INNSUITES HOSPITALITY TRUST (Form: 10-Q, Received: 09/03/2010 14:05:17)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2010

Commission File Number 1-7062

INNSUITES HOSPITALITY TRUST

(Exact name of registrant as specified in its charter)

Ohio		34-6647590
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

InnSuites Hotels Centre
1625 E. Northern Avenue, Suite 105
Phoenix, AZ 85020
(Address of principal executive offices)

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

Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or l5(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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

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

Large accelerated filer o Accelerated filer ¨ Non-accelerated filer o Smaller reporting company ý

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

Number of outstanding Shares of Beneficial Interest, without par value, as of August 31, 2010: 8,576,018

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	JULY 31, 2010			JANUARY 31, 2010
	(UNAUDITED)			(AUDITED)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	413,617		$	406,385
Restricted Cash	82,536			81,421
Accounts Receivable, including $151,790 and $179,818 from related parties and net of Allowance for Doubtful Accounts of $47,000 and $39,000, as of July 31, and January 31, 2010, respectively	393,394			439,167
Prepaid Expenses and Other Current Assets	518,739			495,537
Total Current Assets	1,408,286			1,422,510
Hotel Properties, net	26,242,009			26,722,832
Property, Plant and Equipment, net	149,552			177,183
Deferred Finance Costs and Other Assets	164,444			151,791
TOTAL ASSETS	$	27,964,291		$	28,474,316

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses	$	1,521,295		$	1,846,455
Notes Payable to Banks	—			110,137
Current Portion of Mortgage Notes Payable	8,297,564			826,249
Current Portion of Other Notes Payable	171,197			165,326
Total Current Liabilities	9,990,056			2,948,167
Mortgage Notes Payable	14,200,157			21,080,705
Other Notes Payable	393,468			480,553

TOTAL LIABILITIES	24,583,681			24,509,425

SHAREHOLDERS’ EQUITY
Shares of Beneficial Interest, without par value; unlimited authorization; 8,578,618 and 8,605,426 shares issued and outstanding at July 31, and January 31, 2010, respectively	15,530,301			15,903,170
Treasury Stock, 8,208,128 and 8,181,323 shares held at July 31, and January 31, 2010, respectively	(11,409,725		)	(11,368,630		)
TOTAL TRUST SHAREHOLDERS’ EQUITY	4,120,576			4,534,540
NON-CONTROLLING INTEREST		(739,966	)		(569,649	)
TOTAL EQUITY		3,380,610			3,964,891
TOTAL LIABILITIES AND EQUITY	$	27,964,291		$	28,474,316

See accompanying notes to unaudited

consolidated financial statements

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	FOR THE SIX MONTHS ENDED JULY31,
	2010			2009

REVENUE
Room	$	6,302,693		$	7,244,351
Food and Beverage	477,622			516,522
Telecommunications	10,906			7,928
Other	116,387			161,171
Management and Trademark Fees, including $134,188 and $187,724 from related parties for the six months ended July 31, 2010 and 2009, respectively	137,488			191,082
Payroll Reimbursements, Related Party	1,374,126			1,347,521
TOTAL REVENUE	8,419,222			9,468,575

OPERATING EXPENSES
Room	1,681,241			1,838,299
Food and Beverage	408,273			413,807
Telecommunications	38,318			20,382
General and Administrative	1,512,555			1,585,294
Sales and Marketing	585,049			716,066
Repairs and Maintenance	625,050			595,322
Hospitality	370,950			398,724
Utilities	574,270			622,333
Hotel Property Depreciation	935,238			982,305
Real Estate and Personal Property Taxes, Insurance and Ground Rent	480,088			542,822
Other	10,822			4,971
Payroll Expenses, Related Party	1,374,126			1,347,521
TOTAL OPERATING EXPENSES	8,595,980			9,067,846
OPERATING INCOME (LOSS)	(176,758		)	400,729
Interest Income	1,233			9,926
TOTAL OTHER INCOME	1,233			9,926
Interest on Mortgage Notes Payable	770,531			752,347
Interest on Notes Payable to Banks	—			1,255
Interest on Other Notes Payable	21,429			5,151
TOTAL INTEREST EXPENSE	791,960			758,753

CONSOLIDATED LOSS BEFORE INCOME TAX PROVISION	(967,485		)	(348,098		)
INCOME TAX PROVISION	—			—
CONSOLIDATED NET LOSS		(967,485	)		(348,098	)
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(279,277	)		(236,985	)
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS	$	(688,208	)	$	(111,113	)
NET LOSS PER SHARE – BASIC AND DILUTED	$	(0.08	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC AND DILUTED	8,591,977			8,961,151

See accompanying notes to unaudited

consolidated financial statements

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	FOR THE THREE MONTHS ENDED JULY 31,
	2010			2009

REVENUE
Room	$	2,526,428		$	2,905,664
Food and Beverage	152,255			194,296
Telecommunications	3,964			3,062
Other	60,736			65,749
Management and Trademark Fees, including $60,669 and $82,989 from related parties for the three months ended July 31, 2010 and 2009, respectively	62,576			85,101
Payroll Reimbursements, Related Party	693,558			727,442
TOTAL REVENUE	3,499,517			3,981,314

OPERATING EXPENSES
Room	778,806			897,217
Food and Beverage	179,402			183,594
Telecommunications	17,977			9,524
General and Administrative	708,170			734,222
Sales and Marketing	280,435			375,135
Repairs and Maintenance	298,036			307,132
Hospitality	176,191			183,256
Utilities	308,330			354,223
Hotel Property Depreciation	465,494			487,402
Real Estate and Personal Property Taxes, Insurance and Ground Rent	235,427			260,683
Other	4,994			2,643
Payroll Expenses, Related Party	693,558			727,442
TOTAL OPERATING EXPENSES	4,146,820			4,522,473
OPERATING LOSS	(647,303		)	(541,159		)
Interest Income	769			3,589
TOTAL OTHER INCOME	769			3,589
Interest on Mortgage Notes Payable	392,113			375,542
Interest on Notes Payable to Banks	—			(3,050		)
Interest on Other Notes Payable	10,360			4,179
TOTAL INTEREST EXPENSE	402,473			376,671

CONSOLIDATED LOSS BEFORE INCOME TAX PROVISION	(1,049,007		)	(914,241		)
INCOME TAX PROVISION	—			—
CONSOLIDATED NET LOSS		(1,049,007	)		(914,241	)
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(263,561	)		(269,686	)
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS	$	(785,446	)	$	(644,555	)
NET LOSS PER SHARE – BASIC AND DILUTED	$	(0.09	)	$	(0.07	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC AND DILUTED	8,583,359			8,930,901

See accompanying notes to unaudited

consolidated financial statements

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	FOR THE SIX MONTHS ENDED JULY 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated Net Loss	$	(967,485	)	$	(348,098		)
Adjustments to Reconcile Consolidated Net Loss to Net Cash Provided By Operating Activities:
Provision for Uncollectible Receivables	8,127			18,421
Stock-Based Compensation	24,300			11,700
Hotel Property Depreciation	935,238			982,305
Loss on Disposal of Hotel Properties	450			690
Amortization of Deferred Loan Fees	21,295			19,924
Changes in Assets and Liabilities:
Accounts Receivable	37,646			5,402
Prepaid Expenses and Other Assets	(28,203		)	(28,622			)
Accounts Payable and Accrued Expenses	(325,160		)	(71,624			)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(293,792		)	590,098

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Investment Interest	400,000			—
Change in Restricted Cash	(1,115		)	(29,176			)
Improvements and Additions to Hotel Properties	(427,234		)	(480,478			)
NET CASH USED IN INVESTING ACTIVITIES	(28,349		)	(509,654			)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Deferred Loan Fees	(28,948)			—
Principal Payments on Mortgage Notes Payable	(409,233		)	(399,156			)
Net Proceeds from Refinancings of Mortgage Notes Payable	1,000,000			—
Payments on Notes Payable to Banks	(483,930		)	(2,660,473			)
Borrowings on Notes Payable to Banks	373,793			2,795,520
Repurchase of Treasury Stock	(41,095		)	(69,436			)
Repurchase of Partnership Units	—			(98			)
Payments on Other Notes Payable	(81,214		)	(15,477			)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	329,373			(349,120			)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	7,232			(268,676			)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	406,385			1,141,520
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	413,617		$		872,844

See Supplemental Disclosures at Note 7

See accompanying notes to unaudited

consolidated financial statements

INNSUITES HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JULY 31 AND JANUARY 31, 2010

AND FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2010 AND 2009

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

InnSuites Hospitality Trust (the “Trust”) is an unincorporated real estate investment trust in the State of Ohio that at July 31, 2010 owned four hotels through a partnership interest in RRF Limited Partnership (the “Partnership”) and one hotel (Yuma Hospitality LP) directly (the “Hotels”) with an aggregate of 843 suites in Arizona, southern California and New Mexico. The Trust is the sole general partner in the Partnership. The Hotels are managed by InnSuites Hotels, Inc. (“InnSuites Hotels”), which is a wholly-owned subsidiary of the Trust.

InnSuites Hotels holds management contracts under which it provides hotel management services to the Hotels, as well as three hotels with an aggregate of 439 suites owned by affiliates of James F. Wirth (“Mr. Wirth”), the Trust’s Chairman, President and Chief Executive Officer. Under the management agreements, InnSuites Hotels provides the personnel at the hotels, the expenses of which are reimbursed at cost, and manages the hotels’ daily operations, for which it receives a percentage of revenue from the hotels. InnSuites Hotels also holds licensing agreements and the “InnSuites” trademarks and provides licensing services to the Hotels, as well as the three hotels owned by affiliates of Mr. Wirth with an aggregate of 439 suites and two unrelated hotel properties with 288 suites. During the second quarter of fiscal year 2011, one of Mr. Wirth’s hotels was sold to an unrelated third party which signed a licensing agreement with InnSuites Hotels on substantially the same terms, except that fees for the first year were waived. Under the licensing agreements with affiliates of Mr. Wirth and that unrelated property, InnSuites Hotels receives a fixed monthly fee based on the number of units in the hotel property in exchange for use of the “InnSuites” trademark. Under the licensing agreement with the other unrelated property, InnSuites Hotels receives a revenue-based monthly fee in exchange for the use of the trademark.

The Trust’s general partnership interest in the Partnership was 71.41% as of both July 31 and January 31, 2010. The weighted average for the six months ended July 31, 2010 and 2009 was 71.41% and 71.06%, respectively. The weighted average for the three months ended July 31, 2010 and 2009 was 71.41% and 71.27%, respectively.

PARTNERSHIP AGREEMENT

The Partnership Agreement of the Partnership (the “Partnership Agreement”) provides for the issuance of two classes of limited partnership units, Class A and Class B. Such classes are identical in all respects, except that each Class A limited partnership unit is convertible into a like number of Shares of Beneficial Interest of the Trust at any time at the option of the limited partner. A total of 369,391 Class A limited partnership units were issued and outstanding as of both July 31 and January 31, 2010. Additionally, as of July 31 and January 31, 2010, a total of 3,407,938 Class B limited partnership units were held by Mr. Wirth and his affiliates on that date, in lieu of the issuance of Class A limited partnership units. Each Class B limited partnership unit is identical to Class A limited partnership units in all respects, except that Class B limited partnership units are convertible only with the approval of the Board of Trustees of the Trust, in its sole discretion. If all of the Class A and B limited partnership units were converted, the limited partners in the Partnership would receive 3,777,329 Shares of Beneficial Interest of the Trust as of July 31, 2010. The Trust held 9,434,188 General Partner Units as of both July 31 and January 31, 2010.

BASIS OF PRESENTATION

The financial statements of the Partnership, InnSuites Hotels and Yuma Hospitality LP are consolidated with the Trust, and all significant intercompany transactions and balances have been eliminated.

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended July 31, 2010 are not necessarily indicative of the results that may be expected for the year ended January 31, 2011. For further information, refer to the consolidated financial statements and footnotes thereto included in the Trust’s Annual Report on Form 10-K as of and for the year ended January 31, 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accounting policies that the Trust believes are most critical and involve the most subjective judgments include estimates and assumptions of future revenue and expenditures used to project cash flows. Future cash flows are used to determine the recoverability (or impairment) of the carrying values of the Trust’s assets in the event management is required to test an asset for recoverability of carrying value under FASB authoritative guidance related to the impairment or disposal of long-lived assets. For hotel properties held for use, if the carrying value of an asset exceeds the estimated future undiscounted cash flows over its estimated remaining life, the Trust recognizes an impairment expense to reduce the asset’s carrying value to its fair value. Fair value is determined by either the most current third-party property appraisal, if available, or the present value of future undiscounted cash flows over the remaining life of the asset. In cases where the Trust does not expect to recover the carrying cost of hotel properties held for sale, it will reduce the carrying value to the sales price less costs to sell. The Trust’s evaluation of future cash flows is based on historical experience and other factors, including certain economic conditions and committed future bookings. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows.

LIQUIDITY

The Trust’s principal source of cash to meet its cash requirements, including distributions to its shareholders, is the Trust’s share of the Partnership’s cash flow and its direct ownership of the Yuma, Arizona property. The Partnership’s principal source of revenue is hotel operations for the four hotel properties it owns. The Trust’s liquidity, including its ability to make distributions to its shareholders, will depend upon the Trust’s ability and the Partnership’s ability to generate sufficient cash flow from hotel operations.

Hotel operations are significantly affected by occupancy and room rates, which decreased from the first six months of fiscal year 2010 to the first six months of fiscal year 2011. Results are also significantly impacted by overall economic conditions and conditions in the travel industry. Unfavorable changes in these factors could negatively impact hotel room demand and pricing, which would reduce our profit margins on rented suites.

We have principal of $417,008 due and payable for the remainder of fiscal year 2011 under mortgage notes payable. For the period between August 1, 2010 and July 31, 2011, we have principal of $8,297,564 due and payable under mortgage notes payable. The mortgage note payable secured by the Ontario, California property matures in May 2011, at which time a final principal payment of approximately $7.5 million will be due. We will actively seek to either extend our current loan agreement or refinance the balance with another lender. Our ability to extend or refinance the Ontario note will depend on several factors, including the condition of credit markets and economic trends in both the hospitality industry in general and at the property specifically. We anticipate that current cash balances, future cash flows from operations and available credit will be sufficient to satisfy obligations related to the other four mortgages as they become due. In the event cash flows from operations are insufficient to satisfy these obligations as they become due, we may seek to refinance properties, negotiate additional credit facilities or issue debt instruments.

In past years, the Trust has relied on cash flows from operations to meet its financial obligations as they come due. However, for the remainder of fiscal year 2011 (August 1, 2010 through January 31, 2011), the Trust’s management has projected that cash flows from operations alone may not be sufficient to meet all of its financial obligations as they come due in the last two quarters of fiscal year 2011. Based on this projection, the Trust negotiated a new $1.0 million line of credit with Rare Earth Financial, LLC, an affiliate of Mr. Wirth, providing enough available liquidity for management to believe that the Trust will meet all of its financial obligations as they come due during fiscal year 2011. See Note 9 – “Subsequent Event”.

In addition, the Trust’s management is currently negotiating a new bank line of credit to replace the line of credit that expired on June 30, 2010.

REVENUE RECOGNITION

Room, food and beverage, telecommunications, management and licensing fees and other revenue are recognized as earned as services are provided and items are sold. Payroll reimbursements are recorded as the Trust provides its personnel to the hotels under management and are not netted with the corresponding payroll expense.

INCOME PER SHARE

Basic and diluted loss per share have been computed based on the weighted-average number of Shares of Beneficial Interest outstanding during the periods and potentially dilutive securities.

For the three and six month periods ended July 31, 2010 and 2009, there were Class A and Class B limited partnership units outstanding, which are convertible to Shares of Beneficial Interest of the Trust. Assuming conversion, the aggregate weighted-average incremental increase of the Shares of Beneficial Interest would have been 3,777,329 and 3,796,262 for the second quarter of fiscal year 2011 and 2010, respectively. The aggregate weighted-average incremental increase of the Shares of Beneficial Interest would have been 3,777,329 and 3,817,540 for the first six months of fiscal year 2011 and 2010, respectively. For the three-month and six-month periods ended July 31, 2010 and 2009, the Class A and Class B limited partnership units were antidilutive. Therefore, a reconciliation of basic and diluted loss per share is not included.

3. STOCK-BASED COMPENSATION

For the six months ended July 31, 2010, the Trust recognized expenses of $24,300 related to stock-based compensation. During the six months ended July 31, 2009, the Trust recognized expense of $11,700. The Trust did not issue any restricted shares during the first six months of fiscal year 2011.

The following table summarizes restricted share activity during the six months ended July 31, 2010:

	Restricted Shares
	Shares	Weighted-Average Per Share Grant Date Fair Value
Balance at January 31, 2010	36,000	$1.35
Granted	—	—
Vested	(18,000)	$1.35
Forfeited	—	—
Balance of unvested awards at July 31, 2010	18,000	$1.35

No cash was paid out or received by the Trust relating to restricted share awards during the six months ended July 31, 2010 or 2009.

4. RELATED PARTY TRANSACTIONS

As of July 31, 2010 and 2009, Mr. Wirth and his affiliates held 3,407,938 Class B limited partnership units in the Partnership. As of July 31, 2010 and 2009, Mr. Wirth and his affiliates held 5,089,632 and 5,573,624 Shares of Beneficial Interest of the Trust, respectively.

The Trust recognized related party payroll reimbursement revenue and related payroll expense to Mr. Wirth and his affiliates in the amounts of $1.4 million and $1.3 million for the six months ended July 31, 2010 and 2009, respectively. The Trust recognized related party payroll reimbursement revenue and related payroll expense to Mr. Wirth and his affiliates in the amounts of $694,000 and $727,000 for the three months ended July 31, 2010 and 2009, respectively.

See Note 6 – “Sale of Partial Interest in Albuquerque Suite Hospitality, LLC” and Note 9 – “Subsequent Event” for additional information on related party transactions.

5. NOTES PAYABLE TO BANKS

On March 3, 2008, we established an $850,000 revolving line of credit, replacing a $750,000 line of credit that matured on May 18, 2008. The line of credit, with an original maturity date of July 15, 2009, had no financial covenants and bore interest at Wall Street Journal prime. During the second quarter of fiscal year 2010, we extended the maturity date of the line of credit to June 30, 2010. The line of credit agreement was not extended by the bank and therefore expired on June 30, 2010. The Trust’s management is currently negotiating a new bank line of credit.

6. SALE OF PARTIAL INTEREST IN ALBUQUERQUE SUITE HOSPITALITY, LLC

On July 29, 2010, the Partnership sold approximately 12% of its sole membership interest in Albuquerque Suite Hospitality, LLC (the “Albuquerque entity”), which owns and operates the Albuquerque, New Mexico property, for $400,000. The buyer was Rare Earth Financial, LLC (“Rare Earth”), an affiliate of Mr. Wirth. The price paid reflects the net assets of the Albuquerque entity calculated using the third-party appraisal value for the hotel property and the carrying cost of all other assets and liabilities. The Partnership’s carrying value of the 12% investment at the time of the sale was $(7,562), resulting in an increase in the Partnership’s equity of $407,562 due to the sale of the membership interest. The transaction was a reduction in the Partnership’s controlling interest, therefore no gain or loss was reflected in the income statements.

On July 22, 2010, the Board of Trustees unanimously approved, with Mr. Wirth abstaining, for the Partnership to enter into an agreement with Rare Earth to sell additional units in the Albuquerque entity. On August 30, 2010, an agreement was executed. Under the agreement, Rare Earth will either purchase or bring in other investors to purchase at least 51% of the membership interests in the Albuquerque entity. Additionally, if more than 51% of the membership interests are sold, Rare Earth will receive a $320,000 syndication fee. If less than 51% of the membership interests are sold, Rare Earth will receive a syndication fee equal to 8% of the actual membership interests sold. Rare Earth will receive its fee in either cash, to be paid from new member subscriptions, or additional units in the Albuquerque entity. The Partnership is making available for sale all of its 295 membership units in the Albuquerque entity for $10,000 per unit.

7. STATEMENTS OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES

The Trust paid $765,590 and $740,331 in cash for interest for the six months ended July 31, 2010 and 2009, respectively.

During the second quarter of fiscal year 2010, the Trust issued a promissory note for $198,000 to an unrelated third party for the purchase of 62,207 limited partnership units in the Partnership and 54,372 Shares of Beneficial Interest. The note is due in 60 monthly principal and interest installments of $3,921 and matures on May 28, 2015.

8. COMMITMENTS AND CONTINGENCIES

Two of the Hotels are subject to non-cancelable ground leases expiring in 2033 and 2050. Total expense associated with the non-cancelable ground leases for the six months ended July 31, 2010 was $102,976, plus a variable component based on gross revenues of each property that totaled approximately $42,439. Total expense associated with the non-cancelable ground leases for the six months ended July 31, 2009 was $101,910, plus a variable component based on gross revenues of each property that totaled approximately $43,934.

During the second quarter of fiscal year 2010, the Trust entered into a five-year office lease for its corporate headquarters. The Trust recorded $10,260 of general and administrative expense related to the lease during the six-month period ended July 31, 2010. The Trust recorded no such expense in the prior year period. The lease includes a base rent charge of $24,000 for the first lease year with annual increases to a final year base rent of $39,600. The Trust has the option to cancel the lease after each lease year for penalties of four months rent after the first year with the penalty decreasing by one month’s rent each successive lease year. It is the Trust’s intention to remain in the office for the duration of the five-year lease period.

Future minimum lease payments under the non-cancelable ground leases and office lease are as follows:

Fiscal Year Ending
Remainder of 2011	$	108,298
2012	234,156
2013	238,556
2014	246,555
2015	226,955
Thereafter	5,319,615

Total	$	6,374,135

The Trust is obligated under loan agreements relating to four of its Hotels to deposit 4% of the individual Hotel’s room revenue into an escrow account to be used for capital expenditures. The escrow funds applicable to the four Hotel properties for which a mortgage lender escrow exists are reported on the Trust’s Consolidated Balance Sheet as “Restricted Cash.”

InnSuites Hotels has entered into franchise arrangements with Best Western International for four of the Hotel properties. These agreements provide for fees to be paid by the Hotels based on revenue and reservations received, and contain no minimum payment provisions.

The nature of the operations of the Hotels exposes them to risks of claims and litigation in the normal course of their business. Although the outcome of these matters cannot be determined, management does not expect that the ultimate resolution of these matters will have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Trust.

The Trust is involved from time to time in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Trust’s consolidated financial position, results of operations or liquidity.

9. SUBSEQUENT EVENT

On August 1, 2010, the Partnership established a $1.0 million line of credit with Rare Earth Financial, LLC, an affiliate of Mr. Wirth. The line of credit bears interest of 7.0% per annum on advances, with monthly interest-only payments, and matures on March 1, 2012. At the option of the lender, the Partnership will be required to grant the lender a security interest in 51% of its membership units in Tucson St. Mary’s Suite Hospitality, LLC, which owns and operates the Tucson City Center hotel property. The agreement requires the Partnership to repay 50% of any principal outstanding under the line of credit on March 1, 2011, with the remaining 50% due on April 1, 2011. Beginning on June 1, 2011, the Partnership may resume receiving advances under the line of credit through the maturity date.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

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

We own the sole general partner’s interest in the Partnership. Our principal source of cash flows is from the operations of the Hotels and management and licensing contracts with affiliated and third-party hotels.

Our principal source of cash to meet our cash requirements, including distributions to our shareholders, is our share of the Partnership’s cash flow and our direct ownership of the Yuma, Arizona property. The Partnership’s principal source of revenue is hotel operations for the four hotel properties it owns. 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.

In past years, the Trust has relied on cash flows from operations to meet its financial obligations as they come due. However, for the remainder of fiscal year 2011 (August 1, 2010 through January 31, 2011), the Trust’s management has projected that cash flows from operations alone may not be sufficient to meet all of its financial obligations as they come due in the last two quarters of fiscal year 2011. Based on this projection, on August 1, 2010, the Trust negotiated a new $1.0 million line of credit with Rare Earth Financial, LLC, providing enough available liquidity for management to believe that the Trust will meet all of its financial obligations as they come due during fiscal year 2011.

In addition, the Trust’s management is currently negotiating a new bank line of credit to replace the bank line of credit that expired on June 30, 2010.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In our Annual Report on Form 10-K for the year ended January 31, 2010, we identified the critical accounting policies that affect our more significant estimates and assumptions used in preparing our consolidated financial statements. 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. Those policies include methods used to recognize and measure any identified impairment of our hotel properties assets. There have been no material changes to our critical accounting policies since January 31, 2010.

RESULTS OF OPERATIONS

Our expenses consist primarily of hotel operating expenses, property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees and depreciation of the Hotels. Our operating performance is principally related to the performance of the Hotels. Therefore, management believes that a review of the historical performance of the operations of the Hotels, particularly with respect to occupancy, calculated as rooms sold divided by the number of 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 the number of rooms available, is appropriate for understanding revenue from the Hotels. Occupancy was 55.8% for the six months ended July 31, 2010, a decrease of 7.2% from the prior year same period. ADR decreased $1.30, or 1.7%, to $74.06. The decrease in ADR and reduced occupancy resulted in a decrease of $6.17, or 13.0%, in REVPAR to $41.31 from $47.48 in the prior year period. The decrease in occupancy is due to the downward trend in our economy, which caused less vacation and fewer business travelers.

The following table shows occupancy, ADR and REVPAR for the periods indicated:

	FOR THE SIX MONTHS ENDED
	July 31,
	2010			2009
OCCUPANCY		55.8	%		63.0	%
AVERAGE DAILY RATE (ADR)	$	74.06		$	75.36
REVENUE PER AVAILABLE ROOM (REVPAR)	$	41.31		$	47.48

No assurance can be given that the trends reflected in this data will improve or that occupancy, ADR or REVPAR will not continue to decrease as a result of changes in national or local economic or hospitality industry conditions. We expect the current global economic conditions to negatively affect our business at least through the end of this current fiscal year.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 2010 COMPARED TO THE SIX MONTHS ENDED JULY 31, 2009

A summary of the operating results for the six months ended July 31, 2010 and 2009 is:

	2010			2009			Change			% Change
Revenue	$	8,419,222		$	9,468,575		$	(1,049,353	)	(11.1)	%
Operating Income (Loss)	$	(176,758	)	$	400,729		$	(577,487	)	>(100.0)	%
Total Expenses	$	9,387,940		$	9,826,599		$	(438,659	)	(4.5)	%
Net Loss Attributable to Controlling Interest	$	(688,208	)	$	(111,113	)	$	(577,095	)	>(100.0)	%
Net Loss Per Share – Basic and Diluted	$	(0.08	)	$	(0.01	)	$	(0.07	)	>(100.0)	%

For the six months ended July 31, 2010, our total revenue was $8.4 million, a decrease of $1.0 million, or 11.1%, compared with the prior year period total of $9.5 million. Revenues from hotel operations, which include Room, Food and Beverage, Telecommunications and Other revenues, decreased 12.9% to $6.9 million for the six months ended July 31, 2010, from $7.9 million for the six months ended July 31, 2009. Hotel operations, including Food and Beverage operations, experienced decreases in revenues during the first six months of fiscal year 2011 due to lower occupancy and increased rate pressure, most prominently at our Yuma, Arizona location as a result of increased supply in the area. Expenses may not decline proportionately with a decline in revenues due to a high degree of operational and financial leverage in the hotel industry.

Total expenses were $9.4 million for the six months ended July 31, 2010, a decrease of $439,000, or 4.5%, from the prior year period total of $9.8 million. Total operating expenses were $8.6 million for the six months ended July 31, 2010, a decrease of $472,000, or 5.2%, from the prior year period total of $9.1 million. The majority of the hotel operating expenses decreased due to lower occupancy.

General and administrative expense was $1.5 million for the six months ended July 31, 2010, a decrease of $73,000, or 4.6%, from the prior year period total of $1.6 million. The decrease was primarily due to reduced professional fees and salary expenses incurred by the Trust.

Sales and marketing expense was $585,000 for the six months ended July 31, 2010, a decrease of $131,000, or 18.3%, from the prior year period total of $716,000. The decrease was primarily due to reduced centralized marketing expenditures, including internet-based marketing.

Total interest expense was $792,000 for the six months ended July 31, 2010, an increase of $33,000, or 4.4%, from the prior year period total of $759,000. Interest on mortgage notes payable increased $18,000, or 2.4%, to $771,000 for the six months ended July 31, 2010, due primarily to higher loan balances due to the refinancing of the Albuquerque and Yuma property mortgages. Interest on other notes payable increased $16,000, or over 100.0%, to $21,000 for the six months ended July 31, 2010, due primarily to notes payable entered into during the last half of fiscal year 2010 to repurchase shares of beneficial interest.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2010 COMPARED TO THE THREE MONTHS ENDED JULY 31, 2009

A summary of the operating results for the three months ended July 31, 2010 and 2009 is:

	2010			2009			Change			% Change
Revenue	$	3,499,517		$	3,981,314		$	(481,797	)	(12.1)	%
Operating Loss	$	(647,303	)	$	(541,159	)	$	(106,144	)	(19.6)	%
Total Expenses	$	4,549,293		$	4,899,144		$	(349,851	)	(7.1)	%
Net Loss Attributable to Controlling Interest	$	(785,446	)	$	(644,555	)	$	(140,891	)	(21.9)	%
Net Loss Per Share – Basic and Diluted	$	(0.09	)	$	(0.07	)	$	(0.02	)	(28.6)	%

For the three months ended July 31, 2010, our total revenue was $3.5 million, a decrease of $482,000, or 12.1%, compared with the prior year period total of $4.0 million. Revenues from hotel operations, which include Room, Food and Beverage, Telecommunications and Other revenues, decreased 13.4% to $2.7 million for the three months ended July 31, 2010, from $3.2 million for the three months ended July 31, 2009. Hotel operations, including Food and Beverage operations, experienced decreases in revenues during the second quarter of fiscal year 2011 due to lower occupancy and increased rate pressure, most prominently at our Yuma, Arizona location as a result of increased supply in the area. Expenses may not decline proportionately with a decline in revenues due to a high degree of operational and financial leverage in the hotel industry.

Total expenses were $4.5 million for the three months ended July 31, 2010, a decrease of $350,000, or 7.1%, from the prior year period total of $4.9 million. Total operating expenses were $4.1 million for the three months ended July 31, 2010, a decrease of $376,000, or 8.3%, from the prior year period total of $4.5 million. The majority of the hotel operating expenses decreased due to lower occupancy.

General and administrative expense was $708,000 for the three months ended July 31, 2010, a decrease of $26,000, or 3.5%, from the prior year period total of $734,000. The decrease was primarily due to reduced professional fees and salary expenses incurred by the Trust.

Sales and marketing expense was $280,000 for the three months ended July 31, 2010, a decrease of $95,000, or 25.2%, from the prior year period total of $375,000. The decrease was primarily due to reduced centralized marketing expenditures, including internet-based marketing.

Total interest expense was $402,000 for the three months ended July 31, 2010, an increase of $26,000, or 6.9%, from the prior year period total of $377,000. Interest on mortgage notes payable increased $17,000, or 4.4%, to $392,000 for the three months ended July 31, 2010, due primarily to higher loan balances due to the refinancing of the Albuquerque and Yuma property mortgages.

FUNDS FROM OPERATIONS (FFO)

We recognize that industry analysts and investors use Funds From Operations (“FFO”) as a financial measure to evaluate and compare equity REITs. We also believe it is meaningful as an indicator of net income, excluding most non-cash items, and provides information about our cash available for distributions, debt service and capital expenditures. We follow the March 1995 interpretation of the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO, as amended January 1, 2000, which is calculated (in our case) as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, depreciation and amortization on real estate property and extraordinary items. FFO does not represent cash flows from operating activities in accordance with GAAP and is not indicative of cash available to fund all of our cash needs. FFO should not be considered as an alternative to net income or any other GAAP measure as an indicator of performance and should not be considered as an alternative to cash flows as a measure of liquidity. In addition, our FFO may not be comparable to other companies' FFO due to differing methods of calculating FFO and varying interpretations of the NAREIT definition. The following table shows the reconciliation of FFO to Net Income Attributable to Shares of Beneficial Interest:

	For the Six Months Ended July 31,				For the Three Months Ended July 31,
	2010		2009		2010		2009
Net Loss Attributable to Controlling Interest	$	(688,208)	$	(111,113)	$	(785,446)	$	(644,555)
Hotel Property Depreciation		935,238		982,305		465,494		487,402
Loss on Disposition of Hotels		450		690		249		101
Non-Controlling Interest Share of Depreciation and Loss on Dispositions		(205,642)		(216,609)		(102,170)		(106,627)
Funds from Operations	$	41,838	$	655,273	$	(421,873)	$	(263,679)

FFO decreased approximately $613,000 for the six month period ended July 31, 2010, reflecting a decrease of 93.6% when compared to the prior year period. The decrease was primarily due to lower occupancies and room rates resulting in less revenue during the period.

FFO decreased approximately $158,000 for the three month period ended July 31, 2010, reflecting a decrease of 60.0% when compared to the prior year period. The decrease was primarily due to lower occupancies and room rates resulting in less revenue during the period.

LIQUIDITY AND CAPITAL RESOURCES

Through our ownership interest in the Partnership, Yuma Hospitality LP and InnSuites Hotels, we have a proportionate share of the benefits and obligations of the Partnership’s and Yuma Hospitality LP’s ownership interests, as well as InnSuites Hotels’ operational interests, in the Hotels. Our principal source of cash to meet our cash requirements, including distributions to our shareholders, is our share of these cash flows. Our liquidity, including our ability to make distributions to our shareholders, will depend upon the ability to generate sufficient cash flows from hotel operations.

During the first quarter of fiscal year 2011, we increased our mortgage note payable secured by the Yuma, Arizona property. The new balance of the mortgage note payable is $5.0 million. The additional $1.0 million borrowed bears interest at 8.0% and matures on December 31, 2013. The note is due in monthly interest-only installments of $30,000, an increase of $6,667 from the previous monthly interest-only installments of $23,333. We used the $1.0 million to build operating reserves and reduce payables.

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.

We continue to contribute to a Capital Expenditures Fund (the “Fund”) an amount equal to 4% of the Hotels’ room revenues. The Fund is restricted by the mortgage lender for four of our properties. As of July 31, 2010, $82,536 was held in restricted capital expenditure funds and is included on our Balance Sheet as “Restricted Cash.” The Fund is intended to be used for capital improvements to the Hotels and for refurbishment and replacement of furniture, fixtures and equipment, in addition to other uses of amounts in the Fund considered appropriate from time to time. During the six months ended July 31, 2010, the Hotels spent $427,234 for capital expenditures. We consider the majority of these improvements to be revenue producing. Therefore, these amounts have been capitalized and are being depreciated over their estimated useful lives. The Hotels also spent $625,050 and $595,322 during the six-month periods ended July 31, 2010 and 2009, respectively, on repairs and maintenance. The Hotels spent $298,036 and $307,132 during the three-month periods ended July 31, 2010 and 2009, respectively, on repairs and maintenance. These amounts have been charged to expense as incurred.

As of July 31, 2010, we have no commitments for capital expenditures beyond the 4% reserve for refurbishment and replacements set aside annually for each hotel property.

OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

Other than lease commitments and legal contingencies incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned subsidiaries that are not included in the consolidated financial statements. (See Note 2 - “Summary of Significant Accounting Policies.”)

SEASONALITY

The Hotels’ operations historically have been seasonal. The three southern Arizona hotels experience their highest occupancy in the first fiscal quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal quarter tends to be the lowest period of occupancy at those three southern Arizona hotels. This seasonality pattern can be expected to cause fluctuations in our quarterly revenue. The two hotels located in California and New Mexico historically experience their most profitable periods during the second and third fiscal quarters (the summer season), providing some balance to the general seasonality of our hotel business. To the extent that cash flows from operations are insufficient during any quarter, because of temporary or seasonal fluctuations in revenue, we may utilize other cash on hand or borrowings to make distributions to our shareholders or to meet operating needs. No assurance can be given that we will make distributions in the future.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q, including statements containing the phrases “believes,” “intends,” “expects,” “anticipates,” “predicts,” “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 and Section 21E of the Securities Exchange Act of 1934. We intend that such forward-looking statements be subject to the safe harbors created by such Acts. These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, acquisitions, developments, financings, and other matters; and (vi) 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:

•	local or national economic and business conditions, including, without limitation, conditions which may affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate;

•	fluctuations in hotel occupancy rates;

•	changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise;

•	seasonality of our business;

•	interest rate fluctuations;

•	changes in government regulations, including federal income tax laws and regulations;

•	competition;

•	any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties;

•	insufficient resources to pursue our current strategy;

•	concentration of our investments in the InnSuites Hotels® brand;

•	loss of franchise contracts;

•	real estate and hospitality market conditions;

•	hospitality industry factors;

•	our ability to meet present and future debt service obligations;

•	terrorist attacks or other acts of war;

•	outbreaks of communicable diseases;

•	natural disasters; and

•	loss of key personnel.

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. Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, the qualifications set forth hereinabove are inapplicable to any forward-looking statements in this Form 10-Q relating to the operations of the Partnership.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of July 31, 2010 to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 8 to the notes to unaudited consolidated financial statements.

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 limited partnership units in the Partnership 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 limited partnership units in the Partnership 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 limited partnership units in the Partnership and/or Shares of Beneficial Interest in open market or privately negotiated transactions. Acquired Shares of Beneficial Interest will be held in treasury and will be available for future acquisitions and financings and/or for awards granted under the InnSuites Hospitality Trust 1997 Stock Incentive and Option Plan. During the three months ended July 31, 2010, we acquired 16,055 Shares of Beneficial Interest in open market transactions at an average price of $1.58 per share. We intend to continue repurchasing Shares of Beneficial Interest and RRF Limited Partnership Units in compliance with applicable legal and NYSE Amex requirements. We remain authorized to repurchase an additional 352,067 limited partnership units in the Partnership and/or Shares of Beneficial Interest pursuant to the share repurchase program, which has no expiration date.

	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Be Yet Purchased Under the Plans
May 1 – May 31, 2010	6,720	$	1.58	6,720	361,402
June 1 – June 30, 2010	7,320	$	1.60	7,320	354,082
July 1 – July 31, 2010	2,015	$	1.45	2,015	352,067

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

On July 22, 2010, the Board of Trustees unanimously approved, with Mr. James F. Wirth abstaining, for the Partnership to enter into an agreement with Rare Earth Financial, LLC ("Rare Earth") to sell additional units in Albuquerque Suite Hospitality, LLC ("Albuquerque"). Rare Earth is an affiliate of Mr. Wirth, the Trust's Chairman, President and Chief Executive Officer. On August 30, 2010, an agreement was executed by and among the Partnership, the Trust, Rare Earth, Albuquerque and Mr. Wirth. Under the agreement, Rare Earth will either purchase or bring in other investors to purchase at least 51% of the membership interests in the Albuquerque entity. Additionally, if more than 51% of the membership interests are sold, Rare Earth will receive a $320,000 syndication fee. If less than 51% of the membership interests are sold, Rare Earth will receive a syndication fee equal to 8% of the actual membership interests sold. Rare Earth will receive its fee in either cash, to be paid from new member subscriptions, or additional units in the Albuquerque entity. The Partnership is making available for sale all of its 295 membership units in the Albuquerque entity for $10,000 per unit.

ITEM 6 . EXHIBITS

Exhibits

10.1		Line of Credit Agreement, dated August 1, 2010, between RRF Limited Partnership and Rare Earth Financial, LLC
10.2		Albuquerque Suite Hospitality, LLC Restructuring Agreement , dated as of August 30, 2010, by and among RRF Limited Partnership, Rare Earth Financial, LLC, InnSuites Hospitality Trust, James F. Wirth, and Albuquerque Suite Hospitality, LLC
31.1		Section 302 Certification By Chief Executive Officer
31.2		Section 302 Certification By Chief Financial Officer
32.1		Section 906 Certification of Principal Executive Officer and Principal Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		INNSUITES HOSPITALITY TRUST


Dated:	September 3, 2010	/s/ James F. Wirth
		James F. Wirth
		Chairman, President and Chief Executive Officer


Dated:	September 3, 2010	/s/ Anthony B. Waters
		Anthony B. Waters
		Chief Financial Officer

Exhibit 10.1

PROMISSORY NOTE

$1,000,000.00 Phoenix, Arizona

August 1, 2010

FOR VALUED RECEIVED, the undersigned RRF LIMITED PARTNERSHIP, a Delaware partnership, (“Maker”), promises to pay to the order of Rare Earth Financial, L.L.C., an Arizona limited liability company, (the “Payee”; Payee and each subsequent transferee and/or owner of this Note, whether taking by endorsement or otherwise, are herein successively called “Holder”) at 1625 East Northern Avenue, Suite 105, Phoenix, Arizona 85020-3932, or at such other place as the Holder may from time to time designate in writing, the principal sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), or so much as has been advanced, plus interest calculated on a daily basis (based on a 360-day year) from the date hereof on the principal balance from time to time outstanding as hereinafter provided, principal, interest and all other sums payable hereunder to be paid in lawful money of the United States of America as follows:

(A)	During the 20 month term of the Note, interest shall accrue monthly at the rate equal to 7% per annum.

(B)	All accrued interest shall be due and payable on the first day of each calendar month after the date of this Note commencing with August 1, 2010, and continuing each month thereafter until this Note is paid in full on April 1, 2012.

(C)	Payments shall include interest only payments on the first of each month.

(D)

One half (½) of the entire unpaid principal balance, ½ of all accrued and unpaid interest, and ½ of all other amounts payable hereunder shall be due and payable in full no later than March 1, 2011. The entire remaining unpaid principal, all accrued and unpaid interest and all other amounts payable hereunder shall be due and payable in full no later than April 1, 2011.

(E)	On June 1, 2011, the Maker may request advances from the Lender until March 1, 2012.

Notwithstanding anything herein to the contrary, Lender shall not be obliged to make any advance under this Note and the determination to provide any advances requested by Maker shall be made in Lender’s sole and absolute discretion.

If payment is ten (10) days or more late, Maker will be charged five percent (5%) of the regularly scheduled payment. This late charge may be assessed without written notice and shall be immediately due and payable and shall be in addition to all other rights and remedies available to Holder.

Unless otherwise agreed to, in writing, or otherwise required by applicable law, payments will be applied first to late charges and any unpaid collection costs, then to accrued, unpaid interest, then to principal and other charges; provided, however, upon delinquency or other default, Holder reserves the right to apply payments among principal, interest, late charges, collection costs and other charges at its discretion. All prepayments shall be applied to the indebtedness owing hereunder in such order and manner as Holder may from time to time determine in its sole discretion.

Payee, upon written notice, may require Maker to grant Payee a security interest in 51% of Maker’s membership interests in Tucson St. Mary’s Suite Hospitality, LLC as collateral for Maker’s obligations under this note.

Time is of the essence of this Note. At the option of Holder, the entire unpaid principal balance, all accrued and unpaid interest and all other amounts payable hereunder shall become immediately due and payable without notice upon the failure to pay any sum due and owing hereunder as provided herein if such failure continues for thirty (30) days after written notice thereof to Maker or upon the occurrence of any Event of Default as defined in the Loan Agreement or any of the Security Documents.

Upon default, including failure to pay upon final maturity, Holder, at is option, may also, if permitted under applicable law, do one or both of the following: (a) increase the applicable interest rate on this Note to ten percent (10%) per annum, and (b) add any unpaid accrued interest to principal and such sum will bear interest therefrom until paid at the rate provided in this Note (including any increased rate). The interest rate will not exceed the maximum rate permitted by applicable law. Maker shall pay all costs and expenses, including reasonable attorneys’ fees and court costs, incurred in the collection or enforcement of all or any part of this Note. All such costs and expenses shall be secured by the Deed of Trust and by all other Security Documents. In the event of any court proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Holder.

Failure of Holder to exercise any option hereunder shall not constitute a waiver of the right to exercise the same in the event of any subsequent default or in the event of continuance of any existing default after demand for strict performance hereof.

Maker and all sureties, guarantors and/or endorsers hereof (or of any obligation hereunder) and accommodation parties hereon (all of which, including Maker, are severally each hereinafter called a “Surety”) each: (a) agree that the liability under this Note of all parties hereto is joint and several; (b) severally waive any homestead or exemption laws and right thereunder affecting the full collection of this Note; (c) severally waive any and all formalities in connection with this Note to the maximum extent allowed by law, including (but not limited to) demand, diligence, presentment for payment, protest and demand, and notice of extension, dishonor, protest, demand and nonpayment of this Note; and (d) consent that Holder may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note at the request of any other person liable hereon, and such consent shall not alter nor diminish the liability of any person hereon.

Maker agrees that to the extent Maker or any Surety makes any payment to Holder in connection with the indebtedness evidenced by this Note, and all or any part of such payment is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid by Holder or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any such payment is hereinafter referred to as a “Preferential Payment”), then the indebtedness of Maker under this Note shall continue or shall be reinstated, as the case may be, and, to the extent of such payment or repayment by Holder, the indebtedness evidenced by this Note or part thereof intended to be satisfied by such Preferential Payment shall be revived and continued in full force and effect as if said Preferential Payment had not been made.

Without limiting the right of Holder to bring any action or proceeding against Maker or any Surety or against any property of Maker or any Surety (an “Action”) arising out of or relating to this Note or any indebtedness evidenced hereby in the courts of other jurisdictions, Maker and each Surety hereby irrevocably submit to the jurisdiction, process and venue of any Arizona State or Federal court sitting in Phoenix, Arizona, and hereby irrevocably agree that any Action may be heard and determined in such Arizona State court or in such Federal court. Maker and all Sureties each hereby irrevocably waives, to the fullest extent it may effectively do so, the defenses of lack of jurisdiction over any person, inconvenient forum or improper venue, to the maintenance of any Action in any jurisdiction.

This Note shall be binding upon Maker and its successors and assigns and shall inure to the benefit of Payee, and any subsequent holders of this Note, and their successors and assigns.

All notices required or permitted in connection with this Note shall be given at the place and in the manner provided in the Loan Agreement for the giving of notices.

This Note shall be governed by and construed according to the laws of the State of Arizona, without giving effect to conflict of laws principles.

JURY WAIVER. THE UNDERSIGNED AND HOLDER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND HOLDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT OR ANY OTHER AGREEMENTS, DOCUMENTS OR INSTRUMENTS EXECUTED OR DELIVERED IN CONNECTION WITH, OR OTHERWISE RELATING TO, THE INDEBTEDNESS EVIDENCED HEREBY (TOGETHER WITH THIS NOTE, THE “RELATED DOCUMENTS”), OR ANY RELATIONSHIP BETWEEN HOLDER AND THE UNDERSIGNED. THIS PROVISION IS A MATERIAL INDUCEMENT TO HOLDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER RELATED DOCUMENTS.

IN WITNESS WHEEREOF, these presents are executed as of the date first written above.

LENDER		MAKER

RARE EARTH FINANCIAL, LLC		RRF LIMITED PARTNERSHIP,
an Arizona Limited Liability Company		a Delaware limited partnership,
		InnSuites Hospitality Trust, General Partner,
		An Ohio real estate investment trust

By: /s/ James F. Wirth		By: /s/ Marc E. Berg
Name: James F. Wirth		Name: Marc E. Berg
Title : Manager		Title: Executive Vice-President

Exhibit 10.2

Albuquerque Suite Hospitality LLC

Restructuring Agreement

This Agreement is made as of August 30, 2010, by and among:

RARE EARTH FINANCIAL, LLC, an Arizona limited liability company (“Rare Earth”);

RRF LIMITED PARTNERSHIP, a Delaware limited partnership (“RRF”);

INNSUITES HOSPITALITY TRUST, an Ohio business trust (“IHT”) and General Partner of RRF; and

ALBUQUERQUE SUITE HOSPITALITY LLC, an Arizona limited liability company (“ASH”)

RECITALS:

ASH owns and operates the Albuquerque InnSuites Hotels & Suites, a 101-unit hotel in Albuquerque, New Mexico (the “Property”).

ASH is currently owned approximately 88% by RRF and approximately 12% by Rare Earth.

Rare Earth and RRF wish to restructure ASH, creating Class A, Class B and Class C Membership Interests (referred to collectively as “Interests”), and cause ASH to offer and sell up to 400 Class A Interests in ASH to accredited investors for $4,000,000 (the “Offering”). Rare Earth, as the new Administrative Member of ASH, will coordinate the offering and sale of Class A Interests to third parties. Rare Earth and other Affiliates may purchase Interests under the offering.

As a part of the restructuring, RRF would exchange its current Membership Interests in ASH for 295 Class B Interests in ASH, and Rare Earth would exchange its current Interest in ASH for 40 Class C Interests in ASH. Proceeds from the Offering will be used in part to redeem Class B Interests, and may be used in part to redeem Class C Interests.

FOR VALUABLE CONSIDERATION RECEIVED, the parties agree as follows:

1. Restructuring of ASH . As soon as practicable after execution of this Agreement, Rare Earth and RRF, as the sole Members and Manager of ASH, will amend the Articles of Organization and Operating Agreement, in form and substance reasonably acceptable to RRF and ASH, for ASH to:

(a) Change ASH from a manager-managed to a member-managed limited liability company;

(b) Create three classes of Membership Interests authorized for issuance in amounts sufficient to accommodate the offering and the restructuring issuances to Rare Earth and RRF, and provide for distribution and liquidation rights and preferences as described in Section 3 and 7 below and the exchange provided for in Recital D above; and

2. Offering . Upon completion of the restructuring, ASH will conduct an offering to accredited investors only of up to 400 Class A Interests at $10,000 per Interest (the “Offering”), for a total offering $4,000,000 (the “Offering Price”). The Offering Price reflects the appraised value of the Property of $4,900,000, less current debt and other liabilities of approximately $1,550,000 for a net equity value of approximately $3,350,000. The $3,350,000 net equity value is further reduced by the $400,000 in Interests held by Rare Earth to net of $2,950,000 to RRF. As Class A Interests are sold in the Offering, RRF’s Class B Interests will be redeemed on a one-for-one basis. The Offering contemplates the sale of 65 Interests to build cash reserves estimated at $650,000, less a Restructuring and Offering Fee of $320,000 to Rare Earth and offering costs of $30,000, for a net of $300,000 in cash reserves. Subject to the closing of the Offering, ASH will pay: (a) a Restructuring and Offering Fee to Rare Earth of 8% of the Offering Price ($320,000); and (b) offering costs of $30,000. If 51% of the Interests in the Offering are not sold (including Interests purchased by Rare Earth and its affiliates), Rare Earth will be paid a fee equal to 8% of the aggregate offering price of the actual Interests sold, including $400,000 worth of Interests sold to Rare Earth and its affiliates (the “Alternate Fee”), instead of the $320,000 Restructuring and Offering Fee. The Alternate Fee will be payable by ASH in cash or Class C Interests of ASH valued at $10,000 per Interest, as agreed between ASH and RRF, and will be due on the earlier of the closing of the Offering or December 31, 2011.

3. Interests .

(a) All Membership Interests will have equal voting rights and will share equally in all distributions (including distributions or proceeds payable upon a Triggering Event), subject to (1) priority distribution rights and distribution catch-up rights described in paragraph 3(b), and (2) the Administrative Member’s 50% participation right described in paragraph 3(e). All Memberships will be redeemable by ASH for $10,000 after payment of all distributions to which such Interests are entitled under paragraphs 3(b) and (c).

(b) All Membership Interests will be entitled to receive priority distributions annually from ASH of $700 per $10,000 Interest from January 1, 2011 through December 31, 2015. However, priority distributions will be paid first to Class A Interests, second to Class B Interests and third to Class C Interests. Priority distributions will be cumulative, so that all priority distributions must be paid in full to Class A Interests before any priority distributions are paid to Class B or C Interests, and all priority distributions must be paid in full to Class A and B Interests before priority distributions are paid to Class C Interests. Rare Earth, James Wirth and certain named affiliates shall elect to defer receiving all priority distributions on their Class A Interests until all priority distributions to other holders of Class A and Class B Interests have been paid current. Upon completion of priority distributions due Class A Interests through December 31, 2015, Class A Interests will not participate in distributions by ASH until Class B and Class C priority distributions have been paid current through December 31, 2015. Upon completion of priority distributions due Class A and Class B Interests through December 31, 2015, Class A and Class B Interests will not participate in distributions by ASH until Class C priority distributions have been paid current through December 31, 2015. If a Triggering Event of ASH occurs (including a sale or refinancing of substantially all of the assets of ASH or merger, sale, liquidation or other winding-up of ASH) prior to the payment of all priority distributions to Class A, B and C Interests, such priority distributions will be paid to the respective Members out of any proceeds of the event before general distribution of the proceeds to the Members (including the Administrative Member’s participation described in 3(e)).

(c) After December 31, 2015, all Membership Interests will be entitled to annual distributions of $700 per $10,000 Interest, which will be cumulative. All Interests will share equally in all such distributions. If a Triggering Event (as defined in 3(b)) of ASH occurs prior to the payment of any accumulated distributions to the Members, such accumulated distributions will be paid out of any proceeds of the event before general distribution of the proceeds to the Members (including the Administrative Member’s participation described in 3(e)). In the event that funds generated from a Triggering Event are insufficient to pay the total amount of all such accumulated distributions owed to the Members, all Members will participate pro rata in the funds available for distribution to them.

(d) Distributions will be payable quarterly in arrears based on calendar quarters, due 40 days after the end of the quarter. The first regularly scheduled distribution will be for the first calendar quarter January 1 through March 31st and will be payable 40 days later on May 10, 2011. Thereafter, distributions will be made every three months provided, in the sole judgment and discretion of the Administrative Member, cash is available for such distributions. ASH will use its best efforts to pay the quarterly distributions contemplated in paragraphs 3(b) and (c).

(e) In the event that either (a) all Interests have been redeemed or (b) all Interests are current in the distributions to which they are entitled and each Interest has received distributions totaling at least $10,000, Rare Earth will receive 50% of (1) any distributions made by ASH and (2) the proceeds from any Triggering Event (as defined in 3(b)) as consideration for its role as Administrative Member.

4. Payments from Rare Earth to RRF . As consideration for the transactions contemplated by this Agreement and with the expectation that the transactions contemplated by this Agreement will be consummated, Rare Earth has paid RRF $400,000 prior to the date of this Agreement for Rare Earth’s current 12% Interest in ASH.

5. Administrative Member . If a minimum of 160 Interests (excluding 40 Interests sold to Rare Earth) are not sold by December 31, 2011, Rare Earth will resign as Administrative Member of ASH, and Rare Earth and RRF will cause RRF to be elected as Administrative Member. Rare Earth will use its best efforts to sell at least 160 Interests (excluding 40 Interests sold to Rare Earth) on or before January 31, 2011.

6. Removal of Administrative Member . At any time, a Majority-in-Interest of the Class A Members may remove Rare Earth as Administrative Member and elect a new Administrative Member. Notwithstanding its removal as Administrative Member pursuant to this paragraph, Rare Earth will retain the participation right described in paragraph 3(e) provided that 160 or more Interests have been sold by December 31, 2011.

7. Ownership of ASH . The table below demonstrates the capital structure of ASH immediately upon restructuring, the capital structure in the event of the sale of 203 Class A Interests in the Offering, and the capital structure in the event of the sale of all 400 Class A Interests in the Offering.

	Immediately Upon Restructuring	In the Event of Sale of 203 Class A Interests	In the Event of Sale of 400 Class A Interests
Owners	Interests	Interests	Interests
Third Parties	0	203 Class A	400 Class A
RRF	295 Class B	95 Class B	0 Class B
Rare Earth	40 Class C	72 Class C	0 Class C
Authorized & Unissued	65	30	0
Total	400	400	400

8. Miscellaneous .

(a) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona.

(b) Waiver . No waiver or modification of this Agreement shall be valid unless in writing and executed by the party against which the waiver or modification is to be enforced. No waiver of any breach or default shall operate as a waiver of any other breach or default, whether similar or different from the breach or default waived.

(c) Severability . All provisions of this Agreement are severable, and if any provision is held to be invalid, illegal or unenforceable in any respect by any court of competent jurisdiction, the validity, legality and enforceability of the remaining provisions shall not be affected, and this Agreement shall be interpreted as if such invalid, illegal or unenforceable provisions were not contained herein.

(d) Entire Agreement . This Agreement constitutes the complete understanding of the parties hereto, and supersedes all prior understandings or agreements, whether oral or written. This Agreement shall be binding upon the inure to the benefit of the parties hereto, their successors, their legal representatives, heirs and assigns.

The parties have executed this Agreement effective as of the date first written above.

RRF LIMITED Partnership

By: InnSuites Hospitality Trust

Its: General Partner

/s/ Marc E. Berg

By: Marc E. Berg

Its: Executive Vice President

RARE EARTH FINANCIAL LLC

/s/ James F. Wirth

By: James Wirth, Manager

ALBUQUERQUE SUITE HOSPITALITY LLC

By: RRF Limited Partnership, Manager

/s/ Marc E. Berg

By: Marc E. Berg

Its: Executive Vice President

JAMES WIRTH

/s/ James F. Wirth

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, James F. Wirth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InnSuites Hospitality Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	September 3, 2010
		/s/ James F. Wirth
		James F. Wirth
		Chairman, President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Anthony B. Waters, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InnSuites Hospitality Trust;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	September 3, 2010
		/s/ Anthony B. Waters
		Anthony B. Waters
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report of InnSuites Hospitality Trust (the “Trust”) on Form 10-Q for the quarter ended July 31, 2010, as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), each of the undersigned officers of the Trust certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

1.		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

Dated:	September 3, 2010	/s/ James F. Wirth
		James F. Wirth
		Chairman, President and Chief Executive Officer

		/s/ Anthony B. Waters
		Anthony B. Waters
		Chief Financial Officer

A signed original of this written statement has been provided to the Trust and will be retained by the Trust and furnished to the SEC or its staff upon request.