangesAdjustments in the adjustments to reconcile Consolidated Net Loss to net incomecash used in or provided by operating activities for the threesix months ended AprilJuly 30,31, 2026 and 2025 2025, respectively, consistconsisted primarily of operating lease costs, stock-based compensation, hotel property depreciation, and changes in operating assets and liabilities. Hotel property non-cash depreciation was approximately $195,000$380,000 during the threesix months ended AprilJuly 30,31, 2026 compared to approximately $182,000 $371,000 during the threesix months ended April 30,July 31, 2025, an increase of approximately $13,000 as the Trust recognized more depreciation due to increased hotel property investment.$9,000.

Changes in operating assets and liabilitiesliabilities, forincluding accounts receivable, prepaid expenses and other assetsassets, operating lease liabilities, and accounts payable and accrued expenses, resulted in a net use of cash of approximately $315,000 during the six months ended July 31, 2026 compared to a net source of cash of approximately $105,000 during the six months ended July 31, 2025. The approximately $420,000 unfavorable change was primarily attributable to increases in accounts receivable and decreases in accounts payable and accrued expenses totaled approximately $(316,000) and $58,000 forduring the three six months ended AprilJuly 30,31, 2026 and 2025, respectively. This significant decrease in changes in assets and liabilities for the three months ended April 30, 2026 compared to the three months ended April 30, 2025 was due to the decrease in operating liabilities related to ongoing operations.2026.