NOTES RECEIVEABLE

9 Months Ended

Oct. 31, 2024

Notes Receiveable

NOTES RECEIVEABLE

16. NOTES RECEIVEABLE

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

On August 15, 2018 InnSuites Hospitality Trust (IHT) entered into a final 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.

● No interest accrued through May 2024, and no payments on the note receivable including principal and interest based on the extended time period were due through May 2024.

● 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.

● The note has matured. However, IHT is currently in discussions for a further extension/modification.

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

FISCAL YEAR
2025		1,925,000
	$	1,925,000

● Management’s best, conservative valuation of IBC’s assets, and their marketability, in the case of a default by the Buyer.

● 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 strongly believes the IBC business model is sound and viable, partly because IBC focus is on independent hotels. Half of the world’s hotels are non-affiliated hotels. There are only two major hotel reservation systems, which are both focused on affiliated hotels.

As of October 31, 2024, management evaluated the carrying value of the note determined no impairment is needed at this time. This is detailed further with ongoing discussions of an extension, which allows time for IBC to benefit from the current strong travel, hospitality services, and hotel reservations currently being experienced.

IHT has no managerial control nor does IHT have the ability to direct the operations or capital requirements of IBC. IHT has no rights to any benefits or losses from IBC as of August 1, 2018.