NOTES RECEIVEABLE

3 Months Ended

Apr. 30, 2026

16. NOTES RECEIVEABLE

Sale of IBC Hospitality Technologies; IBC Hotels LLC (IBC)

On August 15, 2018 InnSuites Hospitality Trust (IHT) entered into a sale agreement of its technology subsidiary, IBC Hotels LLC (IBC), to an unrelated third-party buyer (Buyer). As a part of the amended sale agreement, the Trust received a secured promissory note adjusted to the principal amount of $1,925,000 with interest to be accrued at 3.75% per annum, which is recorded in the accompanying consolidated balance sheet in continuing operations, which was subsequently adjusted to 3.25%, due in 2030.

	●	Note is secured by (1) pledge of the Buyer’s interest in IBC, and (2) a security interest in all assets of IBC, provided IHT shall agree to subordinate such equity interest to commercially reasonable debt financing upon request.

	●	If IBC closes an equity transaction with net proceeds to IBC in excess of $2,500,000, IBC/Buyer shall pay or pre-pay to IHT an amount equal to (a) 50% of the net proceeds received by IBC and (b) 50% of the sum of the unpaid balance of the note and accrued interest accrued but unpaid interest thereon, as the date of receipt of the net proceeds by IBC.

	●	RRF, the Management Subsidiary of IHT, is currently the Management Company of IBC. The Note was extended to June 30, 2030, including interest modification to 3.25% payable at maturity.

	●	Future payments on this note are shown in the table below.

SCHEDULE OF FUTURE PAYMENTS OF DEBT

FISCAL YEAR
2030		1,925,000
Total	$	1,925,000

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There were past negative impact of the COVID-19 pandemic, on the travel and hospitality industry, in which IBC’s reservation and booking technology operates. IHT believes the IBC business model is sound and viable, partly because IBC focus is on independent boutique hotels. Half of the world’s hotels are non-affiliated hotels. There are only two major hotel reservation systems, both with multi-billion dollar valuation, which are both focused on affiliated hotels.

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IBC was purchased by an affiliate of the Trust Chairman with modified terms and maturity date. The RRF subsidiary of the Trust now manages IBC Hotels, with a five-year option to buy at cost.

IHT Management believes this option to buy at cost could prove to be a valuable asset of RRF, and eventually IHT in the future, if the current expansion of IBC, (which is underway), is successful in the years ahead.

Rare Earth Financial LLC (REF), an affiliate majority-owned by our President and CEO, James Wirth, entered into an agreement with the Obasa Group of Companies, on March 5, 2025, to purchase 102037739 Saskatchewan Ltd, and its subsidiary IBC. RRF LLLP, a subsidiary of IHT, agreed to become the Management Company of IBC, in an effort to rekindle earlier operations that were partially successful, until the Covid-19 pandemic in early 2020. The Note Payable to IHT was extended until June 30, 2030, with interest to be paid at 3.25%. REF intends to make any outstanding interest payments potentially due in Fiscal Year 2027 (February 1, 2026 to January 31, 2027). As part of the Management Agreement, RRF obtained a five-year option to purchase IBC at the net cost of REF. If the rekindling of IBC is successful, this option could prove to be a valuable asset of IHT in the future.

As of April 30, 2026, management evaluated the carrying value of the note and determined no further impairment is needed at this time.