UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT

Commission File Number 1-7062

INNSUITES HOSPITALITY TRUST

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (602) 944-1500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [  ] No [X]

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Aggregate market value of Shares of Beneficial Interest held by non-affiliates of the registrant as of July 31, 2019,2020, based upon the closing sales price of the registrant’s Shares of Beneficial Interest on that date, as reported on the NYSE AMERICAN: $5,876,683 $3,697,553.

Number of Shares of Beneficial Interest outstanding as of August 12, 2020: 9,145,008May 14, 2021: 8,856,054

Documents incorporated by reference: None.

Securities registered pursuant to Section 12(b) of the Act:

PART I

Item 1. BUSINESS

INTRODUCTION TO OUR BUSINESS

InnSuites Hospitality Trust (the “Trust”) is headquartered in Phoenix, Arizona and is an unincorporated Ohio real estate investment trust formed on June 21, 1971. The Trust is not a real estate investment trust for federal taxation purposes but is taxed as a C-corporation. The Trust, with its affiliates RRF Limited Partnership, a Delaware limited partnership (the “Partnership”), and InnSuites® Hotels, Inc., a Nevada corporation (“InnSuites Hotels”), owns interests in two hotels, operates and provides management services for threetwo hotels, and provides trademark license services. At January 31, 2020,2021, and currently, the Trust owns a 75.89% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 20.33%20.67% interest in the InnSuites hotel located in Albuquerque, New Mexico. The Tucson and Albuquerque hotels are sometimes referred to as the “Hotels”. We anticipate selling one or both of the Hotels in the next twenty-four (24)to thirty-six (24-36) months.

InnSuites Hotels Inc., a wholly-owned subsidiary of the Trust, provides management services for the two Trust Hotels and prior to its sale on December 18, 2020, for one hotel located in Tempe, Arizona (the “Tempe Hotel”) that is owned by affiliates of James F. Wirth, the Trust’s Chairman and Chief Executive Officer. InnSuites Hotels also provides trademark and licensing services to the Tempe Hotel. The Trust has approximately 120 full-time employees and approximately 20 part-time employees.

The two Hotels have an aggregate of 270 hotel suites and operate as moderate -service hotels that apply a value studio and two-room suite operating philosophy formulated in 1980 by Mr. Wirth. The Trust hotels offer services such as free hot breakfast buffets and complimentary afternoon social hours plus amenities, such as microwave ovens, refrigerators, and free high-speed Internet access.

For the fiscal yearFiscal Year 2022 ahead, February 1, 20202021 through January 31, 20212022, the Trust’s operations are focused on the continued recovery from the impact of the corona virusCorona Virus (COVID-19) pandemic, and the severe impact on the travel and hospitality industries which took place after February 1, 2020. The Trust’s primary business objective is to maximize returns to its shareholders through increases in asset value and long-term total returns to shareholders, including profitable sale of assets and growth of investments. The Trust seeks to achieve this objective through intensive management and marketing of the InnSuites© hotels, and by selling hotel real estate at market prices well above book values and benefitting from diversified investments.investments, including UniGen Power, Inc. (UPI). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Future Positioning” for a more detailed discussion of the Trust’s strategic objectives.

The Trust has a single class of Shares of Beneficial Interest, without par value, that are traded on the NYSE AMERICAN under the symbol “IHT.” The Partnership has two outstanding classes of limited partnership interests, Class A and Class B, which are identical in all respects. However,respects, except that each Class A Partnership unit is convertible, at the option of the Class A holder, into one newly-issuednewly issued Share of Beneficial Interest of the Trust and each Class B Partnership unit is convertible, upon approval of the Board of Trustees of the Trust, into one newly-issued Share of Beneficial Interest of the Trust. The Partnership Agreement of the Partnership subjects both general and limited partner units to certain restrictions on transfer.

MANAGEMENT AND LICENSING CONTRACTS

The Trust directly manages the Hotels through the Trust’s wholly-owned subsidiary, InnSuites Hotels, Inc. Under the management agreements, InnSuites Hotels manages the daily operations of the both Trust Hotels and the Tempe Hotel.Hotels. All Trust managed Hotel expenses, revenues and reimbursements among the Trust, InnSuites Hotels and the Partnership have been eliminated in consolidation. The management fees for the Hotels and the Tempe Hotel are 5% of room revenue and a monthly accounting fee of $2,000 per hotel. These agreements have no expiration dates but may be cancelled by either party with 90-days30-days written notice, or potentially sooner in the event the property changes ownership.

The Trust also provides the use of the “InnSuites” trademark to the Hotels and the Tempe Hotelstands ready to offer trademark services through the Trust’s wholly-owned subsidiary, InnSuites Hotels, Inc., which is included in the management fee. The InnSuites trademark expires in January 2027.

These revenues are included in the management and trademark fees revenues in the consolidated statement of operations of our financial statements.

MEMBERSHIP AGREEMENTS

InnSuites Hotels has entered into membership agreements with Best Western International, Inc. (“Best Western”) with respect to each of the two Hotels. In exchange for use of the Best Western name, trademark and reservation system, each Hotel pays marketing and reservation fees to Best Western based on reservations received through the use of the Best Western reservation system, a marketing fee based upon the monthly room revenues, and the number of available suites at the Hotels. The agreements with Best Western are year-to-year. Best Western requires that the Hotels meet certain requirements for room quality, and the two Hotels are subject to removal from the Best Western reservation system if these requirements are not met. During the past year, the two Hotels received significant reservations through the Best Western reservation system. Under these arrangements, fees paid for membership fees and reservations were approximately $171,000 and $277,000, recorded in on the Consolidated Statement of Operations, for fiscal yearsFiscal Years ended January 31, 20202021, and 2019,2020, respectively.

COMPETITION IN THE HOTEL INDUSTRY

The hotel industry is highly competitive. We expect the major challenge for theThere are clear signs and trends of economic recovery in this early part of fiscal year ending2022, virtually all our fiscal year 2021 from February 1, 2020 until January 31, 2021 (“fiscal year 2021”)was negative due to be the economicimpact of COVID-19. The Tucson hotel especially has experienced strong recovery fromof revenue and even stronger rebounds of gross operating profit to continue due to the Coronavirus (COVID-19) pandemic during the spring of 2020.ongoing stringent cost control measures. The Albuquerque hotel is doing better than its competitors but nonetheless is very adversely affected by travel restrictions. Despite this revenues are growing and gross operating profit is growing even more again due to stringent cost control measures. The drastic impact of COVID-19 to the world economy and hospitality industry has resulted in severely reduced occupancy and significant reduction in room rates. Continued competition for reduced demand in corporate, leisure, group, and government business in the markets in which we operate, will affect our ability to maintain room rates and maintain market share. Each of the Hotels and the Tempe Hotel 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 financial resources than the Trust.

Certain additional hotel property refurbishments have recently been completed by competitors in both of the Hotels’ markets, and additional hotel property developments may be built in the future. Such hotel developments could have an adverse effect on the revenue of our Hotels in their respective markets.

The Trust’s hotel investments are located in Arizona and New Mexico. With the completed renovations at our Tucson, Arizona and Albuquerque, New Mexico hotel properties, those hotels have seen additionalare expected to see incremental demand during the fiscal year ended January 31, 2020,next 18 months, as supply had been steady in those respective markets.markets, and is expected to increase as COVID-19 restrictions phase out. Either an increase in supply or a decline in demand could result in increased competition, which could have an adverse effect on occupancy, room rates and revenues of our Hotels in their respective markets. The hotels have experienced a decrease in demand due to impact of the COVID-19 virus and the related restrictions and reduction of travel after February 1, 2020.

The Trust may not invest further in hotels, but rather diversify into investments includingsuch as the $1 million investment made by the Trust in December 2019 in the innovative UPIUniGen Power, Inc. (UPI), efficient clean energy power generation company. The Trust may continue to seek further diversification through a reverse merger with a larger non-public entity.

REGULATION

The Trust is subject to numerous federal, state, and local government laws and regulations affecting the hospitality industry, including usage, building and zoning requirements and the laws and regulations related to the preparation and sale of food and beverage such as health and liquor license laws. A violation of any of those laws and regulations or increased government regulation could require the Trust to make unplanned expenditures which may result in higher operating costs. Compliance with these laws is time intensive and costly and may reduce the Trust’s revenues and operating income.

Under the Americans with Disabilities Act of 1990 (the “ADA”), all public accommodations are required to meet certain readily achievable federal requirements related to access and use by disabled persons. In addition to ADA work completed to date, the Trust may be required to remove additional access barriers or make unplanned, substantial modifications to its Hotels to comply with the ADA or to comply with other changes in governmental rules and regulations, or become subject to claims, fines, and damage awards, any of which could reduce the number of total available rooms, increase operating costs, and have a negative impact on the Trust’s results of operations.

Our hotel properties are subject to various federal, state, and local environmental laws that impose liability for contamination. Under these laws, governmental entities have the authority to require us, as the current or former owner of the property, to perform or pay for the clean-up of contamination (including swimming pool chemicals or hazardous substances or biological waste) at or emanatingarising from the property and to pay for natural resource damage arising from contamination. These laws often impose liability without regard to whether the owner or operator knew of or caused the contamination. Such liability can be joint and several, so that each covered person can be responsible for all of the costs involved, even if more than one person may have been responsible for the contamination. We can also be liable to private parties for costs of remediation, personal injury, death and/or property damage resulting from contamination at or emanatingoriginating from our hotel properties. Moreover, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property on favorable terms or at all. Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.

The Trust is also subject to laws governing our relationship with employees, including minimum wage requirements, overtime, working conditions and work permit requirements. There are frequent proposals under consideration, at the federal and state levels, to increase the minimum wage. Additional increases to the state or federal minimum wage rate, and employee benefit costs including health care or other costs associated with employees could increase expenses and result in lower operating margins.

The Trust collects and maintains information relating to its guests for various business purposes, including maintaining guest preferences to enhance the Trust’s customer service and for marketing and promotional purposes. The collection and use of personal data are governed by privacy laws and regulations. Compliance with applicable privacy regulations may further increase the Trust’s operating costs and/or adversely impact its ability to service its guests and market its products, properties, and services to its guests. In addition, non-compliance with applicable privacy regulations by the Trust (or in some circumstances non-compliance by third parties engaged by the Trust) could result in fines or restrictions on its use or transfer of data.

SEASONALITY OF THE HOTEL BUSINESS

The Hotels’ operations historically have been somewhat seasonal. The Tucson Hotel typically experiences its highest occupancy in the first fiscal quarter and, to a lesser extent, the fourth fiscal quarter (the winter high season). The second fiscal quarter tends to be the lowest occupancy period at the Tucson Hotel. This seasonality pattern can be expected to cause fluctuations in the Trust’s quarterly revenues. The hotel located in New Mexico historically experienceexperiences their most profitable periods during the second and third fiscal quarters (the summer high season), providing balance to the general seasonality of the Trust’s hotel business.

The seasonal nature of the Trust’s business increases its vulnerability to risks such as labor force shortages and cash flow issues. Further, if an adverse event such as an actual or threatened terrorist attack, viral outbreak or pandemic, international conflict, data breach, regional economic downturn or poor weather conditions should occur during the first or fourth fiscal quarters,high season, the adverse impact to the Trust’s revenues could likely be greater as a result of its seasonal business.

OTHER AVAILABLE INFORMATION

We also make available, free of charge, on our Internet website at www.innsuitestrust.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Information on our Internet website shall not be deemed incorporated into, or be part of, this report.

Item 1A. RISK FACTORS

Not required for smaller reporting companies.

Item 1B. UNRESOLVED STAFF COMMENTS

Not required for smaller reporting companies.

Item 2. PROPERTIES

The Trust maintains its administrative offices at the InnSuites Hotels Centre, at 1730 E. Northern Avenue, Suite 122, Phoenix, Arizona 85020 in a space leased by the Trust from a third party. The two Hotels are operated as InnSuites Hotels, and both Hotels are also marketed as Best Western® Hotels. The Hotels operate in the following locations:

In the fiscal yearyears ended January 31, 2019, and January 31, 2020, we remodeled 100% of each property’s available suites and public areas. The Albuquerque Hotel added six additional suites during the fiscal quarter ending April 30, 2018 by splitting several two-room suites into individual suites. The Trust owns a direct 20.33%20.67% interest in the InnSuites Hotel and Suites Airport Albuquerque Best Western Hotel. The Partnership owns a 51.01% interest in the InnSuites Hotel and Suites Tucson Oracle Best Western Hotel. The Trust owns a 75.89% general partner interest in the Partnership.

See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – General” below for a discussion of occupancy rates at the Hotels.

See Note 1011 to the Trust’s Consolidated Financial Statements – “Mortgage Notes Payable” below for a discussion of mortgages encumbering the Hotels.

See Note 2016 to the Trust’s Consolidated Financial Statements – “Commitments and Contingencies”“Leases” for a discussion of the lease for our corporate headquarters and the non-cancellable ground lease to which our Albuquerque Hotel is subject.

Item 3. LEGAL PROCEEDINGS

The Trust is not a party to, nor are any of its properties subject to, any material litigation or environmental regulatory proceedings. See Note 20 to Trust’s Consolidated Financial Statements – “Commitments and Contingencies”.

Item 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II

Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Trust’s Shares of Beneficial Interest are traded on the NYSE American under the symbol “IHT.” On June 4, 2019,January 31, 2021, the Trust had 9,360,292approximately 9,057,730 shares outstanding. As of June 4, 2019,May 11, 2021, there were approximately 339 holders of record of our Shares of Beneficial Interest, not including holders who hold their asset positions with banks and brokers.

The following table sets forth, for the periods indicated, the high and low sales prices of the Trust’s Shares of Beneficial Interest, as reported on the NYSE American, as well as dividends declared thereon:

The Trust intends to maintain athe current conservative dividend policy to facilitate the reduction of debt, andpolicy. The Trust currently is, and has, been paying two semiannual dividends each Fiscal Year totaling $0.02 per share per fiscal year.Fiscal Year. In the fiscal yearsFiscal Years ended January 31, 20192020 and 2020,2021, the Trust paid dividends of $0.01 per share per share in each of the second and the fourth quarters. The Trust has paid dividends each fiscal yearFiscal Year since its inception in 1971. The Trust has approvedcurrently intends to pay the scheduled semiannual $0.01 dividend payable on July 31, 2020.2021 at NYSE American.

On January 2, 2001, the Board of Trustees approved a share repurchase program under Rule 10b-18 of the Securities Exchange Act of 1934, as amended, for the purchase of up to 250,000 Partnership units and/or Shares of Beneficial Interest in open market or privately negotiated transactions. On September 10, 2002, August 18, 2005 and September 10, 2007, the Board of Trustees approved the purchase of up to 350,000 additional Partnership units and/or Shares of Beneficial Interest in open market or privately negotiated transactions. Additionally, on January 5, 2009, September 15, 2009 and January 31, 2010, the Board of Trustees approved the purchase of up to 300,000, 250,000 and 350,000, respectively, additional Partnership units and/or Shares of Beneficial Interest in open market or privately negotiated transactions. Acquired Shares of Beneficial Interest will beare held in treasury and will be available for future acquisitions and financings and/or for awards granted under the Trusts’ equity compensation plans/programs. The Trust’s management believes the Trust share price does not fully recognize the Trust’s full value. During the fiscal year ended January 31, 2020,2021, the Trust acquired 71,543233,569 Shares of Beneficial Interest in open market transactions at an average price of $1.71$1.08 per share. The average price paid includes brokerage commissions. The Trust intends to continue repurchasing Shares of Beneficial Interest in compliance with applicable legal and NYSE AMERICAN requirements. The Trust remains authorized to repurchase an additional 372,965300,000 Partnership units and/or Shares of Beneficial Interest pursuant to the publicly announced share repurchase program, which has no expiration date. On June 25, 2019, the Trust’s Board of Trustee’s authorized the repurchase of up to 750,000 shares and units in addition to the above amounts previously authorized. On January 31, 2020, the Trust Board of Trustee’s authorized the repurchase of up to 500,000 shares and units in addition to the above amounts previously authorized.

See Part III, Item 12 for information about our equity compensation plans.

See Note 2 to our Consolidated Financial Statements – “Summary of Significant Accounting Policies” for information related to grants of restricted shares made to members of our Board of Trustees during fiscal year 2020.2021. These grants were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2).

For stock option grants during fiscal 2020,2021, see Note 24 to our Consolidated Financial Statements - “Stock Options.”

For the issuance of Shares of Beneficial Interest by the Trust to Rare Earth Financial, LLC, see Note 17 to our Consolidated Financial Statements – “Other Related Party Transactions.” These issuances were made in reliance upon the exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2).

Item 6. SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7A

GENERAL

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.

We are engaged in the ownership and operation of hotel properties. At January 31, 2020,2021, the Trust had two moderate -service hotels in Tucson, Arizona and Albuquerque, New Mexico with 270 hotel suites, and managed a third hotel in Tempe, Arizona.suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels. We are also involved in various operations incidental to the operation of hotels, such as the operation of a limited service restaurantsrestaurant, and bars, andbar, as well as meeting/banquet room rentals.

At January 31, 2020,2021, we owned through our sole general partner’s interest in the Partnership, a direct 20.33%20.67% interest in the Albuquerque, New Mexico Hotel, and, together with the Partnership, owned a 51.01% interest in the Tucson, Arizona. Hotel.

Our operations consist of one reportable segment – Hotel Operations & Hotel Management Services. Hotel Operations derives its revenue from the operation of the Trust’s two hotel properties with an aggregate of 270 suites in Arizona and New Mexico. Hotel management services, provides management services for the Trust’s two Hotels and a non-owned hotel in Tempe, Arizona. As part of our management services, we also provide trademark and licensing services. The Tempe hotel was sold on December 16, 2020.

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, 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 increases in operating expenses, resulting in lower operating margins and higher hourly labor costs. Either a further increase in supply or a further decline in demand could result in increased competition, which could have an adverse effect on the rates and revenue of the Hotels in their respective markets.

We experienced strongextremely weak economic conditions during fiscal year 2020.Fiscal Year 2021, ended January 31, 2021, primarily a result of the Covid-19 virus pandemic. We anticipate that aslow recovery from weak travel and hospitality industry for mostmuch of the fiscal yearcurrent Fiscal Year 2022, ending January 31, 20212022 due to the COVID-19Covid-19 travel related restrictions and decline in travel. We expect the major challenge for fiscal year 20212022 to be the continued recovery of the travel industry, and our Hotel’s occupancy levels, followed by room rates. We believe that we have positioned the Hotels to remain competitive through our now completed refurbishment(s), by offering a relatively large number of fully refurbished two-room suites at each location, and by maintaining robust complementary guest items, including complimentary breakfast and free Internet access.

Our strategic plan is to continue to obtain the full benefit of our real estate equity, by marketing the remaining two Hotels over the next 2412-36 months. 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. In the process of reviewing merger opportunities, in the fiscal year ended January 31, 2020, the Trust identified and invested $1 million in Unigen Power, Inc. (“Unigen”, or “UPI), aan innovative efficient clean energy power generation companycompany. The Trust has invested $1 million debentures convertible into 1 million shares of UniGen Power Inc., and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next approximately two to three years, which could result up to 25% ownership in UPI. For more information on our strategic plan, including information on our progress in disposing of our hotel properties and expanding energy diversification, see “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations.

Our expenses consist primarily of property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees, depreciation of the Hotels and hotel operating expenses. Hotel operating expenses consist primarily of payroll, guest and maintenance supplies, marketing, and utilities expenses. Under the terms of its Partnership Agreement, the Partnership is required to reimburse us for all such expenses. Accordingly, managementManagement 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 2020,2021, as compared with fiscal 2019,2020, occupancy decreased 0.20%approximately 24.21% to 80.45%56.24% from 80.65%80.45% in the prior fiscal year. ADR increaseddecreased by $4.20,$7.64, or 5.46%9.41%, to $73.54 in fiscal year 2021 from $81.18 in fiscal year 2020 from $76.982020. The decreased occupancy and decreased ADR resulted in a decrease in REVPAR of $23.96, or 36.69%, to $41.35 in fiscal year 2019. The flat/slightly decreased occupancy and increased ADR resulted in an increase in REVPAR of $2.94, or 4.71%, to2021 from $65.31 in fiscal year 2020 from $62.372020. The decrease in fiscal year 2019. The increased inOccupancy, ADR and REVPAR reflect an improved productthe Covid-19 travel lockdown and improvedresulting depressed economy.

For the fiscal year ending January 31, 2021,2022, we anticipate reducedcontinued Covid-19 pressure, moderately increased occupancy, and to a lesser extent lowerflat rates (ADR), resulting in reducedrelatively flat REVPAR all due to the COVID-19 virus-related travel/hospitality slowdown. WeAdditionally, we expect some offsetting benefit from the expected forgiveness of debt related to the Small Business Administration (SBA) Payroll Protection Program (PPP) loans. We had a total of three PPP loans, one of which had been granted forgiveness in the amount of approximately $86,700 in January 2021, subsequently another loan was forgiven in March 2021 for $228,602 and a loan was granted forgiveness in the amount of approximately $187,685 also in March 2021.

The following table shows certain historical financial and other information for the periods indicated:

No assurance can be given that occupancy, ADR andand/or REVPAR will not increase or decrease as a result of changes in national or local economic or hospitality industry conditions.

We enter into transactions with certain related parties from time to time. For information relating to such related party transactions see the following:

Results of operations of the Trust for the fiscal year ended January 31, 20202021 compared to the fiscal year ended January 31, 2019.2020.

Overview

A summary of total Trust operating results for the fiscal years ended January 31, 20202021 and 20192020 is as follows:

As a result of the sale of IBC (see Note 25), theThe Chief Operating Decision Maker (“CODM”), Mr. Wirth, CEO of the Trust, has determined that the Trust operations are comprised of one reportable segment, Hotel Operations & Corporate OverheadHotel Management Services (continuing operations) segment that has ownership interest in two hotel properties with an aggregate of 270 suites in Arizona and New Mexico. The Trust has a concentration of assets in the southwest United States and the southern Arizona market. Prior to the sale of IBC, the Trust had previously determined that its operations were comprised of two reportable segments, a Hotel Operations & Corporate Overhead segment, and the IBC Hospitality segment serving 2,000 unrelated hotel properties. In connection with the sale of IBC, the historical financial information presented in this Form 10-K reflects this change with IBC being reported as discontinued operation.

The Trust has its hotel investments in the southwest region of the United States. The CODM does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided.

REVENUE – CONTINUING OPERATIONS:

For the twelve months ended January 31, 2020,2021, we had total revenue of approximately $6,568,000$4,203,000 compared to approximately $6,169,000$6,568,000 for the twelve months ended January 31, 2019,2020, a increasedecrease of approximately $399,000,$2,366,000, or 6.5%36%. In the prior fiscal years ended January 31, 2019 and 2018, we made significant improvements to our Tucson, Arizona property which allowed us to increase rates with increased occupancy. For comparability purposes, the current fiscal year revenues do not include our Yuma, Arizona properties which was sold on October 24, 2018, and our IBC Technology Division which was sold in August of 2018.

We realized a 7.1% increase38% decrease in room revenues during fiscal year 20202021 as room revenues were approximately $3,905,000 for the fiscal year ending January 31, 2021 as compared to approximately $6,278,000 for the fiscal year ending January 31, 2020 as compared to approximately $5,862,000 for2020. With the fiscal year ending January 31, 2019. With changesdecrease in our foodroom revenue and beverage offerings,general occupancy, our food and beverage revenue increaseddecreased by 36.0%18% to approximately $68,000$56,000 for fiscal year 20202021 as compared to approximately $50,000$68,000 during fiscal year 2019, an increase2020, a decrease of approximately $18,000. -$12,000. We also realized an approximate 1.2%32% decrease in management and trademark fee revenues during fiscal year 20202021 to approximately $170,000$116,000 as compared to approximately $172,000$170,000 during fiscal year 2019.2020. Management and trademark fee revenues decreased during fiscal year 20202021 as a result of the loss of management fees due to the sale of the Yuma hotel, offset by higher fees from the remaining hotels.Tempe hotel. Management fees remained unchanged year on year at 5%. During fiscal year 2021, we expect management and trademark fee revenues to be lower when compared to fiscal year 2020 management and trademark fee revenues, on reduced revenues. We realized an approximate 40% decrease143% increase in other revenues from the hotel properties during fiscal year 20202021 to approximately $51,000$126,000 as compared to approximately $85,000$52,000 during fiscal year 2019.2020.

EXPENSES – CONTINUING OPERATIONS:

Total expenses before interest expense and income tax provision waswere approximately $8,421,000$7,015,000 for the twelve months ended January 31, 20202021 reflecting an increasea decrease of approximately $947,000$1,406,000 compared to total expenses before interest expense and income tax provision of approximately $7,474,000$8,421,000 for the twelve months ended January 31, 2019.2020. The increasedecrease was primarily due to an increasea decrease in operating expenses forrelated to decreased occupancy and revenues at the $825,000 impairment of the IBC/Obasa Note Receivablehotel properties, offset by sales and the effects of the adoption of ASC-842 lease accounting pronouncement in 2019.occupancy expense. 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 $2,033,000$1,526,000 for the fiscal year ended January 31, 20202021 compared to approximately $1,941,000$2,033,000 in the prior year period for an increasea decrease of approximately $92,000,$507,000, or 4.7% increase.25%. Room expenses increaseddecreased as occupancy at the hotels increased,decreased, and additionalreduced expenses were incurred with the increased occupancy

Food and beverage expenses included food and beverage costs, personnel and miscellaneous costs to provide banquet events. For the fiscal year ended January 31, 2020, food and beverage expenses increased approximately $37,000, or 51.4%, to approximately $109,000 for the fiscal year ended January 31, 2020, compared to approximately $72,000 for the fiscal year ended January 31, 2018. This increase is consistent with the 36% increase in food and beverage revenue and additional costs associated with our improved food and beverage offerings.

Telecommunications expense, consisting of telephone and Internet costs, were classified as general and administrative expense for the fiscal year ended January 31, 2020, as compared to the prior fiscal year ended January 31, 2019 which were approximately $3,000.decreased occupancy.

General and administrative expenses include overhead charges for management, accounting, shareholder, and legal services. General and administrative expenses of approximately $2,998,000$1,958,000 for the twelve months ended January 31, 2021, decreased approximately $215,000 from approximately $2,173,000 for the twelve months ended January 31, 2020 increasing approximately $664,000 from approximately $2,334,000 for the twelve months ended January 31, 2019 primarily due to the impairmentlower charges in corporate staffing in support of the Obasa/IBC Note Receivable of $825,000, offset by cost reductions in staffing at the corporate headquarters.hotels and property sales efforts.

Sales and marketing expense decreased approximately $11,000,$190,000, or 18.9%33%, to approximately $380,000 for the twelve months ended January 31, 2021 from approximately $570,000 for the twelve months ended January 31, 2020 from approximately $581,0002020. Open positions for sales and marketing resources, due to a tight labor market, remained unfilled, and accounted for the twelve months ended January 31, 2019.decrease.

Repairs and maintenance expense decreased by approximately $92,000,$48,000, or 18.6%12%, fromto approximately $495,000 reported$355,000 for the twelve months ended January 31, 2019 compared to2021 from approximately $403,000 for the twelve months ended January 31, 2020. Having completed the property improvements at our Tucson, Arizona property during the fiscal year ended January 31, 2019, our repair and maintenance expense in the current year was significantly lower.hotel Management believesanticipates the improvements which complies with the increasing Best Western standards, has ledwill (after the adverse effects of travel restrictions and slowdown), lead to improvedimprovement in guest satisfaction and drivenwill drive additional revenue growth

through increased occupancy and increased rates in the year ahead.

Hospitality expense increaseddecreased by approximately $27,000,$359,000, or 5.6%70%, from $483,000to approximately $151,000 for the twelve months ended January 31, 2019 to2021 from approximately $510,000 for the twelve months ended January 31, 2020. The increasedecrease was primarily due to the additional product mix provided duringreduced occupancy and reduced breakfast offerings at the Hotels’ complimentary breakfast and happy hour required by Best Western.hotel properties due to COVID-19 restrictions.

Utility expenses increased by $21,000,decreased approximately $26,000, or 5.8%7%, to approximately $383,000 000 for the twelve months ended January 31, 2020 from approximately $362,000 for the twelve months ended January 31, 2019. Utility increases were consistent with, and in support of, our higher revenues.

Hotel property depreciation expenses increased by approximately $57,000, or 6.7%, from approximately $845,000$357,000 reported for the twelve months ended January 31, 2019 compared2021 from approximately $383,000 for the twelve months ended January 31, 2020. The decrease was primarily due to the decrease in Hotel occupancy.

Hotel property depreciation expenses decreased by approximately $71,000 to approximately $831,000 for the twelve months ended January 31, 2021 from approximately $902,000 for the twelve months ended January 31, 2020. IncreasedDecreased depreciation resulted from the additional capital expenditures associated with the Tucson hotel improvementsbeing fully depreciated, and to a lesser extent, improvements at the Albuquerque hotel, made during the fiscal year ended January 31, 2019.

REVENUE – DISCONTINUING OPERATIONSthus less expense was incurred and recorded.

Hotel Operations & Corporate Overhead Segment

On October 24, 2018, the Trust sold its Yuma, Arizona hotelReal estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $10,000, or 2%, to an unrelated third party for approximately $16.05 million, which the Trust received in cash. Total gain on sale was approximately $9.6 million. For the fiscal year ended January 31, 2019, the Yuma, Arizona hotel had approximately $3,294,000 of revenue consisting of approximately $3.2 million of room and other revenues and approximately $28,000 of food and beverage revenues. For the fiscal year ended January 31, 2018, the Yuma, Arizona hotel had approximately $4,125,000 of revenue, consisting of approximately $4.1 million in room and other revenues and approximately $42,000 of food and beverage revenues Since the Yuma hotel was sold in the fiscal year ended January 31, 2019, no revenue exists for the current fiscal year .

IBC Technology Segment

Our IBC Technologies Division was sold effective July 31, 2018, to an unrelated party for approximately $3.0 million, for which the Trust received $250,000 in cash, carried the balance of $2,750,000 in the form of a secured note. For the fiscal year ended January 31, 2019 we had total IBC revenue of approximately $223,000. There is no revenue for the current fiscal year.

Hotel Operations & Corporate Overhead Segment

For the twelve months ended January 31, 2019, IBC had approximately $2,808,000 of total expenses. There are no expenses for IBC in the current fiscal year ended January 31, 2020

For the fiscal year ended January 31, 2019, our Yuma, Arizona hotel was owned and operated by the Trust for approximately 9 months and incurred normal routine operating expenses including approximately $1,262,000 of room expenses, approximately $36,000 food and beverage expenses, approximately $365,000 general and administrative expenses, approximately $177,000 of sales and marketing expenses, approximately $185,000 of repairs and maintenance expenses, approximately $168,000 of hospitality expenses, approximately $161,000 utilities, approximately $344,000 of depreciation, approximately $88,000 of property insurance and tax expenses. There are no expenses for the Yuma, Arizona hotel for the fiscal year ended January 31, 2020.

IBC Technology Segment

Total expenses of approximately $892,000$482,000 for the twelve months ended January 31, 2019 were2021 from approximately $492,000 for the twelve months ended January 31, 2018. Our IBC Technologies Division2020. The decrease was solddue primarily to savings in August 2018.insurance expense.

ForSales and occupancy tax expenses increased approximately $844,000, or 100%, to approximately $844,000 for the fiscal yeartwelve months ended January 31, 2019,2021 from approximately $0 for the twelve months ended January 31, 2020. This represents a liability arising from an occupancy tax discrepancy generated from our IBC Development Segment was ownedTucson Oracle and operated byAlbuquerque hotels from prior periods. These additional amounts due for Hotel sales and occupancy expenses are not expected to be recurring, since the Trust for approximately 7 monthscollects and incurred normal routine operating expenses including approximately $402,000remits all necessary occupancy taxes to the state monthly. No additional assessments have transpired since September 2020. Management has assessed the materiality of generalthe discrepancy on prior reported periods and administrative expenses,has concluded it is qualitatively immaterial to the readers of approximately $292,000our Consolidated Financial Statements. The Trust is currently reviewing the sufficiency of sales and marketing expenses, approximately $143,000 of reservation acquisition costs, and approximately $50,000 of depreciation expensethe extra-ordinary assessments.

LIQUIDITY AND CAPITAL RESOURCES

Overview – Hotel Operations & Corporate OverheadHotel Management Services

OurOne principal source of cash to meet our cash requirements, including distributionsdividends to our shareholders, is our share of the Partnership’s cash flow of the Tucson hotel, and quarterly distributions from the Albuquerque, New Mexico propertyproperties. Another principal source of cash is management fees earned in the operation of the Trusts’ two hotels and salespotential future real estate hotel sales. An affiliated hotel was sold on December 16, 2020. Also, another source of our hotel properties.cash is repayment of the intercompany loans, which was recently facilitated with the Tempe Hotel sale. The Partnership’s principal source of revenue is hotel operations and distributions for the one 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.debt and the source of repayment of intercompany loan from Tucson and Albuquerque.

Hotel operations are significantly affected by occupancy and room rates at the Hotels. Due toHotels in the impact ofFiscal year 2021. We anticipate occupancy will partially recover from the COVID-19 virus on the travel and hospitality industries,Virus, and the economy in general, we are anticipating significantly lower occupancyrelated economic and ADRtravel slowdown during this coming year and capitalFiscal 2022. Capital improvements are expected to decrease from the prior year, especially in our first fiscal quarter February 1, 2020 through April 30, 2020. We expect only modest recovery in our second fiscal quarter (May-July, 2020) with continuing improvement during the remainder of the fiscal year ending January 31, 2021, as the travel and hospitality industries, and overall economy, rebound.year.

With approximately $1,200,000$1,703,000 of cash and short term investments as of January 31, 20202021 and the availability of a $1,000,000$250,000 bank lines of credit, an up to $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of our two available Advances to Affiliate credit facilities for a totaland available Bank line of $1,000,000 maximum borrowing capacity,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. In addition, our management is analyzing other strategic options available to us, including raising additional funds, additional asset sales, increasing borrowings at either, or both, the Albuquerque andour Tucson hotels and using the funds generated to pay intercompany loans due from the Tucson hotel to the Partnership of approximately $3.7 million; however,hotel. However, such transactions may not be available on terms that are favorable to us, or at all.

IHT and InnDependent Boutique Collections Hotels (IBC), agreed to extend the payment schedule on IBC’s note receivable by one (1) year, extending the first payment from November 2020 to November 2021. The reason for the extension is in support of IBC’s cash requirements; related to IBC’s realization of fully benefiting from a return in occupancy and travel. These potential benefits in turn improve IHT’s secured position on its note receivable from IBC. Management also believes that even with an additional extension repayment term due to COVID-19 that the future collectability of the current carrying value of the note is probable and not subject to further impairment, or allowance for the year ended January 31, 2021.

Refer to Note 6 – “Note Receivable” for information related to the Sale of IBC Hospitality Technologies (IBC).

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

We anticipate no additional new-build hotel supply during the remaining fiscal year 2022, and accordingly we anticipate some recovery of revenues and operating margins. We expect the major challenge for the upcoming fiscal year to be the economic and travel recovery of leisure, corporate, group, and government business in the markets in 2022 which we operate, which may affect our ability to recover occupancy and eventually increase room rates while maintaining and/or building market share.

NetNegative cash used in operating activities totaled approximately $953,000$807,000 during fiscal year 2020the twelve months ended January 31, 2021 as compared to net cash used of approximately $1,799,000 used in$953,000 during the prior fiscal year. Consolidated net income was approximately $(1,978,000) for the fiscal yeartwelve months ended January 31, 20202020. Consolidated net loss was approximately $2,828,000 for the twelve months ended January 31, 2021 as compared to consolidated net incomeloss for the fiscal yeartwelve months ended January 31, 20192020 of approximately $11,106,000.$1,978,000 a major explanation in each Fiscal Year was non-cash depreciation expense. Explanation of the differences between these fiscal years are explained above in the results of operations of the Trust.

Changes in the adjustments to reconcile net loss and net income for the yearstwelve months ended January 31, 20202021 and 2019,2020, respectively, consist primarily of gain on disposal of assets,operating lease costs, stock-based compensation, hotel property depreciation, and changes in assets and liabilities. Hotel property depreciation was approximately $902,000$831,000 during fiscal year 2020the twelve months ended January 31, 2021 compared to approximately $1,245,000$902,000 during fiscal year 2019,the twelve months ended January 31, 2020, a decrease of $343,000$71,000 as the Trust recognized less depreciation as one ofcapitalized fixed assets became fully depreciated. During Fiscal Year ended January 31, 2020, IHT impaired the hotel propertiesnote receivable by $825,000 and no further impairment was sold duringrequired in the fiscal year 2019. There was no amortization of intangibles during fiscal years 2020 or 2019.ended January 31, 2021.

Changes in assets and liabilities for accounts receivable, prepaid expenses and other assets and accounts payable and accrued expenses totaled approximately $91,000$909,000 and approximately $(296,000)($438,000) for the fiscal yearstwelve months ended January 31, 20202021 and 2019,2020, respectively. This significant increase in changes in assets and liabilities for the fiscal yeartwelve months ended January 31, 2021 compared to the twelve months ended January 31, 2020 compared to the fiscal year ended January 31, 2019 was due to decreasesthe increase in accounts payables and accrued liabilities.operating liabilities related to ongoing operations.

Net cash provided by investing activities totaled approximately $1,305,000$503,000 for the yeartwelve months ended January 31, 20202021 compared to net cash provided by investing activities of approximately $8,372,000$1,305,000 for the yeartwelve months ended January 31, 2019.2020. The decrease in net cash provided by investing activities during fiscal year 2020the twelve months ended January 31, 2021 was due primarily due to (1) the Yuma hotel sale in the prior year; and there were no hotels sold in the current year, (2) the $1.0 million investments in UniGen Power Inc. [UPI], (3) offset by the lending on advances to affiliates – related party of approximately $75,000 during the fiscal year 2020 as compared to approximately $776,000 for the fiscal year 2019.additional investment into UniGen.

Net cash provided by financing activities totaled approximately $807,000 and $99,000, compared to net cash used of $10,399,000respectively, for the yearstwelve months ended January 31, 20202021 and 2019, respectively.2020. The significant decreaseincrease of approximately $10,498,000$708,000 was primarily due to decreases in distributions to non-controlling interest holders, decreases in repurchasethe repayments of treasury stock;the Tempe Hotel related party note payable, borrowings on the Rare Earth related party note payable, and increases in collection online of credit – related party,SBA PPP loans, which became available soon after the Covid-19 Pandemic arose, as previously discussed.

Principal payments on mortgage notes payables for continuing operations waspayable were approximately $120,000$168,000 and $102,000$119,000 during the fiscal yearstwelve months ended January 31, 2021 and 2020, respectively. Net payments and 2019, respectively. Paymentsborrowings on notes payable to banks was approximately $170,000($17,000) and approximately $-0-$8,000 during the fiscal yearstwelve months ended January 31, 2021 and 2020, and 2019, respectively as we paid off our mortgages on our Yuma, Arizona property in the fiscal year ended January 31, 2019, as that asset was sold. Borrowings on Mortgage Notes Payable was $1,400,000 and $-0- during the fiscal years ended January 31, 2020 and 2019, respectively due to refinancing our Albuquerque, New Mexico property in the fiscal year ended January 31, 2020.respectively.

For the fiscal year ended January 31, 2020, payments on line of credit – related party netted against borrowings on line of credit – related party was approximately $-0- of net cash provided by financing activities as compared to approximately $178,000 of net cash provided by financing activities for the fiscal year ended January 31, 2019.

PaymentsBorrowing on notes payables – related party, netted against borrowingscollections on note payable – payable–related party, was approximately $323,000$1,434,000 and $306,000($323,000) of net cash used byin financing activities during the fiscal yearstwelve months ended January 31, 20202021 and 2019,2020, respectively.

PaymentsBorrowings on other notes payables netted against borrowingspayments on other note payable was approximately $614,000$168,000 and $330,00($613,000) of net cash provided by (used in) financing activities during the fiscal yearstwelve months ended January 31, 20202021 and 2019,2020, respectively.

ProceedsNet proceeds from sales of non-controlling ownership interests in subsidiaries decreased by approximately $102,000$20,000 as salesnet purchases of non-controlling ownership interest was approximately $-0-($20,000) for the fiscal yeartwelve months ended January 31, 20202021 and approximately $102,000$0 for the yeartwelve months ended January 31, 2019. 2020.

We had no sales of our IHT stock for cash for the fiscal yearstwelve months ended January 31, 20202021 and January 31, 2019.2020.

During the fiscal yeartwelve months ended January 31, 2020,2021, our distributions to non-controlling interest holders was approximately $521,000$150,000 compared with approximately $9,560,117$521,000 for the fiscal yeartwelve months ended January 31, 2019.2020.

We continue to contribute to a Capital Expenditures Fund (the “Fund”) an amount equal to 4% of the InnSuites Hotels’ revenues from operation of the Hotels. The Fund is restricted by the mortgage lender for one of our properties. As of January 31, 20202021, and 2019,2020, there were no monies held in these accounts reported on our 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 fiscal yeartwelve months ended January 31, 20202021 and 2019,2020, the Hotels spent approximately $251,000$37,000 and $937,000,$324,000, respectively, for capital expenditures. The capital expenditures were primarily associated with the property improvements at the Hotels, as required to meet continuing Best Western standards. We consider the majoritymost of these improvements to be revenue producing. Therefore, these amounts are capitalized and depreciated over their estimated useful lives. For the remaining fiscal year 20212022 capital expenditures, we plan on spending less on capital improvements as we have completed our property improvements at our Tucson, Arizona and Albuquerque, New Mexico hotels.hotel which required significant amounts of capital improvements during the nine months ending October 31, 2019. Repairs and maintenance were charged to expense as incurred and approximated $355,000 and $403,000 for the twelve months ended January 31, 2021 and $680,000 for fiscal years 2020, and 2019, respectively.

We have minimum debt payments, net of debt discounts, of approximately $1,754,000$216,015 and approximately $668,000$1,177,729 due during fiscal years 20202022 and 2021,2023, respectively. Minimum debt payments due during fiscal year 20212022 and 2023 include approximately $161,000$169,000 and $177,000 of mortgage notes payable, and approximately $167,000$47,216 and $1,000,877 of other notes payable, secured promissory notes outstanding to related parties and approximately $807,000 of other notes payablewhich are secured promissory notes outstanding to unrelated third parties arising from the Shares of Beneficial Interest and Partnership unit repurchases.repurchases, respectively.

We may seek to negotiate additional credit facilities or issue debt instruments. Any debt incurred or issued by us may be secured or unsecured, long-term, medium-term, or short-term, bear interest at a fixed or variable rate and be subject to such other terms as we consider prudent.

SALE OF OWNERSHIP INTERESTS IN ALBQUERQUE, AND TUCSON SUBSIDIARIES

See Notes 3, and 4 of the Trust’s Consolidated Financial Statements for a detailed discussion of the sale of ownership interests in the Trust’s subsidiaries.

COMPLIANCE WITH CONTINUED LISTING STANDARDS OF NYSE AMERICAN

On January 19, 2017, the Trust received a letter from the NYSE AMERICAN informing the Trust that the staff of the NYSE AMERICAN’s Corporate Compliance Department had determined that the Trust is not in compliance with Section 1003(a)(iii) of the NYSE AMERICAN Company Guide due to the Trust having stockholders’ equity of less than $6.0 million and net losses from continuing operations in its five most recent fiscal years ended January 31, 2017.

The NYSE AMERICAN’s letter informed the Trust that, to maintain its listing, it must submit a plan of compliance by February 20, 2017, addressing how it intends to regain compliance with the NYSE AMERICAN’s continued listing standards within the maximum potential 18-month plan period available (the “Plan Period”). Elements of the compliance plan may include the sale of one or more of its assets (management believes IHT hotels have a much lower book value than market value), sale of additional Trust stock at market value, sale of minority interest in specific hotel properties and/or anticipated continuation of the current operational upward current trends in hotel gross operating profits.

On June 2, 2017, the Trust sold its Ontario, California hotel to an unrelated third party for approximately $17.5 million, which the Trust received in cash. The Trust has recognized a gain of approximately $11.4 million on its consolidated statement of operations for the fiscal year ended January 31, 2018. As of January 31, 2018, the Trust Shareholders’ Equity was approximately $8.2 million exceeding the minimum requirements of the NYSE American Company Guide.

On January 11, 2018, the Trust received a letter from the NYSE American LLC informing us that the Trust is back in compliance with all the NYSE American LLC continued listing standards set forth in Part 10 of the NYSE American LLC Company Guide. Specifically, the Trust has resolved the continued listing deficiencies with respect to Section 1003(a)(iii) of the Company Guide reference in the Exchange’s letters dated January 19, 2017. The Trust’s shareholders equity as of January 31, 2018, October 31, 2017, and July 31, 2017 exceeded $8.2 million which met the minimum requirement of $6 million. The Trust will be subject to ongoing review for compliance with NYSE American LLC requirements as part of the Exchange’s routine monitoring.

On July 1,May 16, 2020, the Trust received a letter from NYSE AMERICAN giving an official notice of noncompliance of the Trust with continued listing standards of NYSE American LLC informing(the “Exchange”) because the Trust of noncompliancefailed to timely file with the NYSE American continued listing standards, being subjectSecurities and Exchange Commission (the “SEC”) its Annual Report on Form 10-K for the year ended January 31, 2020 (the “Delinquent Report”). This filing delinquency subjected the Trust to the procedures and requirements set forth inof Section 1007 of the NYSE American Company Guide. The requisite Form 8-K and associated press release were issued on May 22, 2020, and the Trust had failedfiled the annual Form 10-K on August 14, 2020.

On December 12, 2020, the Trust requested and was granted an extension for their quarterly reports for the First, Second, and Third Fiscal Quarters, under the Covid-19 SEC Relief and Late Filer Extension Request process. The Late Filer Extension was initially granted until February 15, 2021 for all three delinquent Quarters. Subsequently, after filing the First Quarter 10-Q on January 11, 2021, the Trust requested and was granted an additional extension for the Second and Third Quarters respectively, until April 15, 2021. The Trust filed their Second Quarterly Report on March 1, 2021. The Trust filed their Third Quarterly Report on March 25, 2021 and is now compliant.

Due to timely issue its FormCOVID-19 disruptions, and consistent with SEC guidelines, the Trust extended their filing dates of the 10-K for the fiscal year timeperiod ended January 31, 2020, the first quarter 10-Q for the fiscal year ended April 30, 2020, the second quarter 10-Q for the fiscal quarter ended July 31, 2020, and the third quarter 10-Q for the fiscal year ended October 31, 2020. The 45-day SEC extension for the second fiscal quarter extended the filing compliance date to October 31, 2020. An additional 45-day SEC extension for the second fiscal quarter extended the filing compliance date to February 15, 2021. The Trust applied for and was granted an additional 60-day SEC compliance extension to April 15, 2021 for both the second and third fiscal quarters. All late filings are now complete, and IHT is once again considered to be in compliance with the SEC and NYSE AMERICAN as of March 25, 2021.

NON-GAAP FINANCIAL MEASURES

The following non-GAAP presentations of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and funds from operations (“FFO”) are made to assist our investors in evaluating our operating performance.

Adjusted EBITDA is defined as earnings before interest expense, amortization of loan costs, interest income, income taxes, depreciation and amortization, and non-controlling interests in the Trust. We present Adjusted EBITDA because we believe these measurements (a) more accurately reflect the ongoing performance of our hotel assets and other investments, (b) provide more useful information to investors as indicators of our ability to meet our future debt payments and working capital requirements, and (c) provide an overall evaluation of our financial condition. Adjusted EBITDA as calculated by us may not be comparable to Adjusted EBITDA reported by other companies that do not define Adjusted EBITDA exactly as we define the term. Adjusted EBITDA does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity.

A reconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the fiscal years ended January 31, 2021 and 2020 and 2019approximate follows:

FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts (“NAREIT”), which is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales of properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. The Trust is an unincorporated Ohio real estate investment trust; however, the Trust is not a real estate investment trust for federal taxation purposes. Management uses this measurement to compare itself to REITs with similar depreciable assets. We consider FFO to be an appropriate measure of our ongoing normalized operating performance. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other companies that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO does not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity, nor is it indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements.

A reconciliation of FFO to net income (loss) attributable to controlling interests for fiscal year ended January 31, 20202021 and 20192020 follows:

The Trust reported Consolidated Net Loss from continuingoperations of approximately $2,828,000 for the fiscal year ended January 31, 2021 compared to Consolidated Net Loss from operations of approximately $1,978,000 for the fiscal year ended January 31, 2020 compared to Consolidated Net Loss from continuing operations of approximately $1,986,000 for the fiscal year ended January 31, 2019.2020. Fiscal 20202021 and 2019 Consolidated Net Income from continuing operations included non-cash depreciation, amortization and current year one-time $825,000 note receivable impairment, of approximately $1,840,000 and $846,000, respectively. Fiscal 2020 Consolidated Net Loss from continuingoperations included non-cash depreciation of approximately $831,000 and $902,000, respectively. Fiscal 2021 Consolidated Net Loss from operations before non-cash depreciation amortization and impairment notes receivable was approximately $(138,000)$1,997,000 as compared with $(1,184,000)$1,077,000 for fiscal 2019.2020. Fiscal 20202021 Consolidated Net Revenues from continuing operations were approximately $6,568,000$4,203,000 as compared with fiscal 20192020 Revenues of approximately $6,169,000. Fiscal 2020 Net Income Per Share was $(0.21) as compared with fiscal 2019 Net Income Per Share of $1.20.$6,568,000.

FUTURE POSITIONING

In viewing the hotel industry cycles, recently reconfirmed by the COVID-19 disruption of travel and hospitality, the Board of Trustees determined that 2008 may have been the high point of the current hotel industry cycle and further determined it was appropriate to actively seek buyers for our properties. We engaged the services of several hotel brokers and began independently advertising our Hotels for sale. We sold the Ontario hotel in June 2017, and the Yumatwo remaining Hotel in October 2018.properties. We continue to independently advertisemake our Tucson Hotel and list our HotelsAlbuquerque Hotel available for sale includingat market value, on ourthe website (www.suitehotelsrealty.com).www.suitehotelsrealty.com.

The table below provides book values, mortgage balances and listed asking price for the Hotels.

The listed asking price“Estimated Market Asking Price” is the amount at which we believe would sell each of the Hotels and is adjusted to reflect recent hotel sales in the Hotels’ areas of operation and currentprojected upcoming 12 month earnings of each of the Hotels. The listed asking priceEstimated Market Asking Price is not based on appraisals of the properties.

On August 1, 2015, we finalized and committedWe have from time to a plan to sell over time our hotel properties. We listed each of the properties with a local real estate hotel broker who has successfully sold four of our hotel properties and we believe that each of the assets isare being marketed at a price that is reasonable in relation to its current fair value. We plan to sell our remaining two Hotel properties one within two years,12-36 months, based on feedback received by our local hotel real estate property professional brokers, and we have engaged hotel real estate brokers who specialize in the selling/buying hotel real estate properties for the sale of our Tucson and Albuquerque Hotel properties. We can provide no assurance that we will be able to sell either or both of the Hotel properties on terms favorable to us or within our expected time frame, or at all.

Effective October 24, 2018, the Trust sold the Yuma hotel to an unrelated third party for $16.05 million. With an estimated basis of approximately $4.6 million, the sale resulted in the recognition of a significant profit after transactional costs.

Although we believe it is probable,believed feasible, we may be unable to realize the listed salesasking price for the individual Hotel properties or to sell them at all.and/or refinance one or both. However, we believe that the listedasking price values are reasonable based on upturn local market conditions, comparable sales, and comparable sales.anticipated upturns in occupancy, rates, and profits per hotel. Changes in market conditions have in part resulted, and may in the future result, in our changing one or all of the listed asking prices.

Our long-term strategic plan is to obtain the full benefit of our real estate equity, to benefit from our UniGen Power, Inc., (UPI) clean energy operation diversified investment, and to pursue a merger with another company, likely a private larger entity that seeks to go public orto list on the NYSE AMERICAN Exchange.

SHARE REPURCHASE PROGRAM

For information on the Trust’s Share Repurchase Program, see Part II, Item 5. “Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” We plan to continue the stock and unit buy backs in the current Fiscal Year 2022.

OFF-BALANCE SHEET ARRANGEMENTS

Other than lease commitments and legal contingencies incurred in the normal course of business, we We do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned or controlled subsidiaries that are not included in our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As a partial offset to the current hotel industry Virus induced drop in demand pressure, the Trust looks to benefit from, and expand, its UPI clean energy operation diversification investments in the months, and years ahead. See Note 7 of the Audited Consolidated Financial Statements for discussion on UPI.

Asset Impairment

We believe that the policies we follow for the valuation of our hotel properties, which constitute the majority of our assets, are our most critical policies. The Financial Accounting Standards Board (“FASB”) has issued authoritative guidance related to the impairment or disposal of long-lived assets, codified in ASC Topic 360-10-35, which we apply to determine when it is necessary to test an asset for recoverability. On an events and circumstances basis, we review the carrying value of our hotel properties. We will record an impairment loss and reduce the carrying value of a property when anticipated undiscounted future cash flows and the current market value of the property do not support its carrying value. In cases where we do not expect to recover the carrying cost of hotel properties held for use, we will reduce the carrying value to the fair value of the hotel, as determined by a current appraisal or other acceptable valuation methods. We did not recognize a hotel properties impairment loss in fiscal years 20202021 or 2019.2020. As of January 31, 2020,2021, our management does not believe that the carrying values of any of our hotel properties are impaired. The Trust did take a reserve for bad debt as of January 31, 2020 reflecting its concern with the collectability of the Obasa note receivable, related to the sale of the IBC technology segment.

Sale of Hotel Assets

On August 1, 2015, the Trust finalized and committed to a plan to sell Hotel properties. The Trust listed Hotel properties with real estate hotel brokers, Effective October 24, 2018, the Trust sold the Yuma hotel to an unrelated third party for $16.05 million, and on June 2, 2017, the Trust sold its Ontario, California hotel to an unrelated third party for approximately $17.5 million. Management believes that our currently-ownedcurrently owned Hotels are listedvalued at prices that isare reasonable in relation to their current fair market value. The Trust believes that the plan to sell these assets will not be withdrawn. At this time, the Trust is unable to predict when, and if, either of its two Hotel properties will be sold. The Trust has listedseeks to sell one hotel per year or both over the Tucson hotel with local real estate hotel brokers and, wenext 12-36 months. We believe that botheach of the Tucson and Albuquerque hotels are being marketedassets is available at a price that is reasonable in relation to its current fair market value.

The plan is to work to sell the remaining two hotel properties over the next 12-36 months, and if needed beyond.

Revenue Recognition

ASU 2014-09 (Topic 606), “Revenue from Contracts with Customers” is effective for reporting period after January 1, 2018. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations.

Revenues are primarily derived from the following sources and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities.

Revenues primarily consist of room rentals, food and beverage sales, management and trademark fees and other miscellaneous revenues from our properties. Revenues are recorded when rooms are occupied and when food and beverage sales are delivered. Management and trademark fees from non-affiliated hotels include a monthly accounting fee and a percentage of hotel room revenues for managing the daily operations of the Hotels and the one hotel owned by affiliates of Mr. Wirth.Wirth until December 2020.

Each room night consumed by a guest with a 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.

In evaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such as free Wi-Fi, grab and go breakfast, access to on-site laundry facilities and parking), as the other obligations are not distinct and separable because the guest cannot benefit from the additional amenities without the consumed room night. The Trust’s obligation to provide the additional items or services is not separately identifiable from the fundamental contractual obligation (i.e., providing the room and its contents). The Trust has no performance obligations once a guest’s stay is complete.

We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in revenues. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency.

SEASONALITY

See Item 1 for related discussion of seasonality.

INFLATION

We rely entirely on the performance of the Hotels and InnSuites Hotels’ ability to increase revenue to keep pace with inflation. Operators of hotels in general, and InnSuites Hotels in particular, can change room rates quickly, but competitive pressures may limit InnSuites Hotels’ ability to raise rates as fast as or faster than inflation

INVESTMENT IN UNIGEN POWER, INC.

On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UPI” or “UniGen”).

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%. The Debentures are convertible into Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. The Loan was structured into two (2) payments of $600,000 and $400,000. The first payment of $600,000 was made by the Trust at closing on December 16, 2020 and the second payment was made on February 3, 2020.

UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) to purchase up to 1,000,000 shares of Class A Common Stock (600,000 issued on January 31, 2020, and 400,000 issued on February 3, 2020). The Debenture Warrants are exercisable at an exercise price of $1.00 per share of Class A Common Stock.

UniGen, also, issued the Trust additional common stock purchase warrants (“Additional Warrants”) to purchase up to 200,000 shares of Class A Common Stock (120,000 issued on January 31, 2020, and 80,000 issued on February 3, 2020). The Additional Warrants are exercisable at an exercise price of $2.25 per share of Class A Common Stock.

On the Trust’s balance sheet, the investment of the $1,060,000 consists of approximately $700,000 in note receivables, approximately $300,000 as the fair value of the warrants issued with the Trust’s investment in UniGen, and $60,000 of UniGen Common Stock. The value of the premium related to the fair value of the warrant will accrete over the life of the debentures.

InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021 that could expand into a multi-million-dollar investment totaling up to approximately 25 percent ownership in privately held UniGen Power, Inc. (UPI) to develop a patented high profit potential new efficient clean energy generation innovation. The initial investment was made December 16, 2019, with significant positive progress to date despite the virus, economic, and travel disruptions of 2020. During the first Fiscal Quarter of 2021, an additional investment of $400,000 was made bringing the total to $1 Million. The investment includes warrants convertible to UPI 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.

Based on subsequent events, IHT is likely to obtain an opportunity to convert a $500,000 UniGen line of credit into 500,000 shares of UniGen. IHT has obtained an additional 300,000 warrants at $2.25 per share. Full conversion of all IHT held convertible debt and UniGen warrants could result in 3 million shares of UniGen stock and if all shares from all parties are fully exercised, it would result in approximately 15 million UniGen shares outstanding, or approximately up to 25% of the total equity of UniGen held by IHT. Trust owns less than 1% of the outstanding shares of Unigen as of January 31, 2021.

According to UniGen Management, the UniGen clean energy innovation project has made positive progress and is on budget, with the first GenSet prototype anticipated to be in operation by year-end, 2021, and possibly as soon as September 2021 or later. The significant time delay is related to several factors, including the Covid-19 travel restrictions to UniGen China suppliers, time needed to incorporate three additional patentable innovations discovered, design improvements, and the pursuit of four additional patents recently discovered and in process. Global Supply sources include China, Italy, Israel, and the United States. IHT has confidence in the UniGen technical team based in Detroit and in the encouraging progress to date. Unigen profitability is anticipated to be 18-24 months into the future, but future high profit potential is encouraging for IHT investors, especially considering 16 months of successful design and development work, now complete.

James Wirth (President) and Marc Berg (Executive Vice President) both lack significant control. They have two of the six Board of Directors seats or 33% and were elected in December 2019 to serve on the board of UPI to closely monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-K, 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 those of our Board of Trustees or our officers in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, dispositions,acquisitions, developments, financings, conflicts of interest and other matters; (vi) plans and progress regarding a reverse merger; (vii) our plans and expectations regarding future sales of hotel properties; and (viii)(vii) trends affecting our or any Hotel’s financial condition or results of operations.

These forward-looking statements reflect our current views in respect of future events and financial performance but are subject to many uncertainties and factors relating to the operations and business environment of the Hotels that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties include, but are not limited to:

We do not undertake any obligation to update publicly or revise any forward-looking statements whether as a result of new information, future events or otherwise except as may be required by law. Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, as amended, the qualifications set forth hereinabove are inapplicableappropriate to any forward-looking statements in this Form 10-K relating to the operations of the Partnership.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

All other schedules are omitted, as the information is not required or is otherwise furnished.

INNSUITES HOSPITALITY TRUST

LIST OF CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated financial statements of InnSuites Hospitality Trust are included in Item 8:

All other schedules are omitted, as the information is not required or is otherwise furnished.

Report of Independent Registered Public Accounting Firm

To the shareholdersBoard of Trustees and the board of trustees of Shareholders

InnSuites Hospitality Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheetssheet of InnSuites Hospitality Trust and subsidiaries (the “Trust”)Trust) as of January 31, 20202021, and 2019, the related consolidated statements of operations, stockholders’shareholders’ equity, and cash flows for each of the two years in the year then ended, January 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of January 31, 2020 and 2019,2021, and the results of its operations and its cash flows for each of the two years in the year then ended January 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Trust’sentity’s management. Our responsibility is to express an opinion on the Trust’sentity’s financial statements based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditsaudit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’sentity’s internal control over financial reporting. Accordingly, we express no such opinion.

Our auditsaudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Note Receivable

Description of the Matter

During the year ended January 31, 2019, the Trust sold its wholly owned technology segment and subsidiary, IBC Hotels LLC or InnDependent Boutique Collection (“IBC”), to an unrelated buyer for $3,000,000. The transaction closed on August 1, 2018 and closing funds of $250,000 were transferred to the Trust, and a secured note receivable was recorded for $2,750,000. Principal and interest payments on the note receivable were to begin in June 2019, and the note matures on June 1, 2024. The note receivable is secured by: (i) a pledge of the IBC interests, and (ii) a security interest in all assets of IBC, provided, however, the Trust shall agree to subordinate such security interest to commercially reasonable debt financing upon the request of an arm’s length lender of IBC. The Trust has no managerial control, does not have the ability to direct the operations or capital requirements of IBC and has no rights to any benefits or losses from IBC as of August 1, 2018.

During the year ended January 31, 2020, the Trust impaired the note receivable and recorded a reserve of $825,000 and recorded a net note receivable of an estimated $1,925,000. Impairment indicators included, among others, the following: the buyer of IBC twice requested an extension to begin monthly principal and interest payments in November 2019, and then again to begin payments in November 2020, because of a lack of available cash and delays in the buyer’s ability to execute on marketing strategies. Extensions to begin monthly payments were agreed upon by the Trust, and the maturity date remained unchanged.

During the year ended January 31, 2021, the buyer requested a third extension to begin monthly principal and interest payments in November 2021, because of significant setbacks caused by COVID-19 in the hospitality industry. The extension to begin monthly payments were agreed upon by the Trust, and the maturity date remained unchanged.

As described in Note 6 of the consolidated financial statements for the year ended January 31, 2021, the Company asserted there are no further impairment indicators and continued to record a net note receivable of an estimated $1,925,000.

Auditing management’s assertions for the realizability, recoverability and collectability of the note receivable was especially challenging and required additional audit effort due to the complexity of management’s assertions and assumptions used in management’s impairment analysis to arrive at a reasonable reserve amount. Evaluating the likelihood and amount of proceeds to be collected on the note receivable was highly subjective and required significant judgement. In particular, management’s estimates were sensitive to assumptions that the buyer will be able to successfully execute on its marketing and advertising strategy for IBC to generate revenue and positive cash flow.

How We Addressed the Matter in Our Audit

/s/ Macias, Gini, and O’Connell LLP

We have served as the Trust’s auditor since 2021.

Irvine, California

5/14/2021

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of trustees of InnSuites Hospitality Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of InnSuites Hospitality Trust and subsidiaries (the “Trust”) as of January 31, 2020, the related consolidated statements of operations, stockholders’ equity and cash flows for the period ended January 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of January 31, 2020, and the results of its operations and its cash flows for the period ended January 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Hall & Company Certified Public Accountants & Consultants, Inc.

We have served as the Trust’s auditor since 2015

Irvine, CA

August 14, 2020

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See accompanying notes to these consolidated financial statements

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS