INTG Intergroup Corporation

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A

(Amendment No. 1)

 

 

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2023

 

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to_________

 

Commission File Number 1-10324

 

THE INTERGROUP CORPORATION

(Exact name of registrant as specified in its charter)

 

delaware		13-3293645
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

 

1516 S. Bundy Drive, Suite 200, Los Angeles, California 90025

(Address of principal executive offices) (Zip Code)

 

(310) 889-2500

(Registrant’s telephone number, including area code)

 

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

 

Title of each class		Trading Symbol		Name of exchange on which registered
Common Stock, $0.01 par value		INTG		The NASDAQ Stock Market, LLC

 

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

 

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

 

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 ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) 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 amendments to this Form 10-K.

 

☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

 

Large Accelerated Filer	☐		Accelerated Filer	☐
Non-Accelerated Filer	☒		Smaller reporting company	☒
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. ☐

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an effort to previously issued financial statements. ☐

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 

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

 

☐ Yes ☒ No

 

As of December 31, 2022, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $31,358,000 (based upon the closing sale price of the common stock on that date on The NASDAQ Stock Market LLC).

 

The number of shares outstanding of registrant’s Common Stock, as of October 13, 2023 was 2,205,927.

 

DOCUMENTS INCORPORATED BY REFERENCE: None

 

 

 

THE INTERGROUP CORPORATION

Explanatory Note

 

We are filing this Amendment No. 1 to our Form 10-K filed on October 16, 2023 to include all required IXBRL files.

 

 

TABLE OF CONTENTS

 

		Page
	PART I
Item 1.	Business.	4
Item 1A.	Risk Factors.	11
Item 1B.	Unresolved Staff Comments.	15
Item 2.	Properties.	15
Item 3.	Legal Proceedings.	22
Item 4.	Mine Safety Disclosures.	22
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	22
Item 6.	Selected Financial Data.	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	31
Item 8.	Financial Statements and Supplementary Data.	32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	66
Item 9A.	Controls and Procedures.	66
Item 9B.	Other Information.	66
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	67
Item 11.	Executive Compensation.	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	75
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	76
Item 14.	Principal Accounting Fees and Services.	77
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	78
Signatures		81

 

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including anticipated repayment of certain of the Company’s indebtedness, the impact to our business and financial condition, the effects of competition and the effects of future legislation or regulations and other non-historical statements, the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdown or a recession and geopolitical conflicts). Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect our results of operations, financial condition, cash flows, performance or future achievements or events.

 

All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in these forward-looking statements. You should not place undue reliance on any forward-looking statements, and we urge investors to carefully review the disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

The risk factors discussed in Item 1A: “Risk Factors” could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements.

 

Other factors that may cause actual results to differ materially from current expectations include, but are not limited to:

 

	●	risks associated with the lodging industry, including competition, increases in wages, labor relations, energy and fuel costs, actual and threatened pandemics, actual and threatened terrorist attacks, and downturns in domestic and international economic and market conditions, particularly in the San Francisco Bay area;
	●	risks associated with the real estate industry, including changes in real estate and zoning laws or regulations, increases in real property taxes, rising insurance premiums, costs of compliance with environmental laws and other governmental regulations;
	●	the availability and terms of financing and capital and the general volatility of securities markets;
	●	changes in the competitive environment in the hotel industry;
	●	economic volatility and potential recessive trends;
	●	risks related to natural disasters;
	●	hyperinflation;
	●	litigation; and
	●	other risk factors discussed below in this Report.

 

All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. You should not put undue reliance on any forward-looking statements and we urge investors to carefully review the disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in this Annual Report on Form 10-K, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, as well as risks, uncertainties and other factors discussed in this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

PART I

 

Item 1. Business.

 

GENERAL

 

The InterGroup Corporation (“InterGroup” or the “Company” and may also be referred to as “we” “us” or “our” in this report) is a Delaware corporation formed in 1985, as the successor to Mutual Real Estate Investment Trust (“M-REIT”), a New York real estate investment trust created in 1965. The Company has been a publicly held company since M-REIT’s first public offering of shares in 1966.

 

The Company was organized to buy, develop, operate, rehabilitate, and dispose of real property of various types and descriptions, and to engage in such other business and investment activities as would benefit the Company and its shareholders. The Company was founded upon, and remains committed to, social responsibility. Such social responsibility was originally defined as providing decent and affordable housing to people without regard to race. In 1985, after examining the impact of federal, state, and local equal housing laws, the Company determined to broaden its definition of social responsibility. The Company changed its form from a REIT to a corporation so that it could pursue a variety of investments beyond real estate and broaden its social impact to engage in any opportunity which would offer the potential to increase shareholder value within the Company’s underlying commitment to social responsibility.

 

As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth. The Company’s Chief Operating Officer, David Gonzalez was elected President of Portsmouth in May 2021.

 

Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Portsmouth received management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees were eliminated in consolidation. Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest.

 

 

Effective December 23, 2021, The partnership was dissolved. The financial statements of Justice were consolidated with those of the Company.

 

Prior to its dissolution effective December 23, 2021, Justice owned and operated a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”). Mezzanine was a wholly owned subsidiary of the Partnership; Operating is a wholly owned subsidiary of Mezzanine. Effective December 23, 2021, Portsmouth replaced Justice as the single member of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.

 

In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale of real estate. Properties include sixteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States but are concentrated in Texas and the County of Los Angeles, California. The Company also has an investment in unimproved real property. As of June 30, 2023, all the Company’s operating real estate properties are managed in-house.

 

The Company acquires its investments in real estate and other investments utilizing cash, securities, or debt, subject to approval or guidelines of the Board of Directors and its Executive Strategic Real Estate and Securities Investment Committee. The Company may also look for new real estate investment opportunities in hotels, apartments, office buildings and development properties. The acquisition of any new real estate investments will depend on the Company’s ability to find suitable investment opportunities and the availability of sufficient financing to acquire such investments. To help fund any such acquisition, the Company may borrow funds to leverage its investment capital. The amount of any such debt will depend on several factors including, but not limited to, the availability of financing and the sufficiency of the acquisition property’s projected cash flows to support the operations and debt service.

 

The Company also may derive income from the investment of its cash and investment securities assets. The Company has invested in income-producing instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s marketable securities and other investments.

 

HILTON HOTELS FRANCHISE LICENSE AGREEMENT

 

The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004. The term of the License Agreement was for an initial period of fifteen years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended the License Agreement through 2030, and provided the Partnership with certain key money cash incentives to be earned through 2030.

 

HOTEL MANAGEMENT COMPANY AGREEMENT

 

Operating entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel, along with its five-level parking garage, with an effective date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.

 

For the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000, respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated statements of operations. As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house.

 

 

 

CHINESE CULTURE FOUNDATION LEASE

 

On March 15, 2005, the Hotel entered into an amended lease with the Chinese Culture Foundation of San Francisco (the “Foundation”) for the third-floor space of the Hotel commonly known as the Chinese Culture Center, which the Foundation had right to occupy pursuant to a 50-year nominal rent lease that began in 1967.

 

The amended lease, among other things, requires the Hotel to pay to the Foundation a monthly event space fee in the amount of $5,000, adjusted annually based on the local Consumer Price Index. As of June 30, 2023, the monthly event space fee is $7,131. The term of the amended lease expires on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a hotel. Subject to certain conditions as set forth in the amended lease, the Foundation is entitled to reserve a maximum of 75 days per calendar year for use of the event space. If the Hotel needs the event space during one of the dates previously reserved by the Foundation, the Hotel shall pay the Foundation $4,000 per day for using the event space. During the fiscal years ended June 30, 2023 and 2022, the Hotel paid the Foundation $20,000 and $12,000 for such fees, respectively.

 

SALES AND REFINANCING OF REAL ESTATE PROPERTIES

 

In July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing. The interest rate on the three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained a mortgage note payable on one of its California properties for $830,000. The Company received net proceeds of $836,000 which exceeded the new loan amount by $6,000 due to advanced deposits made by the Company prior to closing. The interest rate on the mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.

 

On October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031.

 

On June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $584,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052.

 

On May 31, 2023, the Company refinanced its $4,823,000 mortgage note payable on its 264-unit apartment complex in St Louis, Missouri and obtained a new two year mortgage for $5,360,000. The Company deposited the existing cash in escrow for Capital Expenditure Reserve of $616,000 and $244,000 in Additional Reserve for taxes and insurance. The mortgage has a floating monthly rate of 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10% interest-only payments are due for the 12 months and $5,500 principal paydowns commencing in June 2024. The mortgage loan matures in May 2025.

 

 

MARKETABLE SECURITIES INVESTMENT POLICIES

 

In addition to its Hotel and real estate operations, the Company also invests from time to time in income producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs and other companies which invest primarily in real estate.

 

The Company’s securities investments are made under the supervision of an Executive Strategic Real Estate and Securities Investment Committee of the Board of Directors (the “Committee”). The Committee currently has three members and is chaired by the Company’s Chairman of the Board and President, John V. Winfield. The Committee has delegated authority to manage the portfolio to the Company’s Chairman and President together with such assistants and management committees he may engage. The Committee generally follows certain established investment guidelines for the Company’s investments. These guidelines presently include: (i) corporate equity securities should be listed on the New York Stock Exchange (NYSE), NYSE MKT, NYSE Arca or the Nasdaq Stock Market (NASDAQ); (ii) the issuer of the listed securities should be in compliance with the listing standards of the applicable national securities exchange; and (iii) investment in a particular issuer should not exceed 10% of the market value of the total portfolio. The investment guidelines do not require the Company to divest itself of investments, which initially meet these guidelines but subsequently fail to meet one or more of the investment criteria. The Committee has in the past approved non-conforming investments and may in the future approve non-conforming investments. The Committee may modify these guidelines from time to time.

 

The Company may also invest, with the approval of the Committee, in unlisted securities, such as convertible notes, through private placements including private equity investment funds. Those investments in non-marketable securities are carried at cost on the Company’s consolidated balance sheets as part of Other Assets, net and reviewed for impairment on a periodic basis.

 

As part of its investment strategies, the Company may assume short positions in marketable securities. Short sales are used by the Company to potentially offset normal market risks undertaken in the course of its investing activities or to provide additional return opportunities. As of June 30, 2023 and 2022, the Company had obligations for securities sold (equities short) of $1,416,000 and $449,000, respectively.

 

The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. The margin used by the Company may fluctuate depending on market conditions. The use of leverage could be viewed as risky, and the market values of the portfolio may be subject to large fluctuations. Margin balances due as of June 30, 2023 and 2022 were $1,601,000 and $490,000, respectively.

 

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer, and Portsmouth, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

 

Further information with respect to investment in marketable securities and other investments of the Company is set forth in Management Discussion and Analysis of Financial Condition and Results of Operations section and Notes 5 and 6 of the Notes to Consolidated Financial Statements.

 

SEASONALITY

 

Historically, the Hotel’s operation has been seasonal under normal circumstances. Like most hotels in the San Francisco area, the Hotel generally maintained high occupancy and room rates during the entire year except for the weeks starting from Thanksgiving to first week of January due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the effects on our results of operations.

 

COMPETITION

 

The Hotel has navigated this very competitive market nimbly and has consistently been ranked the number one hotel in its Competitive Set (“CompSet”) based on our ability to drive occupancy. During 2021 and first part of calendar 2022, we took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation. In November 2022, we began our guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024.

 

As of the date of this report, the competition for business is very strong as there still hasn’t been a rebound close to 2019 for the overall San Francisco market. The fiscal year ending June 30, 2023, the Hotel’s Competitive Set (“CompSet”) was running 64% occupancy and average daily rate of $236 for a RevPAR of $152. The Hotel has fared drastically better than its CompSet by aggressively pursuing all segments and opening all channels on off peak days and limiting access over peak demand dates. At the end of fiscal year ending June 30, 2023, the Hotel was running occupancy of 83% including the vacancy of the “Out Of Order” rooms of about 13% at $195 average daily rate for a RevPAR of $161, giving the Hotel a RevPAR index of 106%.

 

The Hotel’s location in the San Francisco Financial District historically had provided greater opportunities over its competitors when it comes to developing relationships with the Financial District entities and the customers who regularly do business in the downtown area. With limited business travel to San Francisco for the time, we are competing with hotels in more tourist attracting locations and amenities for the leisure traveler. The ability to capitalize on the strong midweek demand of the individual business traveler to the Financial District has been the focus during the timeframe of strong growth in the market. The shift to attracting leisure travel has pushed the hotel to price aggressively to lure competition from the more tourist locations in San Francisco.

 

 

The Hotel is also subject to certain operating risks common to all of the hotel industry, which could adversely impact performance. These risks include, but are not limited to:

 

	●	Competition for guests and meetings from other hotels including competition and pricing pressure from internet wholesalers and distributors;
	●	increases in operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may not be offset in the future by increased room rates;
	●	labor strikes, disruptions or lock outs;
	●	dependence on demand from business and leisure travelers, which may fluctuate and is seasonal;
	●	increases in energy costs, cost of fuel, airline fares and other expenses related to travel, which may negatively affect traveling;
	●	terrorism, terrorism alerts and warnings, wars and other military actions, pandemics or other medical events or warnings which may result in decreases in business and leisure travel;
	●	natural disasters; and
	●	adverse effects of downturns and recessionary conditions in international, national and/or local economies and market conditions.

 

ENVIRONMENTAL MATTERS

 

In connection with the ownership of the Hotel, the Company is subject to various federal, state and local laws, ordinances and regulations relating to environmental protection. Under these laws, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under or in such property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances.

 

Environmental consultants retained by Justice and its lenders conducted updated Phase I environmental site assessments in fiscal year ended June 30, 2014 on the Hotel property. These Phase I assessments relied, in part, on Phase I environmental assessments prepared in connection with the Partnership’s first mortgage loan obtained in December 2013. Phase I assessments are designed to evaluate the potential for environmental contamination on properties based generally upon site inspections, facility personnel interviews, historical information, and certain publicly available databases; however, Phase I assessments will not necessarily reveal the existence or extent of all environmental conditions, liabilities or compliance concerns at the properties.

 

Although the Phase I assessments and other environmental reports we have reviewed disclose certain conditions on our property and the use of hazardous substances in operation and maintenance activities that could pose a risk of environmental contamination or liability, we are not aware of any environmental liability that we believe would have a material adverse effect on our business, financial position, results of operations or cash flows.

 

The Company believes that the Hotel is in compliance, in all material respects, with all federal, state and local environmental ordinances and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which could have a material adverse effect on the Company. The Company has not received written notice from any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of its present properties.

 

 

Competition – Rental Properties

 

The ownership, operation, and leasing of multifamily rental properties are highly competitive. The Company competes with domestic and foreign financial institutions, REITs, life insurance companies, pension trusts, trust funds, partnerships and individual investors. In addition, The Company competes for tenants in markets primarily on the basis of property location, rent charged, services provided and the design and condition of improvements. The Company also competes with other quality apartments owned by public and private companies. The number of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily properties, as well as the rents it is able to charge. In addition, other forms of residential properties, including single family housing and town homes, provide housing alternatives to potential residents of quality apartment communities or potential purchasers of for-sale condominium units. The Company competes for residents in its apartment communities based on resident service and amenity offerings and the desirability of the Company’s locations. Resident leases at the Company’s apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities.

 

EMPLOYEES

 

As of June 30, 2023, the Company’s corporate office and multifamily operations had 32 employees. Effective August 2014, the Company entered into a client service agreement with Automatic Data Processing (“ADP”), a professional employer organization serving as an off-site, full-service human resource department for its employees. ADP personnel management services are delivered by entering into a co-employment relationship with the Company’s employees. The employees and the Company are not party to any collective bargaining agreement, and the Company believes that its employee relations are satisfactory.

 

The hotel operations had 187 employees as of June 30, 2023. On February 3, 2017, Aimbridge assumed all labor union agreements and Justice provides all funding for all payroll and related costs. As of June 30, 2023, approximately 90% of those employees were represented by one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and a new MOU was signed June 26, 2023. CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed on April 26, 2023. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.

 

Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Aimbridge. The Partnership expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA and incorporates these principles into its operating and budgetary practices.

 

ADDITIONAL INFORMATION

 

The Company files required annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC” or the “Commission”). The public may read and copy any materials that we file with the Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

 

Other information about the Company can be found on its website www.intgla.com. Reference in this document to that website address does not constitute incorporation by reference of the information contained on the website.

 

 

Item 1A. Risk Factors.

 

Adverse changes in the U.S. and global economies could negatively impact our financial performance.

 

Due to a number of factors affecting consumers, the outlook for the lodging industry remains uncertain. These factors have resulted at times in the past and could continue to result in the future in fewer customers visiting, or customers spending less, in San Francisco, as compared to prior periods. The macro-economic situation of a looming US/Global recession has seen business reducing or eliminating typical travel and group meetings in efforts to be conservative in uncertain financial times. Leisure travel and other leisure activities represent discretionary expenditures, and participation in such activities tends to decline during economic downturns, during which consumers generally have less disposable income. As a result, in those times customer demand for the luxury amenities and leisure activities that we offer may decline. Furthermore, during periods of economic contraction, revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings.

 

Weakened global economic conditions may adversely affect our industry, business, and results of operations.

 

Our overall performance depends in part on worldwide economic conditions, which could adversely affect the tourism industry. According to current economic news reports, the United States and other key international economies may be subject to a recession, characterized by falling demand for a variety of goods and services, restricted credit, going concern threats to financial institutions, major multinational companies and medium and small businesses, poor liquidity, declining asset values, reduced corporate profitability, and volatility in credit, equity and foreign exchange markets. These conditions affect discretionary and leisure spending and could adversely affect our customers’ ability or willingness to travel to destinations for leisure and cutback on discretionary business travel, which could adversely affect our operating results. In addition, in a weakened economy, companies that have competing properties may reduce room rates and other prices which could also reduce our average revenues and harm our operating results.

 

We operate a single property located in San Francisco and rely on the San Francisco market. Changes adversely impacting this market could have a material effect on our business, financial condition, results of operations, and fair market value of the Hotel.

 

Our business in San Francisco and the hospitality industry has a limited base of operations and substantially all of our revenues are currently generated by the Hotel in San Francisco, California. Accordingly, we are subject to greater risks than a more diversified hotel or resort operator and the profitability of our operations is linked to local economic conditions in San Francisco. The combination of a decline in the local economy of San Francisco, reliance on a single location and the significant investment associated with it may cause our operating results to fluctuate significantly and may adversely affect us and materially affect our total profitability.

 

We face intense local and increasingly national competition which could impact our operations and adversely affect our business and the results of operations.

 

We operate in the highly competitive San Francisco hotel industry. The Hotel competes with other high-quality Northern California hotels and resorts. Many of these competitors seek to attract customers to their properties by providing food and beverage outlets, retail stores and other related amenities, in addition to recently renovated hotel accommodations. To the extent that we seek to enhance our revenue base by offering our own various amenities, we compete with the service offerings provided by these competitors.

 

Many of the competing properties have themes and attractions which draw a significant number of visitors and directly compete with our operations. Some of these properties are operated by subsidiaries or divisions of large public companies that may have greater name recognition and financial and marketing resources than we do and market to the same target demographic group as we do. Various competitors are expanding and renovating their existing facilities. We believe that competition in the San Francisco hotel and resort industry is based on certain property-specific factors, including overall atmosphere, range of amenities, price, location, technology infrastructure, entertainment attractions, theme and size. Any market perception that we do not excel with respect to such property-specific factors could adversely affect our ability to compete effectively. If we are unable to compete effectively, we could lose market share, which could adversely affect our business and results of operations.

 

 

The San Francisco hotel and resort industry is capital intensive; financing our renovations and future capital improvements could reduce our cash flow and adversely affect our financial performance.

 

The Hotel has an ongoing need for renovations and other capital improvements to remain competitive, including replacement, from time to time, of furniture, fixtures and equipment. We will also need to make capital expenditures to comply with applicable laws and regulations.

 

Renovations and other capital improvements of hotels require significant capital expenditures. In addition, renovations and capital improvements of hotels usually generate little or no cash flow until the project’s completion. We may not be able to fund such projects solely from cash provided from our operating activities. Consequently, we will rely upon the availability of debt or equity capital and reserve funds to fund renovations and capital improvements and our ability to carry them out will be limited if we cannot obtain satisfactory debt or equity financing, which will depend on, among other things, market conditions. No assurances can be made that we will be able to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms.

 

Renovations and other capital improvements may give rise to the following additional risks, among others: construction cost overruns and delays; increased prices of materials due to tariffs; temporary closures of all or a portion of the Hotel to customers; disruption in service and room availability causing reduced demand, occupancy and rates; and possible environmental issues.

 

As a result, renovations and any other future capital improvement projects may increase our expenses, reduce our cash flows and our revenues. If capital expenditures exceed our expectations, this excess would have an adverse effect on our available cash.

 

We have substantial debt, and we may incur additional indebtedness, which may negatively affect our business and financial results.

 

We have substantial debt service obligations. Our substantial debt may negatively affect our business and operations in several ways, including: requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest, which will reduce funds available for operations and capital expenditures, future business opportunities and other purposes; making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; limiting our flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; placing us at a competitive disadvantage compared to our competitors that have less debt; limiting our ability to borrow more money for operations, capital or to finance acquisitions in the future; and requiring us to dispose of assets, if needed, in order to make required payments of interest and principal.

 

The debt agreement that governs our outstanding indebtedness due January 2024 could result in our being required to repay these borrowings on their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, the Hotel financial condition and results of operations could be adversely affected.

 

Our business model involves high fixed costs, including property taxes and insurance costs, which we may be unable to adjust in a timely manner in response to a reduction in our revenues.

 

The costs associated with owning and operating the Hotel are significant. Some of these costs (such as property taxes and insurance costs) are fixed, meaning that such costs may not be altered in a timely manner in response to changes in demand for services. Failure to adjust our expenses may adversely affect our business and results of operations. Our real property taxes may increase as property tax rates change and as the values of properties are assessed and reassessed by tax authorities. Our real estate taxes do not depend on our revenues, and generally we could not reduce them other than by disposing of our real estate assets.

 

Insurance premiums have increased significantly in recent years, and continued escalation may result in our inability to obtain adequate insurance at acceptable premium rates. A continuation of this trend would appreciably increase the operating expenses of the Hotel. If we do not obtain adequate insurance, to the extent that any of the events not covered by an insurance policy materialize, our financial condition may be materially adversely affected.

 

In the future, our property may be subject to increases in real estate and other tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses, which could reduce our cash flow and adversely affect our financial performance. If our revenues decline and we are unable to reduce our expenses in a timely manner, our business and results of operations could be adversely affected.

 

 

Risk of declining market values in marketable securities.

 

The Company invests from time to time in marketable securities. As a result, the Company is exposed to market volatility in connection with these investments. The Company’s financial position and financial performance could be adversely affected by worsening market conditions or sluggish performance of such investments.

 

Illiquidity risk in nonmarketable securities.

 

Nonmarketable securities are, by definition, instruments that are not readily salable in the capital markets, and when sold are usually at a substantial discount. Thus, the holder is limited to return on investment from any income producing feature of the instrument, as any sale of such an instrument would be subject to a substantial discount. Thus, a holder may need to hold such instruments for long period of time and not be able to realize a return of their cash investment should there be a need to liquidate to obtain cash at any given time.

 

Litigation and legal proceedings could expose us to significant liabilities and thus negatively affect our financial results.

 

We are a party, from time to time, to various litigation claims and legal proceedings, government and regulatory inquiries and/or proceedings, including, but not limited to, intellectual property, premises liability and breach of contract claims. Material legal proceedings are described more fully in Note 17, Commitments and Contingencies, to our consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K.

 

Litigation is inherently unpredictable and defending these proceedings can result in significant ongoing expenditures and the diversion of our management’s time and attention from the operation of our business, which could have a negative effect on our business operations. Our failure to successfully defend or settle any litigation or legal proceedings could result in liabilities that, to the extent not covered by our insurance, could have a material adverse effect on our financial condition, revenue and profitability.

 

The threat of terrorism could adversely affect the number of customer visits to the Hotel.

 

The threat of terrorism has caused, and may in the future cause, a significant decrease in customer visits to San Francisco due to disruptions in commercial and leisure travel patterns and concerns about travel safety. We cannot predict the extent to which disruptions in air or other forms of travel as a result of any further terrorist act, outbreak of hostilities or escalation of war would adversely affect our financial condition, results of operations or cash flows. The possibility of future attacks may hamper business and leisure travel patterns and, accordingly, the performance of our business and our operations.

 

We depend in part, on third party management companies for the future success of our business and the loss of one or more of their key personnel could have an adverse effect on our ability to manage our business and operate successfully and competitively or could be negatively perceived in the capital markets.

 

The Hotel is managed by Aimbridge. Their ability to manage the Hotel and to operate successfully and competitively is dependent, in part, upon the efforts and continued service of their managers. The departure of key personnel of current or future management companies could have an adverse effect on our business and our ability to operate successfully and competitively, and it could be difficult to find replacements for these key personnel, as competition for such personnel is intense.

 

Seasonality and other related factors such as weather can be expected to cause quarterly fluctuations in revenue at the Hotel.

 

The hotel and resort industry are seasonal in nature. This seasonality can tend to cause quarterly fluctuations in revenues at the Hotel. Our quarterly earnings may also be adversely affected by other related factors outside our control, including weather conditions and poor economic conditions. As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these quarterly fluctuations in our revenues.

 

 

The hotel industry is heavily regulated and failure to comply with extensive regulatory requirements may result in an adverse effect on our business.

 

The hotel industry is subject to extensive regulation and the Hotel must maintain its licenses and pay taxes and fees to continue operations. Our property is subject to numerous laws, including those relating to the preparation and sale of food and beverages, including alcohol. We are also subject to laws governing our relationship with our employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and firing employees and work permits. Also, our ability to remodel, refurbish or add to our property may be dependent upon our obtaining necessary building permits from local authorities. The failure to obtain any of these permits could adversely affect our ability to increase revenues and net income through capital improvements of our property. In addition, we are subject to the numerous rules and regulations relating to state and federal taxation. Compliance with these rules and regulations requires significant management attention. Furthermore, compliance costs associated with such laws, regulations and licenses are significant. Any change in the laws, regulations or licenses applicable to our business or a violation of any current or future laws or regulations applicable to our business or gaming license could require us to make substantial expenditures or could otherwise negatively affect our gaming operations. Any failure to comply with all such rules and regulations could subject us to fines or audits by the applicable taxation authority.

 

Violations of laws could result in, among other things, disciplinary action. If we fail to comply with regulatory requirements, this may result in an adverse effect on our business.

 

Uninsured and underinsured losses could adversely affect our financial condition and results of operations.

 

There are certain types of losses, generally of a catastrophic nature, such as earthquakes and floods or terrorist acts, which may be uninsurable or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. We will use our discretion in determining amounts, coverage limits, deductibility provisions of insurance and the appropriateness of self-insuring, with a view to maintaining appropriate insurance coverage on our investments at a reasonable cost and on suitable terms. Uninsured and underinsured losses could harm our financial condition and results of operations. We could incur liabilities resulting from loss or injury to the Hotel or to persons at the Hotel. Claims, whether or not they have merit, could harm the reputation of the Hotel or cause us to incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, which could harm our results of operations.

 

In the event of a catastrophic loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in the Hotel, as well as the anticipated future revenue from the property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Hotel. In the event of a significant loss, our deductible may be high, and we may be required to pay for all such repairs and, therefore, it could materially adversely affect our financial condition. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate the Hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.

 

It has generally become more difficult and expensive to obtain property and casualty insurance, including coverage for terrorism. When our current insurance policies expire, we may encounter difficulty in obtaining or renewing property or casualty insurance on our property at the same levels of coverage and under similar terms. Such insurance may be more limited and for some catastrophic risks (for example, earthquake, flood and terrorism) may not be generally available at current levels. Even if we can renew our policies or to obtain new policies at levels and with limitations consistent with our current policies, we cannot be sure that we will be able to obtain such insurance at premium rates that are commercially reasonable. If we were unable to obtain adequate insurance on the Hotel for certain risks, it could cause us to be in default under specific covenants on certain of our indebtedness or other contractual commitments that require us to maintain adequate insurance on the Hotel to protect against the risk of loss. If this were to occur, or if we were unable to obtain adequate insurance and the Hotel experienced damage which would otherwise have been covered by insurance, it could materially adversely affect our financial condition and the operations of the Hotel.

 

 

In addition, insurance coverage for the Hotel and for casualty losses does not customarily cover damages that are characterized as punitive or similar damages. As a result, any claims or legal proceedings, or settlement of any such claims or legal proceedings that result in damages that are characterized as punitive or similar damages may not be covered by our insurance. If these types of damages are substantial, our financial resources may be adversely affected.

 

You may lose all or part of your investment.

 

There is no assurance that the Company’s initiatives to improve its profitability or liquidity and financial position will be successful.

 

The price of the Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of its common stock.

 

The market price of the Company’s common stock may fluctuate significantly from time to time as a result of many factors, including: investors’ perceptions of the Company and its prospects; investors’ perceptions of the Company’s and/or the industry’s risk and return characteristics relative to other investment alternatives; difficulties between actual financial and operating results and those expected by investors and analysts; changes in our capital structure; trading volume fluctuations; actual or anticipated fluctuations in quarterly financial and operational results; volatility in the equity securities market; and sales, or anticipated sales, of large blocks of the Company’s common stock.

 

The concentrated beneficial ownership of our common stock and the ability it affords to control our business may limit or eliminate other shareholders’ ability to influence corporate affairs.

 

The Company’s President, Chief Executive Officer, and Chairman of the Board of Directors, John V. Winfield is a 68.6% beneficial shareholder of the Company. Because of this concentrated stock ownership, Mr. Winfield will be able to significantly influence the election of the Company’s board of directors and all other decisions on all matters requiring shareholder approval. As a result, the ability of other shareholders to determine the management and policies of the Company is significantly limited. The interests of the Company’s largest shareholder may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. This level of control may also have an adverse impact on the market value of our shares because our largest shareholder may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell enough shares to significantly decrease our price per share.

 

Item 1B. Unresolved Staff Comments.

 

None.

 

Item 2. Properties.

 

SAN FRANCISCO HOTEL PROPERTY

 

The Hotel is owned by Portsmouth through its wholly owned subsidiary, Operating. The Hotel is centrally located in the Financial District in San Francisco, one block from the Transamerica Pyramid. The Embarcadero Center is within walking distance and North Beach is two blocks away. Chinatown is directly across the bridge that runs from the Hotel to Portsmouth Square Park. The Hotel is a 31-story (including parking garage), steel and concrete, A-frame building, built in 1970. The Hotel has 544 well-appointed guest rooms and luxury suites situated on 22 floors. The Hotel has a restaurant, a lounge, and a private dining room on 3,700 square feet; additionally, there are two kitchens to service the restaurant and banquets and a fully equipped gym. The third floor houses the Chinese Culture Center (the “CCC”), its administrative office, and a grand ballroom. The Hotel has approximately 22,000 square feet of meeting room space, including the grand ballroom. Other features of the Hotel include a 5-level underground parking garage and pedestrian bridge across Kearny Street connecting the Hotel and the CCC with Portsmouth Square Park in Chinatown.

 

As required by its senior lender, Operating will continue to make minimum payments into its furniture, fixtures, and equipment (“FF&E”) escrow account held by its senior lender of the greatest of 4% of annual revenues or a minimum of $1,952,000 per annum. In the opinion of management, the Hotel is adequately covered by insurance.

 

 

HOTEL FINANCING

 

On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Company is the sole member of Mezzanine, and Mezzanine is the sole member of Operating.

 

The Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.

 

The Mortgage Loan is secured by Portsmouth’s principal asset, the Hotel. The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is ten years with interest only due in the first three years and principal and interest payments to be made during the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance, and FF&E reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.

 

The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. As additional security for the new mezzanine loan, there is a limited guaranty executed by the Company in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).

 

The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership was required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for the $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements. Justice Operating Company, LLC is not meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company. The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations up to their maturity.

 

Each of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants, and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements. The Company is working with various potential lenders to refinance its current senior mortgage and mezzanine debt which will mature on January 1, 2024.

 

 

On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.

 

As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”). The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022.

 

RENTAL PROPERTIES

 

As June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States, with a concentration in Texas and Los Angeles County, California. These properties include sixteen apartment complexes, three single-family houses as strategic investments and one commercial real estate property. All properties are operating properties. In addition to the properties, the Company owns approximately 2 acres of unimproved land in Maui, Hawaii. As of June 30, 2023, all the Company’s operating real estate properties are managed in-house.

 

 

Description of Properties

 

Las Colinas, Texas. The Las Colinas property is a waterfront apartment community along Beaver Creek that was developed in 1993 with 358 units on approximately 15.6 acres of land. The Company acquired the complex on April 30, 2004 for approximately $27,145,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 27.5 years. Real estate property taxes for the year ended June 30, 2023 were approximately $1,054,000. In October 2021, the Company refinanced its 3.73% existing $15,900,000 mortgage note payable on the property and generated net proceeds of $12,938,000. The outstanding new mortgage balance was $28,800,000 as of June 30, 2023. The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031.

 

Morris County, New Jersey. The Morris County property is a two-story garden apartment complex that was completed in June 1964 with 151 units on approximately 8 acres of land. The Company acquired the complex on September 15, 1967 at an initial cost of approximately $1,600,000. Real estate property taxes for the year ended June 30, 2023 were approximately $285,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In April 2020, the Company refinanced its 3.51% and 4.51% existing $8,737,000 and $2,512,000 mortgages and generated net proceeds of $6,814,000. The outstanding new mortgage balance was approximately $17,208,000 at June 30, 2023 with a fixed interest rate of 3.17% per annum and the maturity date of the new mortgage is May 1, 2030.

 

St. Louis, Missouri. The St. Louis property is a two-story project with 264 units on approximately 17.5 acres. The Company acquired the complex on November 1, 1968 at an initial cost of $2,328,000. For the year ended June 30, 2023, real estate property taxes were approximately $134,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. On May 31, 2023, the Company refinanced its $4,823,000 mortgage with a new two-year $5,360,000 mortgage. Interest-only payments are due monthly and commencing on June 10, 2024, the Company will be required to make equal monthly principal installments of $5,500 up to the loan maturity of May 31, 2025. The floating interest rate is based on the one month term SOFR plus 310 bps floating with a SOFR cap of 5.5%. The interest rate of the greater of (a) the Prime Rate for such day and (b) the Federal Funds Rate for plus 0.50%. 5.5% per annum for two years with interest-only payments for the first year. The maturity date of the mortgage is May 31, 2025.

 

Florence, Kentucky. The Florence property is a three-story apartment complex with 157 units on approximately 6.0 acres. The Company acquired the property on December 20, 1972 at an initial cost of approximately $1,995,000. For the year ended June 30, 2023, real estate property taxes were approximately $64,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance was approximately $2,917,000 as of June 30, 2023 with a fixed interest rate of 3.875% per annum and the maturity date of the mortgage is April 1, 2025.

 

Los Angeles, California. The Company owns one commercial property, twelve apartment complexes, and three single-family houses in the general area of County of Los Angeles, California (“Los Angeles”).

 

The Company’s Los Angeles commercial property is a 5,503 square foot, two story building that served as the Company’s corporate offices until it was leased out, effective October 1, 2009 and the Company leased a new space for its corporate office. The Company acquired the building on March 4, 1999 for $1,876,000. Property taxes for the year ended June 30, 2023 were approximately $33,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. As of June 30, 2023, this property was not encumbered by a mortgage.

 

The first Los Angeles apartment complex is a 10,600 square foot two-story apartment with 12 units. The Company acquired the property on July 30, 1999 at an initial cost of approximately $1,305,000. For the year ended June 30, 2023, real estate property taxes were approximately $25,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance was approximately $1,974,000 as of June 30, 2023 with a fixed interest rate of 3.59% per annum and the maturity date of the mortgage is June 23, 2026.

 

The second Los Angeles apartment complex is a 12,700 square foot apartment with 14 units. The Company acquired the property on October 20, 1999 at an initial cost of approximately $2,150,000. For the year ended June 30, 2023, real estate property taxes were approximately $38,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In January 2021, the Company refinanced its 5.89% existing $1,597,000 mortgage and generated net proceeds of $1,057,000. The outstanding new mortgage balance was approximately $2,645,000 at June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is February 1, 2031.

 

 

The third Los Angeles apartment complex is a 10,500 square foot apartment with 9 units. The Company acquired the property on November 10, 1999 at an initial cost of approximately $1,675,000. For the year ended June 30, 2023, real estate property taxes were approximately $30,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In November 2020, the Company refinanced its 5.89% existing $1,088,000 mortgage and generated net proceeds of $798,000. The outstanding new mortgage balance was approximately $1,891,000 as of June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is December 1, 2030.

 

The fourth Los Angeles apartment complex is a 26,100 square foot two-story apartment with 31 units. The Company acquired the property on May 26, 2000 at an initial cost of approximately $7,500,000. For the year ended June 30, 2023, real estate property taxes were approximately $127,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In October 2020, the Company refinanced its 4.85% existing $4,800,000 mortgage and generated net proceeds of $3,529,000. The outstanding new mortgage balance was approximately $8,291,000 at June 30, 2023 with a fixed interest rate of 2.52% per annum and the maturity date of the new mortgage is November 1, 2030. The new mortgage requires interest-only payments for the first two years and will amortize over 30 years thereafter.

 

The fifth Los Angeles apartment complex is a 27,600 square foot two-story apartment with 30 units. The Company acquired the property on July 7, 2000 at an initial cost of approximately $4,411,000. For the year ended June 30, 2023, real estate property taxes were approximately $78,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. On June 30, 2022, the Company refinanced its 5.97%, $5,283,000 mortgage note payable on this property and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $584,000 because of the refinance. The outstanding new mortgage balance was approximately $5,762,000 at June 30, 2023 with a fixed annual interest rate on the new mortgage at 4.40% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052.

 

The sixth Los Angeles apartment complex is a 3,000 square foot apartment with 4 units. The Company acquired the property on July 19, 2000 at an initial cost of approximately $1,070,000. For the year ended June 30, 2023, real estate property taxes were approximately $18,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In July 2021, the Company refinanced its 3.75% existing $323,000 mortgage and generated net proceeds of $846,000. The outstanding new mortgage balance was approximately $1,112,000 as of June 30, 2023 with a fixed interest rate of 3.50% per annum and the maturity date of the new mortgage is July 1, 2051.

 

The seventh Los Angeles apartment complex is a 4,500 square foot two-story apartment with 4 units. The Company acquired the property on July 28, 2000 at an initial cost of approximately $1,005,000. For the year ended June 30, 2023, real estate property taxes were approximately $17,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75% existing $563,000 mortgage and generated net proceeds of $619,000. The outstanding new mortgage balance was approximately $1,112,000 at June 30, 2023 with a five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.

 

The eighth Los Angeles apartment complex is a 7,500 square foot apartment with 7 units. The Company acquired the property on August 9, 2000 at an initial cost of approximately $1,308,000. For the year ended June 30, 2023, real estate property taxes were approximately $23,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance was approximately $751,000 as of June 30, 2023 with an interest rate of 4.125% and the maturity date of the mortgage is September 1, 2042.

 

The ninth Los Angeles apartment complex is a 13,000 square foot two-story apartment with 8 units. The Company acquired the property on May 1, 2001 at an initial cost of approximately $1,206,000. For the year ended June 30, 2023, real estate property taxes were approximately $21,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In July 2021, the Company refinanced the property’s existing 3.75%, $416,000 mortgage with a new mortgage for $1,595,000. The Company generated net proceeds of $1,098,000 because of the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgages mature in July 2051. Outstanding mortgage balance was approximately $1,535,000 as of June 30, 2023.

 

 

The tenth Los Angeles apartment complex, which was owned 100% by the Company’s subsidiary Santa Fe, is a 4,200 square foot two-story apartment with 2 units. Santa Fe acquired the property on February 1, 2002 at an initial cost of approximately $785,000. For the year ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method based upon an estimated useful life of 40 years. On November 23, 2020, Santa Fe sold this property to InterGroup for $1,530,000 in exchange for a reduction of $1,196,000 of its obligation to InterGroup. The outstanding mortgage on the property for $334,000 was simultaneously transferred to InterGroup. Santa Fe realized a gain on the sale of approximately $901,000, which was eliminated in consolidation at InterGroup. The sales price of the property represents the current value as of the sale date as appraised by a licensed independent third-party appraiser. The fairness of the sale terms of the transaction were reviewed and approved by the independent directors of Santa Fe and InterGroup, and unanimously approved by the entire Board of Directors of both companies. In July 2021, the Company refinanced the property’s existing 3.75%, $327,000 mortgage with a new mortgage for $700,000. The Company generated net proceeds of $381,000 because of the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgage matures in July 2051. Outstanding mortgage balance was approximately $673,000 as of June 30, 2023.

 

The eleventh apartment which is located in Marina del Rey, California, is a 6,316 square foot two-story apartment with 9 units. The Company acquired the property on April 29, 2011 at an initial cost of approximately $4,000,000. For the year ended June 30, 2023, real estate property taxes were approximately $58,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 27.5 years. In June 2020, the Company refinanced its 5.6% existing $1,303,000 mortgage and generated net proceeds of $1,144,000. The outstanding new mortgage balance was approximately $2,443,000 as of June 30, 2023 with a fixed interest rate of 3.09% per annum and the maturity date of the new mortgage is July 1, 2030.

 

The twelfth Los Angeles apartment complex is a 4,093 square foot apartment with 4 units. In an all-cash transaction, the Company acquired the property on May 14, 2021 at an initial cost of approximately $2,600,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. For the year ended June 30, 2023, real estate property taxes were approximately $32,000. In July 2021, the Company obtained a mortgage on the property for $830,000, generating net proceeds of $836,000. Interest rate on the mortgage is fixed at 3.50% for five years and the mortgage matures in August 2051. Outstanding mortgage balance was approximately $800,000 as of June 30, 2023.

 

The first Los Angeles single-family house is a 2,771 square foot home. The Company acquired the property on November 9, 2000 at an initial cost of approximately $660,000. For the year ended June 30, 2023, real estate property taxes were approximately $11,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75% existing $363,000 mortgage and generated net proceeds of $576,000. The outstanding new mortgage balance was approximately $886,000 as of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.

 

The second Los Angeles single-family house is a 2,201 square foot home. The Company acquired the property on August 22, 2003 at an initial cost of approximately $700,000. For the year ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75% existing $388,000 mortgage and generated net proceeds of $183,000. The outstanding new mortgage balance was approximately $534,000 as of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.

 

 

The third Los Angeles single-family house is a 2,387 square foot home. The company acquired the property in July of 2015 as a strategic asset for $1,975,000. For the year ended June 30, 2023, real estate property taxes were approximately $26,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In September 2021, the Company refinanced the property’s existing 4.75% per annum mortgage and reduced the rate to five-year fixed at 3.5% per annum, adjustable thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The outstanding mortgage balance was approximately $934,000 as of June 30, 2023 and the maturity date of the mortgage is October 1, 2048.

 

Maui, Hawaii. In August 2004, the Company purchased an approximately two-acre parcel of unimproved land in Kihei, Maui, Hawaii for $1,467,000. Upon the recent wildfires in the area the land was not impacted. As of June 30, 2023, this property is not encumbered by a mortgage.

 

MORTGAGES

 

Further information with respect to mortgage notes payable of the Company is set forth in Note 10 of the Notes to Consolidated Financial Statements.

 

ECONOMIC AND PHYSICAL OCCUPANCY RATES

 

The Company leases units in its residential rental properties on a short-term basis, with no lease extending beyond one year. The economic occupancy (gross potential less rent below market, vacancy loss, bad debt, discounts and concessions divided by gross potential rent) and the physical occupancy (gross potential rent less vacancy loss divided by gross potential rent) for each of the Company’s operating properties for fiscal year ended June 30, 2023 are provided below.

 

Property		Economic Occupancy				Physical Occupancy
1. Las Colinas, TX			100	%			99	%
2. Morris County, NJ			92	%			97	%
3. St. Louis, MO			68	%			66	%
4. Florence, KY			80	%			92	%
5. Los Angeles, CA (1)			92	%			95	%
6. Los Angeles, CA (2)			96	%			89	%
7. Los Angeles, CA (3)			96	%			79	%
8. Los Angeles, CA (4)			81	%			93	%
9. Los Angeles, CA (5)			100	%			97	%
10. Los Angeles, CA (6)			98	%			100	%
11. Los Angeles, CA (7)			100	%			100	%
12. Los Angeles, CA (8)			100	%			94	%
13. Los Angeles, CA (9)			100	%			100	%
14. Los Angeles, CA (10)			75	%			75	%
15. Los Angeles, CA (11)			97	%			100	%
16. Los Angeles, CA (12)			62	%			62	%
17. Los Angeles, CA (13)			100	%			100	%
18. Los Angeles, CA (14)			100	%			100	%
19. Los Angeles, CA (15)			69	%			94	%

 

The Company’s Los Angeles, California properties are subject to various rent control laws, ordinances and regulations which impact the Company’s ability to adjust and achieve higher rental rates. In February 2022, the Los Angeles County Board of Supervisors extended the majority of the eviction moratorium to 2022 and parts of it until 2023. The County’s non-payment COVID-19 tenant eviction protection resolution expired on March 31, 2023. Landlords in California are not allowed to evict tenants for unpaid rent prior to March 2023 and are not allowed to file a civil complaint for such rent until 2025. The Company will file civil complaints as soon as it is allowed by statue in an effort to collect any unpaid rent prior to March 2023.

 

 

Item 3. Legal Proceedings.

 

The Company may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

PART II

 

Item 5. Market for Common Equity and Related Stockholder Matters.

 

MARKET INFORMATION

 

The Company’s Common Stock is listed and trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC under the symbol: “INTG”. As of June 30, 2023, the approximate number of holders of record of the Company’s Common Stock was 165. Such number of owners was determined from the Company’s shareholders records and does not include beneficial owners of the Company’s Common Stock whose shares are held in names of various brokers, clearing agencies or other nominees.

 

DIVIDENDS

 

The Company has not declared any cash dividends on its common stock and does not foresee issuing cash dividends in the near future.

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

 

This information appears in Part III, Item 12 of this report.

 

  

ISSUER PURCHASES OF EQUITY SECURITIES

 

The following table reflects purchases of InterGroup’s common stock made by The InterGroup Corporation, for its own account, during the fourth quarter of its fiscal year ending June 30, 2023.

 

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

 

Fiscal 2023 Period		(a) Total Number of Shares Purchased				(b) Average Price Paid Per Share				(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				(d) Maximum Number of shares that May Yet be Purchased Under the Plans or Programs
Month #1 (April 1- April 30)			190			$	41.94				190				91,218
Month #2 (May 1- May 31)			530			$	36.60				530				91,028
Month #3 (June 1- June 30)			297			$	36.20				297				90,731
TOTAL:			1,017			$	37.94				1,017				90,731

 

The Company has only one stock repurchase program. The program was initially announced on January 13, 1998 and was amended on February 10, 2003 and October 12, 2004. The total number of shares authorized to be repurchased pursuant to those prior authorizations was 870,000, adjusted for stock splits. On June 3, 2009, the Board of Directors authorized the Company to purchase up to an additional 125,000 shares of Company’s common stock. On November 15, 2012, the Board of Directors authorized the Company to purchase up to an additional 100,000 shares of Company’s common stock. On September 23, 2019, the Board of Directors authorized the Company to purchase up to an additional 120,000 shares of Company’s common stock. On December 20, 2021, the Board of Directors authorized the Company to purchase up to an additional 125,000 shares of Company’s common stock. The purchases will be made, in the discretion of management, from time to time, in the open market or through privately negotiated third party transactions depending on market conditions and other factors. The Company’s repurchase program has no expiration date and can be amended and increased, from time to time, in the discretion of the Board of Directors. No plan or program expired during the period covered by the table.

 

Item 6. Selected Financial Data.

 

Not required for smaller reporting companies.

 

Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements, related notes included thereto and Item 1A., “Risk Factors,” appearing elsewhere in this Annual Report on Form 10-K. For the discussion and analysis of our 2022 financial condition and results of operations compared to 2023, refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended June 30, 2023.

 

NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS

 

There are several factors at play that are having a negative impact on our business and the entire hospitality community in San Francisco. The constant “doom loop” of negative headlines picked up in main stream media, particularly outlets like Fox News that have made San Francisco their punching back and find ways to amplify any negative story line in the city. The macro economic situation of a looming US/Global recession have seen business reducing or eliminating typical travel and group meetings in efforts to be conservative in uncertain financial times. The micro economic situation specific to San Francisco and Bay Area is many of the world’s largest tech companies have taken even more drastic cost cutting measures laying off hundreds of thousands of workers in the area and have reduced business travel, group meetings and even major citywides to cancel like Meta, Red Hat and VMWare. The ongoing conditions of the streets in regards to cleanliness, safety and homelessness problems have driven many other citywide customers to rethink hosting meetings in San Francisco and have relocated to other major markets like Las Vegas, Orlando and San Diego. Even factors like the recent culture wars that are dividing much of the country are impacting San Francisco harder than other areas as the city have long been known as the LGBTQ capital of the US, and made recent headlines after Mayor London Breed’s office named the first ever Drag Laureate to an 18 month term as ambassador.

 

 

As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”). The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs.

 

On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ended June 30, 2022.

 

RESULTS OF OPERATIONS

 

As of June 30, 2023, the Company owned approximately 75.7% of the common shares of Portsmouth Square, Inc. The Company’s principal sources of revenue are revenues from the hotel owned by Portsmouth, rental income from its investments in multi-family and commercial real estate properties, and income received from investment of its cash and securities assets.

 

Portsmouth’s primary asset is a 544-room hotel property located at 750 Kearny Street, San Francisco, California 94108, known as the “Hilton San Francisco Financial District” (the “Hotel” or the “Property”) and related facilities, including a five-level underground parking garage. The financial statements of Portsmouth have been consolidated with those of the Company.

 

In addition to the operations of the Hotel, the Company also generates income from the ownership and management of its real estate. Properties include sixteen apartment complexes, one commercial real estate property, and three single-family houses as strategic investments. The properties are located throughout the United States but are concentrated in Texas and Southern California. The Company also has an investment in unimproved real property in Hawaii.

 

The Company acquires its investments in real estate and other investments utilizing cash, securities or debt, subject to approval or guidelines of the Board of Directors. The Company also invests in income-producing instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential.

 

Fiscal Year Ended June 30, 2023 Compared to Fiscal Year Ended June 30, 2022

 

The Company had a net loss of $9,932,000 for the year ended June 30, 2023 compared to a net loss of $10,616,000 for the year ended June 30, 2022. Income from operations was $4,336,000 for the year ended June 30, 2023 and income from operations was $3,671,000 for fiscal year ended June 30, 2022. The Company recorded gains of $58,000 from marketable securities transactions during fiscal year ended June 30, 2023 as compared to losses of $8,101,000 during fiscal year ended June 30, 2022. Gain on insurance recovery of $2,692,000 was recorded during fiscal year ended June 30, 2023. Gain on debt forgiveness was $2,000,000 during fiscal year ended June 30, 2022.

 

Hotel Operations

 

The Company had net loss of $1,612,000 from Hotel operations for the year ended June 30, 2023 compared to net loss of $2,776,000 for the year ended June 30, 2022. The change was primarily attributable to the $10,493,000 increase in Hotel revenue, offset by $7,006,000 increase in operating expenses and the $2,000,000 gain on forgiveness of debt during period ended June 30, 2022.

 

 

The following tables set forth a more detailed presentation of Hotel operations for the years ended June 30, 2023 and 2022.

 

For the year ended June 30,		2023				2022
Hotel revenues:
Hotel rooms		$	35,684,000			$	26,599,000
Food and beverage			2,625,000				1,471,000
Garage			2,790,000				3,112,000
Other operating departments			928,000				352,000
Total hotel revenues			42,027,000				31,534,000
Operating expenses excluding depreciation and amortization			(34,457,000	)			(27,451,000	)
Operating income interest, depreciation and amortization			7,570,000				4,083,000
And gain on forgiveness of debt			-				2,000,000
Interest expense - mortgage			(6,467,000	)			(6,549,000	)
Depreciation and amortization expense			(2,815,000	)			(2,310,000	)
Net loss from Hotel operations		$	(1,712,000	)		$	(2,776,000	)

 

For the year ended June 30, 2023, the Hotel had operating income of $7,570,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $42,027,000. The year over year increase in all areas, except garage revenues, are result of recovery from the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak since March 2020. The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2023 and 2022.

 

Month		Jul				Aug				Sep				Oct				Nov				Dec				Jan				Feb				Mar				Apr				May				Jun				Fiscal Year
Year		2022				2022				2022				2022				2022				2022				2023				2023				2023				2023				2023				2023				2022 - 2023
Average Occupancy %			93	%			94	%			95	%			89	%			82	%			77	%			76	%			77	%			81	%			65	%			80	%			83	%			83	%

 

Year		2021				2021				2021				2021				2021				2021				2022				2022				2022				2022				2022				2022				2021 - 2022
Average Occupancy %			82	%			77	%			76	%			79	%			72	%			74	%			68	%			74	%			81	%			87	%			90	%			95	%			80	%

 

Beginning in November 2022, the occupancy of our hotel has been reduced by approximately 13% every month to reflect the “out-of-order” rooms that are being renovated at any given time. The guestroom renovation is scheduled to be completed by the end of March 31, 2024. Additionally, 14 guest rooms will be added to inventory as a result of renovating such rooms which had been repurposed for administrative offices in past years.

 

Total operating expenses increased by $7,006,000 due to increase in rooms, food and beverage, salaries and wages, utilities, credit card commissions, and franchise fees.

 

The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPAR”) of the Hotel for the year ended June 30, 2023 and 2022.

 

For the Year Ended June 30,		Average Daily Rate				Average Occupancy %				RevPAR
2023		$	217				83	%		$	180
2022		$	168				80	%		$	134

 

 

The Hotel’s revenues increased by 33% year over year. Average daily rate increased by $49, average occupancy increased 3%, and RevPAR increased by $46 for the twelve months ended June 30, 2023 compared to the twelve months ended June 30, 2022. As previously mentioned, our occupancy is lowered by approximately 13% beginning November 2022 when we began to take three levels out of service in order to complete our guestroom renovations. Had the Hotel been able to sell the additional 13% of rooms that were out of order, the RevPar would have been approximately $192.

 

After taking advantage of softer demand to refresh all public spaces and meeting rooms, the Hotel is now deep into a renovation of the guest rooms and suites. The Hotel started it’s full renovation of all guest rooms and suites mid-November 2022 and is over half way complete as of fiscal year end 2023. This includes new carpet, vinyl wall covering, headboards, end tables, wall sconces, art, soft seating and refinish of existing desks and doors. The Hotel removed the existing armoire and has built a closet to replace it. After this project is completed early calendar year 2024, the Hotel will add 14 additional guest rooms bringing back the old Justice offices, spa, and accounting offices to their original purpose. This will all be funded from the Hotel’s cash from operations through the Hotel’s furniture, fixture, and equipment reserve account with our senior lender.

 

Real Estate Operations

 

Revenues from real estate operations were consistent year over year for June 30, 2023 and 2022 at $15,580,000 and $15,685,000 respectively. Real estate operating expenses increased to $10,017,000 from $8,694,000 primarily due to increased insurance expense of over $1,000,000 year over year. Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates and to reduce expenses and improve efficiencies.

 

Investment Transactions

 

The Company had a net income on marketable securities of $1,126,000 for the year ended June 30, 2023 compared to a net loss on marketable securities of $7,614,000 for the year ended June 30, 2022. For the year ended June 30, 2022, the Company had a net realized loss of $2,581,000 related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE).

 

For the year ended June 30, 2023, the Company had a net realized loss of $1,712,000 and a net unrealized gain of $2,838,000. For the year ended June 30, 2022, the Company had a net realized loss of $2,206,000 and a net unrealized loss of $5,408,000.

 

Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

 

During the years ended June 30, 2023 and 2022, the Company performed an impairment analysis of its other investments and determined that its investments had other than temporary impairment and recorded impairment losses of zero and $41,000, respectively.

 

The Company and its subsidiary Portsmouth compute and file income tax returns and prepare discrete income tax provisions for financial reporting. An income tax benefit was recorded for the year ended June 30, 2022, for the pre-tax loss. However, for the year ended June 30, 2023, an expense was booked on the pre-tax loss due to the set up of a valuation allowance on all of Portsmouth (standalone) deferred tax assets.

 

 

MARKETABLE SECURITIES AND OTHER INVESTMENTS

 

As of June 30, 2023 and 2022, the Company had investments in marketable equity securities of $18,345,000 and $11,049,000, respectively. The following table shows the composition of the Company’s marketable securities portfolio by selected industry groups:

 

As of June 30, 2023 Industry Group		Fair Value				% of Total Investment Securities
REITs and real estate companies		$	6,985,000				38.1	%
Technology			2,779,000				15.1	%
T-Notes			2,093,000				11.4	%
Financial services			1,865,000				10.2	%
Consumer cyclical			1,689,000				9.2	%
Basic materials			1,047,000				5.7	%
Healthcare			739,000				4.0	%
Communications Services			566,000				3.1	%
Industrial			485,000				2.7	%
Utilities			97,000				0.5	%
		$	18,345,000				100.0	%

 

As of June 30, 2022 Industry Group		Fair Value				% of Total Investment Securities
REITs and real estate companies		$	3,289,000				29.8	%
Communication Services			2,787,000				25.2	%
Financial Services			1,755,000				15.9	%
Technology			815,000				7.4	%
Basic materials			769,000				7.0	%
Consumer cyclical			693,000				6.3	%
Industrial			385,000				3.5	%
Energy			279,000				2.5	%
Other			277,000				2.4	%
		$	11,049,000				100.0	%

 

As of June 30, 2023, the Company’s investment portfolio is diversified with 59 different equity positions. The Company holds one equity security that comprised more than 10% of the equity value of the portfolio. The three largest security position represent 19%, 4%, and 4% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NASDAQ: ARL), Ouster Inc – Common Stock (NASDAQ: OUST), and Bank Hawaii Corp (NASDAQ: BOH), which are included in the REITs and real estate companies, Financial Services, and Financial Services industry groups, respectively.

 

As of June 30, 2022, the Company’s investment portfolio is diversified with 38 different equity positions. The Company holds three equity securities that comprised more than 10% of the equity value of the portfolio. The three largest security positions represent 23%, 20%, and 13% of the portfolio and consists of the common stock of Paramount Global - Preferred Stock (NASDAQ: PARAP), American Realty Investors, Inc. (NASDAQ: ARL), and BlackRock Muni holdings California Quality Fund Inc. (NASDAQ: MUC), which are included the Communications, REITs and real estate companies, and Financial Services industry groups, respectively.

 

The following table shows the net gain (loss) on the Company’s marketable securities and the associated margin interest and trading expenses for the respective years.

 

For the years ended June 30,		2023				2022
Net gain (loss) on marketable securities		$	1,126,000			$	(7,614,000
Impairment loss on other investments			-				(41,000	)
Dividend and interest income			485,000				980,000
Margin interest expense			(848,000	)			(851,000	)
Trading expenses			(705,000	)			(575,000	)
Total		$	58,000			$	(8,101,000	)

 

 

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL SOURCES

 

The Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due to securities brokers and obligations for securities sold of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively. These marketable securities are short-term investments and liquid in nature.

 

On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. As of the date of this report, the maturity date was extended to July 31, 2025. Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. During the fiscal year ending June 30, 2023 and 2022, InterGroup advanced to the Hotel $1,500,000 and $7,550,000, respectively, bringing the total amount due to InterGroup to $15,700,000 and $14,200,000 as of June 30, 2023 and 2022, respectively. In July 2023, Portsmouth and InterGroup entered into a new loan modification agreement which increased Portsmouth’s borrowing from InterGroup up to $20,000,000. The Company could amend its by-laws and increase the number of authorized shares to issue additional shares to raise capital in the public markets if needed.

 

During the fiscal year ending June 30, 2023, we completed the refinancing on our St. Louis, Missouri property $4.9 million loan and obtain a $5,360,000 new two-year loan at a floating interest rate of 3.1% over the cap 5.5% SOFR. During the fiscal year ending June 30, 2022, we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000. We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable.

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022.

 

 

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

 

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. After considering our approach to liquidity and accessing our available sources of cash, We believe that our cash on hand, along with other potential sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond even if current levels of occupancy and revenue per occupied room (“RevPAR”, calculated by multiplying the hotel’s average daily room rate by its occupancy percentage) were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will be successful with its plan.

 

Going Concern

 

The Hotel financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition, the Hotel has recurring losses and has an accumulated deficit of $105,727,000.

 

Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.

 

The Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average daily rates to increase as it completes renovation up to the point of generating a positive cash flows.

 

The financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Hotel were unable to continue as a going concern.

 

 

MATERIAL CONTRACTUAL OBLIGATIONS

 

The following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest payments.

 

						Year				Year				Year				Year				Year
		Total				2024				2025				2026				2027				2028				Thereafter
Mortgage and subordinated notes payable		$	192,870,000			$	108,420,000			$	9,318,000			$	1,168,000			$	3,299,000			$	1,771,000			$	68,894,000
Other notes payable			2,956,000				567,000				567,000				567,000				463,000				317,000				475,000
Interest			25,577,000				3,849,000				2,898,000				2,390,000				2,284,000				2,286,000				11,870,000
Total		$	221,403,000			$	112,836,000			$	12,783,000			$	4,125,000			$	6,046,000			$	4,374,000			$	81,239,000

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company has no material off balance sheet arrangements.

 

IMPACT OF INFLATION

 

Hotel room rates are typically impacted by supply and demand factors, not inflation, since rental of a hotel room is usually for a limited number of nights. Room rates can be, and usually are, adjusted to account for inflationary cost increases. Since Aimbridge has the power and ability under the terms of its management agreement to adjust Hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material.

 

The Company’s residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Rental increases are expected to offset anticipated increased property operating expenses.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

Critical accounting policies are those that are most significant to the portrayal of our financial position and results of operations and require judgments by management in order to make estimates about the effect of matters that are inherently uncertain. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to the consolidation of our subsidiaries, to our revenues, allowances for bad debts, accruals, asset impairments, other investments, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates, or our estimates may be affected by different assumptions or conditions.

 

INCOME TAXES

 

Judgment is required in addressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws, or interpretations thereof). In addition, we are subject to examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements. We evaluate tax positions taken or expected to be taken on a tax return to determine whether they are more likely than not of being sustained, assuming that the tax reporting positions will be examined by taxing authorities with full knowledge of all relevant information, prior to recording the related tax benefit in our consolidated financial statements. If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes. A change in the assessment of the “more likely than not” standard with respect to a position could materially impact our consolidated financial statements.

 

 

DEFERRED INCOME TAXES – VALUATION ALLOWANCE

 

We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable. This assessment is completed by tax jurisdiction and relies on the weight of both positive and negative evidence available, with significant weight placed on recent financial results. Cumulative pre-tax losses for the three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little or no weight placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. When necessary, we use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. Assumptions, judgment, and the use of estimates are required when scheduling the reversal of deferred tax assets and liabilities, and the exercise is inherently complex and subjective. However, significant judgment will be required to determine the timing and amount of any reversal of the valuation allowance in future periods.

 

HOTEL ASSETS AND DEFINITE-LIVED INTANGIBLE ASSETS

 

We evaluate property and equipment, and definite-lived intangible assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing to the projected undiscounted cash flows of the assets. We use judgment to determine whether indications of impairment exist and consider our knowledge of the hospitality industry, historical experience, location of the property, market conditions, and property-specific information available at the time of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis. When an indicator of impairment exists, judgment is also required in determining the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset or asset group, if applicable. Changes in economic and operating conditions impacting the judgments used could result in impairments to our long-lived assets in future periods. Historically, changes in estimates used in the property and equipment and definite-lived intangible assets impairment assessment process have not resulted in material impairment charges in subsequent periods as a result of changes made to those estimates. There were no indicators of impairment on its hotel investments or intangible assets and accordingly no impairment losses recorded for the years ended June 30, 2023 and 2022.

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

 

Not required for smaller reporting companies.

 

 

Item 8. Financial Statements and Supplementary Data.

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	PAGE
Report of Independent Registered Public Accounting Firm	33
Consolidated Balance Sheets - June 30, 2023 and 2022	35
Consolidated Statements of Operations - For years ended June 30, 2023 and 2022	36
Consolidated Statements of Shareholders’ Deficit - For years ended June 30, 2023 and 2022	37
Consolidated Statements of Cash Flows - For years ended June 30, 2023 and 2022	38
Notes to the Consolidated Financial Statements	39

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders,

The InterGroup Corporation:

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of The InterGroup Corporation and its subsidiaries (the “Company”) as of June 30, 2023 and 2022, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 1, the outstanding balance as of June 30, 2023 of the mortgage notes payable consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024 In addition, the Company has recurring losses and has an accumulated deficit. Due to these factors and the Company’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Company’s ability to continue as a going concern for one year after the financial statement issuance date. Management’s plans in regard to this matter are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 Company 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 audits 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits 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 Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

 

Critical Audit Matters

 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated 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 consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

 

Description of the Matters: Deferred Tax Asset Valuation Allowance

 

As discussed in Note 13 to the consolidated financial statements, it was determined that it is more likely than not that a significant portion of the deferred tax assets at June 30, 2023 are not realizable and thus a valuation allowance of $33,784,000 has been recorded.

 

We identified the deferred tax asset valuation allowance as a critical audit matter due to the uncertainty, subjectivity, estimates and judgments required by management when forecasting future profitability and determining whether or not it is likely that the deferred tax assets will be realized.

 

How We Addressed the Matters in Our Audit

 

To test the Company’s conclusions about their deferred tax valuation allowance, we obtained an analysis about their plans and reviewed all the positive and negative conditions. In addition to considering the impact of any subsequent events, we received the Company’s five-year income projection. We examined the forecast for reasonableness in addition to reviewing management’s plans and considered whether it is likely that the Company’s projected future profitability will allow them to realize their current deferred tax assets.

 

/s/ WithumSmith+Brown, PC

 

We have served as the Company’s auditor since 2022.

 

East Brunswick, NJ

October 13, 2023

 

PCAOB ID Number 100

 

 

THE INTERGROUP CORPORATION

CONSOLIDATED BALANCE SHEETS

 

As of June 30,		2023				2022
ASSETS
Investment in Hotel, net		$	40,318,000			$	37,267,000
Investment in real estate, net			48,057,000				48,025,000
Investment in marketable securities			18,345,000				11,049,000
Cash and cash equivalents			5,960,000				14,367,000
Restricted cash			6,914,000				8,982,000
Other assets			2,764,000				2,744,000
Deferred tax asset			-				3,612,000
Total assets		$	122,358,000			$	126,046,000
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities		$	2,574,000			$	2,715,000
Accounts payable and other liabilities – Hotel			11,616,000				7,508,000
Due to securities broker			1,601,000				490,000
Obligations for securities sold			1,416,000				449,000
Other notes payable			2,954,000				3,521,000
Finance leases			-				183,000
Deferred tax liability			4,927,000				-
Mortgage notes payable - Hotel			107,117,000				108,747,000
Mortgage notes payable - real estate			84,757,000				85,437,000
Total liabilities			216,962,000				209,050,000
Commitments and contingencies - Note 17			-				-
Shareholders’ deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued			-				-
Common stock, $.01 par value, 4,000,000 shares authorized; 3,459,888 and 3,459,888 issued; 2,205,927 and 2,236,180 outstanding as of June 30, 2023 and 2022, respectively			33,000				33,000
Additional paid-in capital			2,445,000				3,277,000
Accumulated deficit			(52,835,000	)			(46,116,000	)
Treasury stock, at cost, 1,253,961 and 1,223,708 shares as of June 30, 2023 and 2022, respectively			(20,794,000	)			(19,324,000	)
Total InterGroup shareholders’ deficit			(71,151,000	)			(62,130,000	)
Non-controlling interest			(23,453,000	)			(20,874,000	)
Total shareholders’ deficit			(94,604,000	)			(83,004,000	)
Total liabilities and shareholders’ deficit		$	122,358,000			$	126,046,000

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

THE INTERGROUP CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

For the years ended June 30,		2023				2022
Revenues:
Hotel		$	42,027,000			$	31,534,000
Real estate			15,580,000				15,685,000
Total revenues			57,607,000				47,219,000
Costs and operating expenses:
Hotel operating expenses			(34,457,000	)			(27,451,000	)
Real estate operating expenses			(10,017,000	)			(8,694,000	)
Depreciation and amortization expense			(5,464,000	)			(4,754,000	)
General and administrative expense			(3,333,000	)			(2,649,000	)
Total costs and operating expenses			(53,271,000	)			(43,548,000	)
Income from operations			4,336,000				3,671,000
Other (expense) income:
Interest expense - mortgages			(8,585,000	)			(8,881,000	)
Net realized (loss) gain on marketable securities			(1,712,000	)			375,000
Net realized loss on marketable securities - Comstock			-				(2,581,000	)
Net unrealized gain (loss) on marketable securities			2,838,000				(5,408,000	)
Gain on debt forgiveness			-				2,000,000
Loss on debt extinguishment			-				(335,000	)
Gain on insurance recovery			2,692,000				-
Impairment loss on other investments			-				(41,000	)
Dividend and interest income			485,000				980,000
Trading and margin interest expense			(1,553,000	)			(1,426,000	)
Net other expense			(5,835,000	)			(15,317,000	)
Loss before income taxes			(1,499,000	)			(11,646,000	)
Income tax (expense) benefit			(8,433,000	)			1,030,000
Net loss			(9,932,000	)			(10,616,000	)
Less: Net loss attributable to the noncontrolling interest			3,213,000				1,893,000
Net loss attributable to InterGroup		$	(6,719,000	)		$	(8,723,000	)
Net loss per share
Basic		$	(4.77	)		$	(4.77	)
Diluted			N/A				$N/A
Net loss per share attributable to InterGroup
Basic		$	(3.92	)		$	(3.92	)
Diluted			N/A				$N/A
Weighted average number of common shares outstanding			2,215,258				2,224,293
Weighted average number of diluted shares outstanding			N/A				N/A

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

THE INTERGROUP CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

 

		Shares				Amount				Capital				Deficit				Stock				Deficit				Interest				Deficit
		Common Stock								Additional Paid-in				Accumulated				Treasury				InterGroup Shareholders’				Non-controlling				Total Shareholders’
		Shares				Amount				Capital				Deficit				Stock				Deficit				Interest				Deficit
Balance at July 1, 2021			3,404,982			$	33,000			$	2,172,000			$	(36,394,000	)		$	(17,370,000	)		$	(51,559,000	)		$	(19,677,000	)		$	(71,236,000	)
Net Loss			-				-				-				(8,723,000	)			-				(8,723,000	)			(1,893,000	)			(10,616,000	)
Issuance of stock from exercise of stock options			54,906				-				-				-				-				-				-				-
Stock options expense			-				-				4,000				-				-				4,000				-				4,000
Distribution from Santa Fe			-				-				1,159,000				-				-				1,159,000				-				1,159,000
Reclassify non-controlling interest due to purchase of Justice			-				-				-				(999,999	)			-				(999,999	)			999,999				-
Investment in Portsmouth			-				-				(58,000	)			-				-				(58,000	)			41,000				(17,000	)
Purchase of Partnership interest			-				-				-				-				-				-				(344,000	)			(344,000	)
Purchase of treasury stock			-				-				-				-				(1,954,000	)			(1,954,000	)			-				(1,954,000	)
Balance at June 30, 2022			3,459,888			$	33,000			$	3,277,000			$	(46,116,000	)		$	(19,324,000	)		$	(62,130,000	)		$	(20,874,000	)		$	(83,004,000	)
Balance			3,459,888			$	33,000			$	3,277,000			$	(46,116,000	)		$	(19,324,000	)		$	(62,130,000	)		$	(20,874,000	)		$	(83,004,000	)
Net Loss			-				-				-				(6,719,000	)			-				(6,719,000	)			(3,213,000	)			(9,932,000	)
Investment in Portsmouth			-				-				(832,000	)			-				-				(832,000	)			634,000				(198,000	)
Purchase of treasury stock			-				-				-				-				(1,470,000	)			(1,470,000	)			-				(1,470,000	)
Balance at June 30, 2023			3,459,888			$	33,000			$	2,445,000			$	(52,835,000	)		$	(20,794,000	)		$	(71,151,000	)		$	(23,453,000	)		$	(94,604,000	)
Balance			3,459,888			$	33,000			$	2,445,000			$	(52,835,000	)		$	(20,794,000	)		$	(71,151,000	)		$	(23,453,000	)		$	(94,604,000	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

THE INTERGROUP CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the years ended June 30,		2023				2022
Cash flows from operating activities:
Net loss		$	(9,932,000	)		$	(10,616,000	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net unrealized (gain) loss on marketable securities			(2,838,000	)			5,408,000
Deferred taxes			8,539,000				(1,472,000	)
Gain on insurance recovery			(2,692,000	)			-
Gain from debt forgiveness			-				(2,000,000	)
Impairment loss on other investments			-				41,000
Depreciation and amortization			5,464,000				4,754,000
Amortization of loan cost			352,000				432,000
Amortization of other notes payable			(567,000	)			(567,000	)
Stock compensation expense			-				4,000
Changes in assets and liabilities:
Investment in marketable securities			(4,458,000	)			19,335,000
Other assets			(20,000	)			(1,123,000	)
Accounts payable and other liabilities			(141,000	)			(642,000	)
Accounts payable and other liabilities – Hotel			4,108,000				764,000
Due to securities broker			1,111,000				(7,427,000	)
Obligations for securities sold			967,000				(5,970,000	)
Net cash (used in) provided by operating activities			(107,000	)			921,000
Cash flows from investing activities:
Capital expenditures for property and equipment - Hotel			(5,866,000	)			(1,926,000	)
Capital expenditures for property and equipment - real estate			(2,314,000	)			(2,760,000	)
Distribution from Santa Fe			-				1,159,000
Investment in Portsmouth			(198,000	)			(17,000	)
Investment in Justice			-				(344,000	)
Insurance proceeds for property damage claims			2,325,000				-
Net cash used in investing activities			(6,053,000	)			(3,888,000	)
Cash flows from financing activities:
Payments of mortgage, finance leases and other notes payable			(8,205,000	)			(3,698,000	)
Proceeds from mortgage and other notes payable			5,360,000				16,683,000
Issuance cost from refinance of long-term debt			-				(107,000	)
Purchase of treasury stock			(1,470,000	)			(1,954,000	)
Net cash provided by (used in) financing activities			(4,315,000	)			10,924,000
Net (decrease) increase in cash, cash equivalents and restricted cash:			(10,475,000	)			7,957,000
Cash, cash equivalents and restricted cash at the beginning of the year			23,349,000				15,392,000
Cash, cash equivalents and restricted cash at the end of the year		$	12,874,000			$	23,349,000
Supplemental information:
Income taxes paid		$	74,000			$	1,975,000
Interests paid		$	7,708,000			$	7,663,000

 

The Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

THE INTERGROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

 

Description of the Business

 

The InterGroup Corporation, a Delaware corporation, (“InterGroup” or the “Company”) was formed to buy, develop, operate and dispose of real property and to engage in various investment activities to benefit the Company and its shareholders.

 

Effective February 19, 2021, the Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF), was liquidated and all of its assets including its 68.8% interest in Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI) were distributed to its shareholders in exchange for their Santa Fe common stock. In June 2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final tax returns.As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth and the Company’s President, Chairman of the Board and Chief Executive Officer, John V. Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.

 

Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest. Effective December 23, 2021, the partnership was dissolved. The financial statements of Justice were consolidated with those of Portsmouth.

 

Prior to its dissolution effective December 23, 2021, Justice owned and operated a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”). Mezzanine was a wholly owned subsidiary of the Partnership; Operating is a wholly owned subsidiary of Mezzanine. Effective December 23, 2021, Portsmouth replaced Justice as the single member of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.

 

Aimbridge Hospitality (“Aimbridge”) manages the Hotel, along with its five-level parking garage, under certain Hotel management agreement (“HMA”) with Operating. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.

 

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In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate and investments in marketable securities. Properties include apartment complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All of the Company’s residential rental properties are managed in-house.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and Portsmouth. All significant inter-company transactions and balances have been eliminated.

 

Investment in Hotel, Net

 

Property and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years.

 

Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses).

 

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2023 and 2022.

 

Investment in Real Estate, Net

 

Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized.

 

The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2023 and 2022.

 

The fair value of the tangible assets of an acquired property, which includes land, building and improvements, is determined by valuing the property as if they were vacant, and incorporates costs during the lease-up periods considering current market conditions and costs to execute similar leases such lost rental revenue and tenant improvements. The value of tangible assets is depreciated using straight-line method based upon the assets estimated useful lives.

 

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Investment in Marketable Securities

 

Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations.

 

Other Investments, Net

 

Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non-marketable debt instruments. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2023 and 2022, the Company recorded impairment losses related to other investments of zero and $41,000, respectively.

 

Cash and Cash Equivalents

 

Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. As of June 30, 2023 and 2022, the Company does not have any cash equivalents.

 

Restricted Cash

 

Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel.

 

Other Assets

 

Other assets include prepaid insurance, accounts receivable, prepaid expenses, and other miscellaneous assets.

 

Accounts receivable from the Hotel and rental property customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Company had accounts receivable, net of $634,000 at July 1, 2022. As of June 30, 2023, and 2022, the allowance for doubtful accounts was $486,000 and $110,000, respectively. The Company extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. The temporary eviction moratorium imposed by the federal and state governmental authorities had delayed evictions during fiscal years 2022 and 2023.

 

Due to Securities Broker

 

The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability.

 

Obligation for Securities Sold

 

Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations.

 

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Accounts Payable and Other Liabilities

 

Accounts payable and other liabilities include trade payables, advanced customer deposits, accrued wages, accrued real estate taxes, and other liabilities.

 

Treasury Stock

 

The Company records the acquisition of treasury stock under the cost method. During the years ended June 30, 2023 and 2022, the Company purchased 30,253 and 41,645 shares of treasury stock, respectively.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:

 

Level 1–inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2–inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3–inputs to the valuation methodology are unobservable and significant to the fair value.

 

Revenue Recognition

 

Performance obligations

 

We identified the following performance obligations for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:

 

	●	Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.
	●	Non-cancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.
	●	Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.
	●	Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.

 

Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.

 

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We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered. See Note 3 – Revenue.

 

Revenue recognition from apartment rental commences when an apartment unit is placed in service and occupied by a rent-paying tenant. Apartment units are leased on a short-term basis, with no lease extending beyond one year.

 

Advertising Costs

 

Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $130,000 and $61,000 for the years ended June 30, 2023 and 2022, respectively.

 

Income Taxes

 

Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.

 

$0 and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were recorded.

 

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions.

 

Earnings Per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted net income per share is similar to the computation of basic net income per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The basic and diluted earnings per share are the same for the fiscal year ended June 30, 2023 and 2022 because the Company had a net loss.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Actual results may differ from those estimates. Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets and when appropriate, records tax valuation allowances based on that evidence and estimates. Such estimates primarily relate to the recording of allowance for doubtful accounts which are based on management’s assessment of the collectability of accounts receivable as of the end of the fiscal year As of June 30, 2023 based on taxable income that may be available under tax law the deferred taxed asset is not more likely than not to be realized.

 

Reclassifications

 

Certain line items on the balance sheet as of June 30, 2023, for the years ended June 30, 2023 and 2022 have been reclassified to conform to the current period presentation. The related party relationship has been disclosed separately in the financial statements than the other debt obligations the Company has.

 

43

 

Debt Issuance Costs

 

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense in the consolidated statement of operations.

 

Recently Issued and Adopted Accounting Pronouncements

 

As of June 30, 2023, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on the Company’s consolidated financial statements.

 

Going Concern

 

The Hotel financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition, the Hotel has recurring losses and has an accumulated deficit of $105,727,000.

 

Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.

 

The Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average daily rates to increase as it completes renovation up to the point of generating a positive cash flows.

 

The financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Hotel were unable to continue as a going concern.

 

NOTE 2 – LIQUIDITY

 

Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the dealings by federal, state, and local civil authorities have a material detrimental impact on our liquidity. For the fiscal year ended June 30, 2023, our net cash flow used by operations was $107,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets. As the hospitality and travel environment continues to recover, the Company will continue to evaluate what services the Company brings back. During the fiscal year ended June 30, 2023, the Company continued to make capital improvements to the hotel in the amount of $5,866,000 and anticipates continuing its guest room upgrade program during the fiscal year 2024.

 

The Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due to securities brokers, of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively. These marketable securities are short-term investments and liquid in nature.

 

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On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. On July 7, 2021, the maturity date was extended to July 31, 2022. Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup. All funds advanced to the Hotel have been eliminated in consolidated financial statements at June 30, 2023 and 2022.

 

On May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and $5,500 principal paydowns commencing in June 2024. During the fiscal year ending June 30, 2022, we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000. We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable.

 

On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022.

 

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance at all of our properties.

 

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will be successful with its plan.

 

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The following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest payments.

 

SCHEDULE OF MATERIAL FINANCIAL OBLIGATION

						Year				Year				Year				Year				Year
		Total				2024				2025				2026				2027				2028				Thereafter
Mortgage and subordinated notes payable		$	192,870,000			$	108,420,000			$	9,318,000			$	1,168,000			$	3,299,000			$	1,771,000			$	68,894,000
Related party notes payable			2,956,000				567,000				567,000				567,000				463,000				317,000				475,000
Interest			25,577,000				3,849,000				2,898,000				2,390,000				2,284,000				2,286,000				11,870,000
Total		$	221,403,000			$	112,836,000			$	12,783,000			$	4,125,000			$	6,046,000			$	4,374,000			$	81,239,000

 

NOTE 3 – REVENUE

 

Our revenue from real estate is primarily rental income from residential and commercial property leases which is recorded when due from residents and is recognized monthly as earned. The revenue recognition rules under ASC 606 specifically eliminates rental revenue from the accounting standard.

 

The following table presents our Hotel revenue disaggregated by revenue streams.

 

SCHEDULE OF DISAGGREGATION OF REVENUE

For the year ended June 30,		2023				2022
Hotel revenues:
Hotel rooms		$	35,684,000			$	26,599,000
Food and beverage			2,625,000				1,471,000
Garage			2,790,000				3,112,000
Other operating departments			928,000				352,000
Total Hotel revenue		$	42,027,000			$	31,534,000

 

Contract assets and liabilities

 

We do not have any material contract assets as of June 30, 2023 and 2022, other than trade and other receivables, net on our consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

 

We record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within accounts payable and other liabilities on our consolidated balance sheets and had a balance of $493,000 at July 1, 2022. During the year ended June 30, 2023, the entire $493,000 was recognized as revenue. Contract liabilities decreased to $290,000 as of June 30, 2023. The decrease as of June 30, 2023, was primarily driven by a decrease in advance deposits received from customers for services to be performed after June 30, 2023.Contract liabilities increased to $493,000 as of June 30, 2022 from $161,000 as of June 30, 2021. The increase for the twelve months ended June 30, 2022 was primarily driven by advance deposits received from customers for services to be performed after June 30, 2022.

 

Contract costs

 

We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers are less than one year.

 

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NOTE 4 – INVESTMENT IN HOTEL, NET

 

Investment in Hotel consisted of the following as of:

 

SCHEDULE OF INVESTMENT IN HOTEL, NET

						Accumulated				Net Book
June 30, 2023		Cost				Depreciation				Value
Land		$	2,738,000			$	-			$	2,738,000
Finance lease ROU assets			1,805,000				(1,239,000	)			566,000
Furniture and equipment			38,727,000				(29,682,000	)			9,045,000
Building and improvements			64,665,000				(36,696,000	)			27,969,000
Investment in Hotel, net		$	107,935,000			$	(67,617,000	)		$	40,318,000

 

						Accumulated				Net Book
June 30, 2022		Cost				Depreciation				Value
Land		$	2,738,000			$	-			$	2,738,000
Finance lease ROU assets			1,805,000				(922,000	)			883,000
Furniture and equipment			32,860,000				(28,567,000	)			4,293,000
Building and improvements			64,665,000				(35,312,000	)			29,353,000
Investment in Hotel, net		$	102,068,000			$	(64,801,000	)		$	37,267,000

 

NOTE 5 - INVESTMENT IN REAL ESTATE, NET

 

At June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States. These properties include sixteen apartment complexes, three single-family houses as strategic investments, and one commercial real estate property. The Company also owns unimproved land located in Maui, Hawaii.

 

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Investment in real estate included the following: 

 

SCHEDULE OF INVESTMENT IN REAL ESTATE

As of June 30,		2023				2022
Land		$	22,998,000			$	22,998,000
Buildings, improvements and equipment			73,151,000				70,933,000
Accumulated depreciation			(50,022,000	)			(47,374,000	)
Investment in real estate, gross			46,127,000				46,557,000
Land held for development			1,930,000				1,468,000
Investment in real estate, net		$	48,057,000			$	48,025,000

 

NOTE 6 - INVESTMENT IN MARKETABLE SECURITIES

 

The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested in corporate bonds and income producing securities, which may include interests in real estate-based companies and REITs, where financial benefit could inure to its shareholders through income and/or capital gain.

 

At June 30, 2023 and 2022, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

 

SCHEDULE OF TRADING SECURITIES

						Gross				Gross				Net
Investment		Cost				Unrealized Gain				Unrealized Loss				Unrealized Gain (Loss)				Fair Value
As of June 30, 2023
Corporate Equities		$	15,419,000			$	3,713,000			$	(787,000	)		$	2,926,000			$	18,345,000
As of June 30, 2022
Corporate Equities		$	11,150,000			$	1,474,000			$	(1,575,000	)		$	(101,000	)		$	11,049,000

 

Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the years ended June 30, 2023 and 2022, respectively.

 

SCHEDULE OF NET GAIN LOSS ON MARKETABLE SECURITIES COMPRISING OF REALIZED AND UNREALIZED GAINS (LOSSES)

For the year ended June 30,		2023				2022
Realized (loss) gain on marketable securities		$	(1,712,000	)		$	375,000
Realized loss on marketable securities related to Comstock			-				(2,581,000	)
Unrealized gain (loss) on marketable securities			2,838,000				(5,408,000	)
Net gain (loss) on marketable securities		$	1,126,000			$	(7,614,000	)

 

NOTE 7 - FAIR VALUE MEASUREMENTS

 

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

 

48

 

The assets measured at fair value on a recurring basis are as follows:

 

SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIS

As of June 30, 2023		Level 1
Assets:
Investment in marketable securities:
REITs and real estate companies		$	6,985,000
Technology			2,779,000
T-Notes			2,093,000
Financial services			1,865,000
Consumer cyclical			1,689,000
Basic materials			1,047,000
Healthcare			739,000
Communication services			566,000
Industrial			485,000
Utilities			97,000
Marketable securities		$	18,345,000

 

As of June 30, 2022		Level 1
Assets:
Investment in marketable securities:
REITs and real estate companies		$	3,289,000
Communication services			2,787,000
Financial services			1,755,000
Technology			815,000
Basic material			769,000
Consumer cyclical			693,000
Industrial			385,000
Energy			279,000
Other			277,000
Marketable securities		$	11,049,000

 

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date.

 

Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above are “Other investments in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

 

SCHEDULE OF FAIR VALUE MEASUREMENTS ON NON-RECURRING BASIS

										Net loss for the
Assets		Level 3				June 30, 2022				year ended June 30, 2022
Other non-marketable investments		$	-			$	-			$	(41,000	)

 

49

 

For fiscal years ended June 30, 2023 and 2022, we received distribution from other non-marketable investments of zero and $41,000, respectively.

 

Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. When determining the fair value of these investments on a non-recurring basis, the Company uses valuation techniques such as the market approach and the unobservable inputs include factors such as conversion ratios and the stock price of the underlying convertible instruments. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

 

NOTE 8 – OTHER ASSETS

 

Other assets consist of the following as of June 30:

 

SCHEDULE OF OTHER ASSETS, NET

		2023				2022
Accounts receivable, net		$	631,000			$	634,000
Prepaid expenses			648,000				775,000
Miscellaneous assets			681,000				652,000
Prepaid taxes			697,000				683,000
Total other assets		$	2,657,000			$	2,744,000

 

NOTE 9 –OTHER FINANCING TRANSACTIONS

 

The following summarizes the balances of other notes payable as of June 30, 2023 and 2022, respectively.

 

 SUMMARY OF OTHER NOTES PAYABLE

As of June 30,		2023				2022
Note payable – Hilton		$	2,058,000			$	2,375,000
Note payable – Aimbridge			896,000				1,146,000
Total other notes payable		$	2,954,000			$	3,521,000

 

Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $317,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.

 

On February 1, 2017, Operating entered an HMA with Ambridge to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in aggregate subject to certain conditions. The HMA also provides for Ambridge to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second anniversary of the takeover date. During the first quarter of fiscal year 2021, the Hotel obtained approval from Ambridge to use the key money for hotel operations and the funds were exhausted by December 31, 2020. The unamortized portion of the key money in the amount of $896,000 and $1,146,000 are included in other notes payable in the consolidated balance sheets at June 30, 2023 and 2022, respectively.

 

50

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan – Justice”) with CIBC Bank USA under the CARES Act administered by the U.S. Small Business Administration (the “SBA”). On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ended June 30, 2022.

 

Future minimum principal payments for all other financing transactions are as follows:

 

SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS

For the year ending June 30,
2024		$	567,000
2025			567,000
2026			567,000
2027			463,000
2028			317,000
Thereafter			475,000
Long term debt		$	2,956,000

 

To fund the redemption of limited partnership interests and to repay the prior mortgage of $42,940,000, Justice obtained a $97,000,000 mortgage loan and a $20,000,000 mezzanine loan in December 2013. The mortgage loan is secured by the Partnership’s principal asset, the Hotel. The mortgage loan bears an interest rate of 5.275% per annum with interest only payments due through January 2017. Beginning in February 2017, the loan began to amortize over a thirty-year period through its maturity date of January 2024. Outstanding principal balance on the loan was $89,114,000 and $90,745,000 as of June 30, 2023 and 2022, respectively. As additional security for the mortgage loan, there is a limited guaranty executed by Portsmouth in favor of the mortgage lender. The mezzanine loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of the mezzanine lender. On July 31, 2019, Mezzanine refinanced the mezzanine loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan which had a 9.75% per annum interest rate was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

 

Effective May 11, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain certain net worth and liquidity. As of June 30, 2023, InterGroup is in compliance with both requirements. Justice Operating Company, LLC has not been meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox by the Lender for all cash collected by the Hotel. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.

 

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On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.

 

As disclosed in its Definitive Information Statement on Schedule 14C, filed with the SEC on January 25, 2021, Santa Fe received shareholder approval to distribute its assets, as described and subsequently dissolve, all as set forth in the Information Statement. As InterGroup formerly owned 83.7% of the outstanding common stock of Santa Fe, the Company received cash of $5,013,000 and 422,998 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe. As a former 3.7% shareholder of Santa Fe, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, received cash of $221,000 and 18,641 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe. On April 12, 2021, Santa Fe received a filed stamped copy of its Articles of Dissolution from the State of Nevada, and Santa Fe is effectively fully dissolved and no longer in legal existence. In June 2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final tax returns.

 

Four of the Portsmouth directors serve as directors of InterGroup. The Company’s Vice President Real Estate was elected President of Portsmouth in May 2021. The Company’s director and Chairman of the Audit Committee, William J. Nance, serves as Comstock’s director and Chairman of the Audit and Finance, Compensation and Nominating and Governance Committees of Comstock.

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

 

52

 

NOTE 10 – MORTGAGE NOTES PAYABLE

 

On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership was the sole member of Mezzanine until its dissolution in December 2021 when Portsmouth replaced the Partnership as the sole member of Mezzanine. Mezzanine is the sole member of Operating.

 

The Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.

 

The Mortgage Loan is secured by Operating’s principal asset, the Hilton San Francisco-Financial District (the “Property”). The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is 10 years with interest only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.

 

The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. Interest only payments were due monthly. On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. As additional security for the new mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).

 

The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership was required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for the $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements. Justice Operating Company, LLC is not meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company. The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations for at least the next twelve months and beyond. Additionally, Operating’s DSCR for the fourth quarter of fiscal year 2023 was 0.23 for the Mortgage Loan and 0.19 for the Mezzanine Loan.

 

53

 

Each of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements.

 

In July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing. Interest rate on the three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained an $830,000 mortgage note payable on one of its unencumbered California properties and received net proceeds of $826,000. The interest rate on the mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.

 

On October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031.

 

On June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $522,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052.

 

On May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and $5,500 principal paydowns commencing in June 2024.

 

54

 

Each mortgage notes payable is secured by real estate or the Hotel. As of June 30, 2023 and 2022, the mortgage notes payables are summarized as follows:

 SCHEDULE OF MORTGAGE NOTE PAYABLE

		As of June 30, 2023
		Number				Note		Note		Mortgage				Interest
Property		of Units				Origination Date		Maturity Date		Balance				Rate
SF Hotel			544 rooms			December 2013		January 2024		$	87,240,000				5.28	%
SF Hotel			544 rooms			July 2019		January 2024			20,000,000				7.25	%
						Mortgage notes payable – Hotel					107,240,000
						Debt issuance costs					(123,000	)
						Total mortgage notes payable – Hotel				$	107,117,000
Florence			157			March 2015		April 2025		$	2,917,000				3.87	%
Las Colinas			358			October 2021		November 2031			28,800,000				2.95	%
Morris County			151			April 2020		May 2030			17,208,000				3.17	%
St. Louis			264			May 2023		May 2025			5,360,000				8.60	%
Los Angeles			4			July 2021		July 2051			1,112,000				3.50	%
Los Angeles			2			July 2021		July 2051			674,000				3.50	%
Los Angeles			1			June 2021		August 2051			886,000				3.50	%
Los Angeles			31			October 2020		November 2030			8,291,000				2.52	%
Los Angeles			30			June 2022		July 2052			5,762,000				4.40	%
Los Angeles			14			January 2021		February 2031			2,645,000				3.05	%
Los Angeles			12			June 2016		June 2026			1,974,000				3.59	%
Los Angeles			9			June 2020		July 2030			2,443,000				3.09	%
Los Angeles			9			November 2020		December 2030			1,891,000				3.05	%
Los Angeles			8			July 2021		July 2051			1,535,000				3.50	%
Los Angeles			7			August 2012		September 2042			751,000				3.75	%
Los Angeles			4			June 2021		August 2051			1,112,000				3.50	%
Los Angeles			1			June 2021		August 2051			534,000				3.50	%
Los Angeles			4			July 2021		August 2051			800,000				3.50	%
Los Angeles			1			September 2018		October 2048			934,000				3.50	%
						Mortgage notes payable – real estate					85,629,000
						Debt issuance costs					(872,000	)
						Total mortgage notes payable – real estate				$	84,757,000

 

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		As of June 30, 2022
		Number				Note		Note		Mortgage				Interest
Property		of Units				Origination Date		Maturity Date		Balance				Rate
SF Hotel			544 rooms			December 2013		January 2024		$	89,114,000				5.28	%
SF Hotel			544 rooms			July 2019		January 2024			20,000,000				7.25	%
						Mortgage notes payable – Hotel					109,114,000
						Debt issuance costs					(367,000	)
						Total mortgage notes payable – Hotel				$	108,747,000
Florence			157			March 2015		April 2025		$	2,998,000				3.87	%
Las Colinas			358			October 2021		November 2031			28,801,000				2.95	%
Morris County			151			April 2020		May 2030			17,598,000				3.17	%
St. Louis			264			May 2013		May 2023			4,958,000				4.05	%
Los Angeles			4			July 2021		July 2051			1,135,000				3.50	%
Los Angeles			2			July 2021		July 2051			688,000				3.50	%
Los Angeles			1			June 2021		August 2051			904,000				3.50	%
Los Angeles			31			October 2020		November 2030			8,400,000				2.52	%
Los Angeles			30			June 2022		July 2052			5,850,000				4.40	%
Los Angeles			14			January 2021		February 2031			2,704,000				3.05	%
Los Angeles			12			June 2016		June 2026			2,026,000				3.59	%
Los Angeles			9			June 2020		July 2030			2,498,000				3.09	%
Los Angeles			9			November 2020		December 2030			1,934,000				3.05	%
Los Angeles			8			July 2021		July 2051			1,567,000				3.50	%
Los Angeles			7			August 2012		September 2042			774,000				3.75	%
Los Angeles			4			June 2021		August 2051			1,135,000				3.50	%
Los Angeles			1			June 2021		August 2051			545,000				3.50	%
Los Angeles			4			July 2021		August 2051			816,000				3.50	%
Los Angeles			1			September 2018		October 2048			956,000				4.75	%
						Mortgage notes payable – real estate					86,287,000
						Debt issuance costs					(850,000	)
						Total mortgage notes payable – real estate				$	85,437,000

 

Future minimum payments for all mortgage notes payable are as follows:

 SCHEDULE OF FUTURE MINIMUM PAYMENT FOR MORTGAGE NOTES PAYABLE

For the year ending June 30,
2024		$	108,420,000
2025			9,318,000
2026			1,168,000
2027			3,299,000
2028			1,771,000
Thereafter			68,894,000
Total Mortgage Notes payable		$	192,870,000

 

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NOTE 11 – MANAGEMENT AGREEMENTS

 

Operating entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel, along with its five-level parking garage, with an effective date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.

 

For the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000, respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated statements of operations. As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house.

 

NOTE 12 – CONCENTRATION OF CREDIT RISK

 

As of June 30, 2023 and 2022, receivables related to Hotel customers were $419,000 and $377,000, respectively. Usually, credit extended to the Company’s tenants at its rental properties is of low risk as leases do not extend beyond one year and if tenants become delinquent, local eviction laws are used to evict tenants. However, as of June 30, 2023 and 2022 accounts receivable from the Company’s rental properties was $698,000 and $366,000, respectively and allowance for doubtful accounts was $486,000 and $110,000, respectively. This unusual large gross receivable amounts from our rental properties was due to temporary eviction moratorium imposed by the federal and state governmental authorities since the beginning of the COVID19 pandemic. Under the eviction moratorium, the Company was not allowed to evict tenants for non-payment of rent. In the State of California, the “Los Angeles County’s COVID-19 Tenant Protection Resolution” expired on March 31, 2023, thereby lifting the eviction moratorium but allowing the tenants additional time to for their past due rent. For tenants that owe rent from March 1, 2020 through September 30, 2021, tenants must pay by August 1, 2023; for tenants that owe rent from October 1, 2021 through January 31, 2023, tenants must pay by February 1, 2024. The Company will continue to pursue its collections to the full extent allowed by the various governmental housing authorities around the country.

 

The Company maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits. Any loss incurred or a lack of access to such funds could have significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

 

NOTE 13 – INCOME TAXES

 

The provision for the Company’s income tax (expense) benefit is comprised of the following:

SCHEDULE OF INCOME TAX (EXPENSE) BENEFIT 

For the years ended June 30,		2023				2022
Federal
Current tax		$	(116,000	)		$	(113,000	)
Deferred tax			6,419,000				884,000
Federal income tax (expense) benefit, total			6,303,000				771,000
State
Current tax			9,000				(330,000	)
Deferred tax			2,121,000				589,000
State income tax (expense) benefit, total			2,130,000				259,000
Income Tax (expense) benefit		$	(8,433,000	)		$	1,030,000

 

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The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before taxes as a result of the following differences:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 

For the years ended June 30,		2023				2022
Statutory federal tax rate		$	(315,000	)		$	2,446,000
State income taxes, net of federal tax benefit			(375,000	)			204,000
Dividend received deduction			(18,000	)			103,000
PPP Loan forgiveness			-				1,391,000
Provision to return adjustment			(334,000	)			634,000
Deferral true up – Justice difference in basis of fixed assets			-				11,621,000
Net operating loss true up			(275,000	)			32,000
Valuation allowance			10,232,000				(15,201,000	)
Payable true up			(249,000	)			(311,000	)
State rate change impact			(352,000	)			-
Other			119,000				111,000
Income tax expense (benefit)		$	(8,433,000	)		$	1,030,000

 

The components of the deferred tax asset and liabilities are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 

		June 30, 2023				June 30, 2022
Deferred tax assets:
Net operating loss carryforwards		$	13,187,000			$	11,075,000
Deferred gains on real estate sale and depreciation			15,054,000				10,418,000
Capital loss carryforwards			1,919,000				1,322,000
Accruals and reserves			843,000				831,000
Interest expense			3,185,000				2,231,000
Tax credits			566,000				566,000
State taxes			139,000				-
Other			204,000				247,000
Deferred Tax Asset before Valuation Allowance			35,097,000				26,690,000
Valuation Allowance			(33,784,000	)			(22,775,000	)
Deferred Tax Asset after Valuation Allowance			1,313,000				3,915,000
Deferred tax liabilities:
Deferred gains on real estate sale and depreciation			(4,796,000	)			-
Unrealized gain on marketable securities			(746,000	)			(9,000	)
Gain on insurance claim			(696,000	)			-
Other			-				-
State taxes			-				(294,000	)
Deferred Tax Liability			(6,238,000	)			(303,000	)
Net deferred tax (liability) asset		$	(4,925,000	)		$	3,612,000

 

Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2023, it has been determined that it is more likely than not that the deferred tax asset will not be recognized. Thus, there is a valuation allowance of $33,784,000 as of June 30, 2023. This was an increase of $11,009,000 from June 30, 2022.

 

As of June 30, 2023, the Company had net operating loss carryforwards (“NOL”) available for carryforward of approximately $41,835,000 and $51,289,000 for federal and state purposes, respectively. Of the $41,835,000 federal NOL carryforwards, $14,707,000 expire in varying amounts through 2037 and $27,128,000 of post-2017 NOLs can be carried forward indefinitely. Note that the post-2017 NOLs may only offset 80% of future taxable income. The Company had capital loss carryforwards of $6,936,000 for federal and state purposes. The capital losses begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of $524,000 which expire in various years.

 

Below is the breakdown of the net operating losses for Intergroup and Portsmouth.

SCHEDULE OF ESTIMATED NET OPERATING LOSSES (NOLS) 

		Federal				State
InterGroup		$	-			$	2,789,000
Portsmouth			41,835,000				48,500,000
		$	41,835,000			$	51,289,000

 

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As of June 30, 2022, the Company had net operating loss (“NOL”) carryforwards of approximately $35,483,000 and $41,238,000 for federal and state purposes, respectively. Of the $35,483,000 federal NOL’s carryforwards, $14,697,000 expire in varying amount through 2037 and $20,786,000 of post 2017 NOL’s can be carried forward indefinitely. Note that the post 2017 NOL’s may only offset 80% of future taxable income. The Company had federal and state capital loss carryforwards of $3,985,000 and $5,547,000, respectively. The capital losses begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of $524,000 which expire in various years.

 

Utilization of certain tax attributes may be subject a substantial annual limitation if it should be determined that there has been a change in the ownership of more than 50 percent of the value of the Company’s stock, pursuant to Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

 

The corporation files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state, and local jurisdictions, where applicable.

 

As of June 30, 2023, tax years beginning in fiscal 2019 and 2018 remain open to examination by the federal and state tax jurisdictions, respectively, and are subject to the statute of limitations.

 

Uncertain Tax Positions

 

The Company regularly evaluates the likelihood of realizing the benefit from income tax positions that it has taken in various federal, state, and foreign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more likely than not that the position will be sustained, a benefit will be recognized at the largest amount that it believes is cumulatively greater than 50% likely to be realized. The following table summarizes changes in the amount of the Company’s unrecognized tax benefits for uncertain tax positions:

 

 SCHEDULE OF UNCERTAIN TAX POSITIONS

Unrecognized Tax Benefits at June 30, 2022		$	-
Unrecognized Tax Benefits at June 30, 2022		$	-
Increase in tax positions taken			1,665,000
Decrease in tax positions taken			-
Unrecognized Tax Benefits at June 30, 2023		$	1,665,000

 

$0 and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were recorded.

 

NOTE 14 – SEGMENT INFORMATION

 

The Company operates in three reportable segments, the operation of the Hotel (“Hotel Operations”), the operation of its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.

 

Information below represents reported segments for the years ended June 30, 2023 and 2022. Segment income from Hotel operations consists of the operation of the Hotel and operation of the garage. Segment income from real estate operations consists of the operation of the rental properties. Loss from investments consists of net investment gain (loss), dividend and interest income and investment related expenses.

 

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SCHEDULE OF SEGMENT REPORTING INFORMATION 

As of and for the year ended		Hotel				Real Estate				Investment
June 30, 2023		Operations				Operations				Transactions				Other				Total
Revenues		$	42,027,000			$	15,580,000			$	-			$	-			$	57,607,000
Segment operating expenses			(34,457,000	)			(10,017,000	)			-				(3,333,000	)			(47,807,000	)
Segment income (loss) from operations			7,570,000				5,563,000				-				(3,333,000	)			9,800,000
Interest expense - mortgages			(6,467,000	)			(2,118,000	)			-				-				(8,585,000	)
Gain on insurance recovery			-				2,692,000				-				-				2,692,000
Depreciation and amortization expense			(2,815,000	)			(2,649,000	)			-				-				(5,464,000	)
Gain from investments			-				-				58,000				-				58,000
Income tax expense			-				-				-				(8,433,000	)			(8,433,000	)
Net income (loss)		$	(1,712,000	)		$	3,488,000			$	58,000			$	(11,766,000	)		$	(9,932,000	)
Total assets		$	46,393,000			$	48,057,000			$	18,345,000			$	9,563,000			$	122,358,000

 

As of and for the year ended		Hotel				Real Estate				Investment
June 30, 2022		Operations				Operations				Transactions				Other				Total
Revenues		$	31,534,000			$	15,685,000			$	-			$	-			$	47,219,000
Segment operating expenses			(27,451,000	)			(8,694,000	)			-				(2,651,000	)			(38,796,000	)
Segment income (loss) from operations			4,083,000				6,991,000				-				(2,651,000	)			8,423,000
Interest expense - mortgage			(6,549,000	)			(2,332,000	)			-				-				(8,881,000	)
Gain on debt forgiveness			2,000,000				(335,000	)			-				-				1,665,000
Depreciation and amortization expense			(2,310,000	)			(2,444,000	)			-				-				(4,754,000	)
Loss from investments			-				-				(8,101,000	)			-				(8,101,000	)
Income tax benefit			-				-				-				1,030,000				1,030,000
Net income (loss)		$	(2,776,000	)		$	1,880,000			$	(8,101,000	)		$	(1,621,000	)		$	(10,618,000	)
Total assets		$	46,847,000			$	48,025,000			$	11,049,000			$	21,125,000			$	126,046,000

 

NOTE 15 – STOCK-BASED COMPENSATION PLANS

 

The Company follows the Statement of Financial Accounting Standards 123 (Revised), “Share-Based Payments” (“SFAS No. 123R”), which was primarily codified into ASC Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units.

 

The Company currently has one equity compensation plan, which is the Intergroup 2010 Omnibus Employee Incentive Plan. The plan has been approved by the Company’s stockholders and are described below. Any outstanding options issued under the Key Employee Plan or the Non-Employee Director Plan remain effective in accordance with their terms.

 

As of June 30, 2023 and 2022, there were no RSUs outstanding.

 

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Intergroup Corporation 2010 Omnibus Employee Incentive Plan

 

On February 24, 2010, the shareholders of the Company approved The Intergroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”), which was formally adopted by the Board of Directors following the annual meeting of shareholders. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest based on 5 years of continuous service. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the 2010 Incentive Plan. The 2010 Incentive plan as modified in December 2013, authorizes a total of up to 400,000 shares of common stock to be issued as equity compensation to officers and employees of the Company in an amount and in a manner to be determined by the Compensation Committee in accordance with the terms of the 2010 Incentive Plan. The 2010 Incentive Plan authorizes the awards of several types of equity compensation including stock options, stock appreciation rights, performance awards and other stock-based compensation. The 2010 Incentive Plan had an original expiration date of February 23, 2020, if not terminated sooner by the Board of Directors upon recommendation of the Compensation Committee. Any awards issued under the 2010 Incentive Plan will expire under the terms of the grant agreement.

 

The shares of common stock to be issued under the 2010 Incentive Plan have been registered under the Securities Act, pursuant to a registration statement filed on Form S-8 by the Company on June 16, 2010. Once received, shares of common stock issued under the Plan will be freely transferable subject to any requirements of Section 16 (b) of the Exchange Act.

 

On March 16, 2010, the Compensation Committee authorized the grant of 100,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive Plan. The exercise price of the options is $10.30, which is 100% of the fair market value of the Company’s Common Stock as determined by reference to the closing price of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the date of grant. The options had an original expiration date ten years from the date of grant, unless terminated earlier in accordance with the terms of the 2010 Incentive Plan. The options shall be subject to both time and market-based vesting requirements, each of which must be satisfied before options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2022, all the market vesting requirements have been met.

 

On December 28, 2019, the Compensation Committee of the Board of Directors recommended to the Board amendments to the 2010 Incentive Plan which would amend Section 1.3 to extend the term from ten years to sixteen years, and Section 6.4 to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to twenty years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.

 

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In February 2012, the Compensation Committee awarded 90,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 90,000 shares of common stock. The per share exercise price of the options is $19.77 which is the fair value of the Company’s Common Stock as reported on NASDAQ on February 28, 2012. The options expire ten years from the date of grant. The options are subject to both time and market-based vesting requirements, each of which must be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. On January 21, 2022, Mr. Winfield exercised 90,000 of his vested stock options by surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 54,906 shares. No additional compensation expense was recorded related to the issuance. This intrinsic value of the cashless exercise of 54,906 stock options was approximately $2,784,000 at January 21, 2022 when the Company’s stock closing stock price was $50.70.

 

On December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.

 

In March 2017, the Compensation Committee awarded 18,000 stock options to the Company’s Chief Operating Officer, David C. Gonzalez, to purchase up to 18,000 shares of common stock. The per share exercise price of the options is $27.30 which is the fair value of the Company’s Common Stock as reported on NASDAQ Capital Market on March 2, 2017. The options expire ten years from the date of grant. Pursuant to the time vesting requirements, the options vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant. All 18,000 shares are vested as of June 30, 2022.

 

During the years ended June 30, 2023 and 2022, the Company recorded stock option compensation expense of zero and $4,000, respectively, related to stock options previously issued. As of June 30, 2023, all compensation related to stock options has been fully amortized.

 

Option-pricing models require the input of various subjective assumptions, including the option’s expected life, estimated forfeiture rates and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

 

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The following table summarizes the stock options activity from July 1, 2021 through June 30, 2023:

 

SCHEDULE OF STOCK OPTION ACTIVITY

				Number of				Weighted Average				Weighted Average				Aggregate
				Shares				Exercise Price				Remaining Life				Intrinsic Value
Outstanding at		July 1, 2021			341,195			$	16.95				2.83 years			$	8,890,000
Granted					-				-				-				-
Exercised					(90,000	)			19.77				-				-
Forfeited					-				-				-				-
Exchanged					-				-				-				-
Outstanding at		June 30, 2022			251,195			$	15.95				2.60 years			$	6,628,000
Exercisable at		June 30, 2022			251,195			$	15.95				2.60 years			$	6,628,000
Vested at		June 30, 2022			251,195			$	15.95				2.60 years			$	6,628,000
Outstanding at		July 1, 2022			251,195			$	15.95				2.60 years			$	6,628,000
Granted					-				-				-				-
Exercised					-				-				-				-
Forfeited					-				-				-				-
Exchanged					-				-				-				-
Outstanding at		June 30, 2023			251,195			$	15.95				1.60 years			$	4,957,000
Exercisable at		June 30, 2023			251,195			$	15.95				1.60 years			$	4,957,000
Vested and expected
to vest at		June 30, 2023			251,195			$	15.95				1.60 years			$	4,957,000

 

NOTE 16 – RELATED PARTY TRANSACTIONS

 

As discussed in Note 9 – Related Party and Other Financing Transactions, upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, respectively, net of loan amortization costs of zero, respectively, and are eliminated in the consolidated balance sheets of InterGroup. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.

 

63

 

As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

 

NOTE 17 – COMMITMENTS AND CONTINGENCIES

 

Cash Management Agreement

 

As part of the Hotel refinancing effective December 18, 2013, Operating entered into a Cash Management Agreement with Bank of America, N.A. (“Lender”) and Wells Fargo Bank, N.A. (“Cash Management Bank”) whereby all cash received by Operating is to be deposited into a business checking account controlled by the Cash Management Bank up to the loan maturity date. Additionally, other terms of the Cash Management Agreement provide that effective February 2019 or upon a Property Improvement Plan (“PIP”) requirement by Hilton (“Franchisor”) deemed the “Cash Sweep Period” during which all excess cash generated by Operating beyond the monthly budgeted expenses and debt services including principal and interest, insurance reserves, real estate taxes reserve, Furniture, fixtures, and equipment (“FF&E”) reserves, for the senior and mezzanine loans, will be held by the Cash Management Bank for future hotel improvements as required by the date or a PIP. Currently, any and all funds are being controlled by the Cash Management Bank according to the Cash Management Agreement.

 

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Franchise Agreements

 

The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004. The term of the License agreement was for an initial period of 15 years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement which amongst other things extended the License Agreement through 2030, and also provided the Partnership certain key money cash incentives to be earned through 2030.

 

Since the opening of the Hotel as a full brand Hilton in January 2006, Justice has incurred monthly royalties, program fees and information technology recapture charges equal to a percentage of the Hotel’s gross room revenue. Fees for such services during fiscal year 2023 and 2022 totaled approximately $3,029,000 and $2,107,000, respectively.

 

Employees

 

The Company’s corporate office and multifamily operations had 32 employees and the hotel operations had 187 employees as of June 30, 2023. On February 3, 2017, Aimbridge assumed all labor union agreements and provides all funding for all payroll and related costs. As of June 30, 2023, approximately 90% of those employees were represented by one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and a new Memorandum of Understanding (“MOU”) was signed June 26, 2023. CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed on April 26, 2023. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.

 

Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Company and Aimbridge. The Company expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA and incorporates these principles into its operating and budgetary practices.

 

Legal Matters

 

Portsmouth Square, Inc., through its operating company Justice Investors Operating Company, LLC, a Delaware limited liability company (the “Company”), is the owner of the real property located at 750 Kearny Street in San Francisco, currently improved with a 27 – story building which houses a Hilton Hotel (the “Property”). The Property was purchased and improved pursuant to the terms of a series of agreements with the City and County of San Francisco (the “City”) in the early 1970’s. The terms of the agreements and subsequent approvals and permits included a condition by which the Company was required to construct an ornamental overhead pedestrian bridge across Kearny Street, connecting the Property to a nearby City park and underground parking garage known as Portsmouth Square (the “Bridge”). Included in the approval process was the City’s issuance of a Major Encroachment Permit (“Permit”) allowing the Bridge to span over Kearney Street. As of May 24, 2022, the City has purported to revoke the Permit and on June 13, 2022, has directed the Company to submit a general bridge removal and restoration plan (the “Plan”) at the Company’s expense. The Company disputes the legality of the purported revocation of the Permit. The Company further disputes the existence of any legal or contractual obligation to remove the Bridge at its expense. In particular, representatives of the Company participated in meetings with the City on and at various times after August 1, 2019, to discuss a collaborative process for the possible removal of the Bridge. Until the purported revocation of the Permit in 2022, the City representatives repeatedly and consistently promised and agreed that the City will pay for the associated costs of any Bridge removal. Nevertheless, without waiving any rights, in an effort to understand all of the available options, and to provide a response to the City’s directives, the Company has engaged a Project Manager, a structural engineering firm and an architect to advise on the development of a Plan for the Bridge removal, as well as the reconstruction of the front of the Hilton Hotel. The Company has been working cooperatively with the City on the process for removal of the Bridge and its related physical encroachments, including obtaining regulatory approvals and permits. A final Plan is currently not expected to be completed until late calendar year of 2023, and permits are unlikely to be obtained until mid-2024 at the earliest. The Company is currently in discussion with the City regarding both the process and financial responsibility for the implementation of the Plan and reconstruction of the impacted portions of the Hotel. Those discussions are expected to continue through the Autumn of 2023.

 

The Company may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.

 

NOTE 18 – SUBSEQUENT EVENTS

 

The Company evaluated subsequent events through the date that the accompanying financial statements were issued, and has determined that no material subsequent events exist through the date of this filing.

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

There were no disagreements on any matter of accounting principles or practices, financial statement disclosure, nor auditing scope or procedure.

 

Item 9A. Controls and Procedures.

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

As of June 30, 2023, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officer and principal financial and accounting officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective because of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for the deferred tax asset valuation allowance was not effectively designed or maintained. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

 

1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,

 

2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

 

3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on our assessments and those criteria, management determined that our internal controls over financial reporting were not effective as of June 30, 2023.

 

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Other than the material weakness identified above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.

 

None.

 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

The following table sets forth certain information with respect to the Directors and Executive Officers of the Company as of June 30, 2023:

 

Name		Position with the Company		Age		Term to Expire
Class A Directors:
John V. Winfield (4)		Chairman of the Board; President and Chief Executive Officer		76		Fiscal 2023 Annual Meeting
Steve Grunwald (3) (5)		Director		41		Fiscal 2024
Class B Directors:
Yvonne L. Murphy (1) (2) (4)		Director		66		Fiscal 2025 Annual Meeting
William J. Nance (2) (3) (4)		Director		79		Fiscal 2025 Annual Meeting
Class C Director:
John C. Love (1) (2) (3)		Director		83		Fiscal 2023 Annual Meeting
Executive Officers:
David C. Gonzalez (4)		Chief Operating Officer, Advisor of Executive Strategic Real Estate and Securities Investment Committee, and President of Portsmouth		56		N/A
Jolie Kahn		Secretary		58		N/A
Ann Marie Blair		Treasurer, Controller (Principal Financial Officer). Ms. Blair appointed effective July 6, 2023		36		N/A
Danfeng Xu		Treasurer, Controller (Principal Financial Officer), and Secretary Resigned effective August 31, 2022		35		N/A

 

(1)	Member of the Nominating Committee
(2)	Member of the Compensation Committee
(3)	Member of the Audit Committee
(4)	Member of the Executive Strategic Real Estate and Securities Investment Committee

 

 

Business Experience:

 

The principal occupation and business experience during the last five years for each of the Directors and Executive Officers of the Company are as follows:

 

John V. Winfield — Mr. Winfield was first appointed to the Board in 1982. He currently serves as the Company’s Chairman of the Board, President and Chief Executive Officer, having first been appointed as such in 1987. Mr. Winfield also serves as Chairman and Chief Executive Officer of the Company’s subsidiary Portsmouth, a public company. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. On May 24, 2021, Mr. Winfield resigned effective immediately as President of Portsmouth. Mr. Winfield’s extensive experience as an entrepreneur and investor, as well as his managerial and leadership experience from serving as a chief executive officer and director of public companies, led to the Board’s conclusion that he should serve as a director of the Company.

 

Yvonne L. Murphy — Mrs. Murphy was elected to the Board of InterGroup in February 2014 and to the Board of Portsmouth, a subsidiary of the Company, in February 2019. She resigned from the Board of Portsmouth in December 2019. Mrs. Murphy was elected to the Board of Portsmouth in October 2022 and served as a director at Portsmouth from March to December 2019. Mrs. Murphy took the place of Director Babin upon his passing in October 2022. Mrs. Murphy has impressive experiences in corporate management, legal research, and legislative lobbying for over 30 years. She was a member of Governor Kenny C. Guinn’s executive staff in Nevada, and was employed for years by the prestigious Jones Vargas law firm in Reno, Nevada. She served in nine legislative sessions during the most challenging years in Nevada’s history. Prior to starting her own lobbying firm, Ms. Murphy worked for RR Partners in its corporate office in Las Vegas, Nevada and in the Government Affairs Division in Reno. She has a Doctorate and a Master’s in Business Administration from the California Pacific University. Mrs. Murphy’s impressive experience in corporate management, legal research and legislative lobbying led to the Board’s conclusion that she should serve as a director of the Company.

 

William J. Nance — Mr. Nance is a Certified Public Accountant and private consultant to the real estate and banking industries. He is also President of Century Plaza Printers Inc. Mr. Nance was first elected to the Board in 1984. He served as the Company’s Chief Financial Officer from 1987 to 1990 and as Treasurer from 1987 to June 2002. Mr. Nance is also a Director of Santa Fe and Portsmouth. Mr. Nance also serves as a director of Comstock Mining, Inc. Mr. Nance’s extensive experience as a CPA and in numerous phases of the real estate industry, his business and management experience gained in running his own businesses, his service as a director and audit committee member for other public companies and his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion that he should serve as a director of the Company.

 

John C. Love — Mr. Love was appointed to the Board in 1998. Mr. Love is an international hospitality and tourism consultant. He is a retired partner in the national CPA and consulting firm of Pannell Kerr Forster and, for the last 30 years, a lecturer in hospitality industry management control systems and competition & strategy at Golden Gate University and San Francisco State University. He is Chairman Emeritus of the Board of Trustees of Golden Gate University and the Executive Secretary of the Hotel and Restaurant Foundation. Mr. Love is also a Director of Portsmouth and served on the Board of Santa Fe from March 1998 to December 2019. Mr. Love’s extensive experience as a CPA and in the hospitality industry, including teaching at the university level for the last 30 years in management control systems, and his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion that he should serve as a director of the Company.

 

Jerold R. Babin — Mr. Babin was first appointed as a director of the Company in February 1996. Mr. Babin is also a director of Portsmouth’s parent company, InterGroup. Mr. Babin was a retail securities broker. From 1974 to 1989, he worked at Drexel Burnham, and from 1989 to 2010, he worked for Prudential Securities (later Wachovia Securities and now Wells Fargo Advisors), where he held the title of First Vice President. Mr. Babin retired from his position at Wells Fargo advisors in June 2010. Mr. Babin had also served as an arbitrator for FINRA (formerly NASD) for over 20 years. Mr. Babin’s extensive experience in the securities and financial markets, as well as his involvement in the securities and public company regulatory industry, led to the Board’s conclusion that he should serve as a director of the Company. Mr. Babin served as a Board Member up to the time of his passing in October 2022.

 

 

David C. Gonzalez — Mr. Gonzalez was appointed Chief Operating Officer of the Company on May 31, 2023 and previously was the Vice President Real Estate of the Company since January 31, 2001. Since 1989, Mr. Gonzalez has served in numerous capacities with the Company, including Controller and Director of Real Estate. Mr. Gonzalez was appointed advisor of the Executive Strategic Real Estate and Securities Investment Committee of the Company and Portsmouth in February 2020. The Board of Directors of Portsmouth Square, Inc. elected Mr. Gonzalez as President of Portsmouth Square Inc. effective May 24, 2021.

 

Ann Marie Blair – Ms. Blair was appointed as Treasurer and Controller of the Company on July 6, 2023. Ms. Blair also serves as Treasurer and Controller of InterGroup, having been appointed to the position on July 6, 2023. Prior to joining the Company, she had served as Chief Financial Officer in the advertising technology industry. She obtained her Bachelor of Science degree in Accounting and her Master of Business Administration from Cumberland University.

 

Danfeng Xu – Ms. Xu was appointed as Treasurer and Controller of the Company on October 16, 2017. Ms. Xu also serves as Treasurer and Controller of Portsmouth and Santa Fe, having been appointed to those positions on October 16, 2017. On June 1, 2018, she was appointed Secretary of the Company, Portsmouth and Santa Fe. Prior to joining the Company, she had served as Controller and worked in other positions at the Hotel from July 2010 to February 2017. She obtained her Bachelor of Science degree in Business Administration, Accounting and Finance from The Ohio State University and her Master of Professional Accounting, with a concentration in Audit and Assurance from University of Washington. Ms. Xu resigned effective August 31, 2022.

 

Family Relationships: There are no family relationships among directors, executive officers, or persons nominated or chosen by the Company to become directors or executive officers.

 

Involvement in Certain Legal Proceedings: No director or executive officer, or person nominated or chosen to become a director or executive officer, was involved in any legal proceeding requiring disclosure.

 

Compliance with Section 16(a) of the Securities Exchange Act of 1934

 

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and each beneficial owner of more than ten percent of the Common Stock of the Company, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten-percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely on its review of the copies of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during fiscal year 2023 all filing requirements applicable to its officers, directors, and greater than ten-percent beneficial owners were complied with.

 

Code of Ethics.

 

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, including its Board of Directors. A copy of the Code of Ethics is posted on the Company’s website at www.intgla.com. The Company will provide to any person without charge, upon request, a copy of its Code of Ethics by sending such request to: The InterGroup Corporation, Attn: Treasurer, 1516 S. Bundy Drive, Suite 200, Los Angeles, California 90025. The Company will promptly disclose any amendments or waivers to its Code of Ethics on Form 8-K and will post such information on its website.

 

BOARD AND COMMITTEE INFORMATION

 

InterGroup’s common stock is listed on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC (“NASDAQ”). InterGroup is a Smaller Reporting Company under the rules and regulations of the Securities and Exchange Commission (“SEC”). With the exception of the Company’s President and CEO, John V. Winfield, all of InterGroup’s Board of Directors consists of “independent” directors as independence is defined by the applicable rules of the SEC and NASDAQ.

 

 

Nominating Committee

 

The Company’s Nominating Committee is comprised of two “independent” directors as independence is defined by the applicable rules of the SEC and NASDAQ. Directors Love and Murphy serve as the current members of the Nominating Committee. The Company has not established a charter for the Nominating Committee, and the Committee has no policy with regard to consideration of any director candidates recommended by security holders. As a smaller reporting company whose directors own in excess of sixty percent of the voting shares of the Company, InterGroup has not deemed it appropriate to institute such a policy. There have not been any material changes to the procedures by which security holders may recommend nominees to the Company’s board of directors.

 

Audit Committee and Audit Committee Financial Expert

 

The Company is a Smaller Reporting Company under SEC rules and regulations. The Company’s Audit Committee is currently comprised of three members: Directors Nance (Chairperson), Babin and Love, each of whom meets the independence requirements of the SEC and NASDAQ as modified or supplemented from time to time. The Company’s Board of Directors has determined that Directors Nance and Love also meet the Audit Committee Financial Expert requirement as defined by the SEC and NASDAQ based on their qualifications and business experience discussed above in this Item 10.

 

Compensation Committee

 

The Company’s Compensation Committee (the “Compensation Committee”) is comprised of three “independent” members of the Board of Directors as independence is defined by the applicable rules of the SEC and NASDAQ. Mr. Nance serves as Chairman of the Compensation Committee. The Company has not established a charter for the Compensation Committee. The Compensation Committee reviews and recommends to the Board of Directors the compensation for the Company’s Chief Executive Officer and other executive officers, including equity or performance-based compensation and plans. The Compensation Committee seeks to design and set compensation to attract and retain highly qualified executive officers and to align their interests with those of long-term owners of the Company. The Compensation Committee may also make recommendations to the Board of Directors as to the amount and form of director compensation. The Compensation Committee has not engaged any compensation consultants in determining the amount or form of executive of director compensation but does review and monitor published compensation surveys and studies. The Compensation Committee may delegate to the Company’s Chief Executive Officer the authority to determine the compensation of certain executive officers. The Compensation Committee also oversees the Company’s 2010 Incentive Plan.

 

Item 11. Executive Compensation

 

The following table provides certain summary information concerning compensation awarded to, earned by, or paid to the Company’s principal executive officer and other named executive officers of the Company whose total compensation exceeded $100,000 for all services rendered to the Company and its subsidiaries for each of the Company’s last two completed fiscal years ended June 30, 2023 and 2022. There was no non-equity incentive plan compensation or nonqualified deferred compensation earnings. There are currently no employment contracts with the executive officers.

 

 

SUMMARY COMPENSATION TABLE

 

Name and Position		Fiscal Year				Salary				Bonus				Other Compensation				Total
John V. Winfield			2023			$	838,000	(1)		$	600,000			$	59,000	(2)		$	1,497,000	(3)
Chairman, President and			2022			$	838,000	(1)		$	-			$	59,000	(2)		$	897,000	(3)
Chief Executive Officer
David C. Gonzalez			2023			$	444,000			$	600,000			$	-			$	1,044,000	(4)
Chief Operating Officer			2022			$	409,000			$	-			$	-			$	409,000	(4)
Danfeng Xu			2023			$	39,000			$	-			$	-			$	39,000	(3)
Treasurer and Controller			2022			$	171,000			$	10,000			$	-			$	181,000	(3)
(Principal Financial Officer, resigned August 2022)

 

(1)	Mr. Winfield also serves as Chairman of the Board of Portsmouth. During fiscal year 2023, Mr. Winfield received salary of $433,000 from Portsmouth. The amounts include director’s fees totaling $6,000 and $6,000 for the fiscal years 2023 and 2022, respectively.
(2)	Compensation for a portion of the salary of an assistant to Mr. Winfield.
(3)	Compensation is allocated approximately 50% to the Company and 50% to Portsmouth.
(4)	Mr. Gonzalez also serves as the President of Portsmouth. Compensation is allocated 67% to the company and 33% to Portsmouth.

 

Outstanding Equity Awards at Fiscal Year Ended June 30, 2023

 

The following table sets forth information concerning option awards and stock awards for each named executive officer that were outstanding as of the end of the Company’s last completed fiscal year ended June 30, 2023. There were no other equity incentive plan awards that were outstanding.

 

Option Awards

Number of

Number of

securities

securities

underlying

underlying

unexercised

unexercised

Option

Option

options (#)

options (#)

exercise

expiration

Name

exercisable

Un-exercisable

price $

date

John V. Winfield

100,000

(1)

-

$

10.30

3/16/26

John V. Winfield

133,195

(2)

-

$

18.65

12/26/23

David C. Gonzalez

18,000

(3)

-

$

27.30

3/2/27

 

(1)

Stock options issued to Mr. Winfield pursuant to the Company’s 2010 Incentive Plan are subject to both time and performance-based vesting requirements, each of which must be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant, March 16, 2010. Pursuant to the performance vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2023, the performance vesting requirements of the options were satisfied.

 

 

(2)	On December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.
(3)	Mr. Gonzalez’s stock options vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant, March 2, 2017.

 

Internal Revenue Code Limitations

 

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), provides that, in the case of a publicly held corporation, the corporation is not generally allowed to deduct remuneration paid to its chief executive officer and certain other highly compensated officers to the extent that such remuneration exceeds $1,000,000 for the taxable year. Certain remuneration, however, is not subject to disallowance, including compensation paid on a commission basis and, if certain requirements prescribed by the Code are satisfied, other performance-based compensation. Since InterGroup and Portsmouth are both public companies, the $1,000,000 limitation applies separately to the compensation paid by each entity. Stock option expenses are also amortized over a several years. For fiscal years 2023 and 2022, no compensation paid by the Company to its CEO or other executive officers was subject the deduction disallowance prescribed by Section 162(m) of the Code.

 

EQUITY COMPENSATION PLANS

 

The Company currently has one equity compensation plan, which has been approved by the Company’s stockholders. However, any outstanding stock options issued under the Company’s prior equity compensation plans remain effective in accordance with their terms.

 

The purpose of the Company’s equity compensation plans is to provide a means whereby officers, directors and key employees of the Company develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders. A further purpose of these plans is to provide a means through which the Company may attract able individuals to become employees or serve as directors of the Company and to provide a means for such individuals to acquire and maintain stock ownership in the Company, thereby strengthening their concern for the welfare of the Company.

 

The InterGroup Corporation 2010 Omnibus Employee Incentive Plan

 

On February 24, 2010, the shareholders of the Company approved The InterGroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”), which was formally adopted by the Board of Directors following the annual meeting of shareholders. The 2010 Incentive Plan as modified in December 2013, authorizes a total of up to 400,000 shares of common stock to be issued as equity compensation to officers and employees of the Company in an amount and in a manner to be determined by the Compensation Committee in accordance with the terms of the Plan. The 2010 Incentive Plan authorizes the awards of several types of equity compensation including stock options, stock appreciation rights, performance awards and other stock-based compensation. The 2010 Incentive Plan had an original expiration date of February 23, 2020, if not terminated sooner by the Board of Directors upon recommendation of the Compensation Committee. Any awards issued under the Plan will expire under the terms of the grant agreement.

 

 

The shares of common stock to be issued under the 2010 Incentive Plan have been registered under the Securities Act, pursuant to a registration statement filed on Form S-8 by the Company on June 16, 2010. Once received, shares of common stock issued under the Plan will be freely transferable subject to any requirements of Section 16(b) of the Exchange Act.

 

On March 16, 2010, the Compensation Committee authorized the grant of 100,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive Plan. The exercise price of the options is $10.30, which is 100% of the fair market value of the Company’s Common Stock as determined by reference to the closing price of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the date of grant. The options had an original expiration date ten years from the date of grant, unless terminated earlier in accordance with the terms of the 2010 Incentive Plan. The options shall be subject to both time and market-based vesting requirements, each of which must be satisfied before options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2023, all the market vesting requirements have been met.

 

On December 28, 2019, the Compensation Committee of the Board of Directors recommended to the Board amendments to the 2010 Incentive Plan which would amend Section 1.3 to extend the term from ten years to sixteen years, and Section 6.4 to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to twenty years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.

 

In February 2012, the Compensation Committee awarded 90,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 90,000 shares of common stock. The per share exercise price of the options is $19.77 which is the fair value of the Company’s Common Stock as reported on NASDAQ on February 28, 2012. The options expire ten years from the date of grant. The options are subject to both time and market-based vesting requirements, each of which must be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. On January 21, 2022, Mr. Winfield exercised 90,000 of his vested stock options by surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 54,906 shares. No additional compensation expense was recorded related to the issuance.

 

On December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.

 

 

In March 2017, the Compensation Committee awarded 18,000 stock options to the Company’s Vice President of Real Estate, David C. Gonzalez, to purchase up to 18,000 shares of common stock. The per share exercise price of the options is $27.30 which is the fair value of the Company’s Common Stock as reported on NASDAQ Capital Market on March 2, 2017. The options expire ten years from the date of grant. Pursuant to the time vesting requirements, the options vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant.

 

Compensation of Directors

 

Effective as of fiscal year ended June 30, 2011, annual cash compensation payable to non-employee directors has been $12,000. With the exception of members of the Audit Committee, non-employee directors do not receive any additional fees for attending Board or Committee meetings but are entitled to reimbursement of their reasonable expenses to attend such meetings. Members of the Audit Committee are paid a fee of $1,000 per quarter, with the Chair of that Committee to receive $1,500 per quarter. As an executive officer, the Company’s Chairman has elected to forego his annual board fees.

 

The following table sets forth the compensation paid to directors during the fiscal year ended June 30, 2023:

 

DIRECTOR COMPENSATION

 

		Fees Earned or								All Other
Name		Paid in Cash*				Stock Awards				Compensation				Total
John C. Love		$	46,000	(1)			-				-			$	46,000
William J. Nance		$	48,000	(2)			-				-			$	48,000
Steve Grunwald		$	18,000				-				-			$	18,000
Jerold R. Babin		$	44,000	(3)			-				-			$	44,000
Yvonne L. Murphy		$	34,000				-				-			$	34,000
John V. Winfield (4)			-				-				-

 

*	Amounts shown include board retainer fees, committee fees and meeting fees.
(1)	Mr. Love also serves as director of the Company’s subsidiary, Portsmouth. Amounts shown include $8,000 in regular board and audit committee fees paid by Portsmouth.
(2)	Mr. Nance also serves as a director of the Company’s subsidiary, Portsmouth. Amounts shown include $8,000 in regular board and audit committee fees paid by Portsmouth.
(3)	Mr. Babin also served as a director of Portsmouth up to his passing away in October 2022. Amounts shown include $6,000 in regular board fees paid by Portsmouth.
(4)	As Chief Executive Officer, the Company’s Chairman, John V. Winfield, was not paid any board, committee or meetings fees. Mr. Winfield received $6,000 in regular board fees from Portsmouth, which is reported on the Summary Compensation Table.

 

 

Change in Control or Other Arrangements

 

Except for the foregoing, there are no other arrangements for compensation of Directors and there are no employment contracts between the Company and its Directors or any change in control arrangements.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

Security Ownership of Certain Beneficial Owners.

 

The following table sets forth, as of August 21, 2023, certain information with respect to the beneficial ownership of Common Stock of the Company owned by those persons or groups known by the Company to own more than five percent of the outstanding shares of Common Stock.

 

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership (1)				Percent of Class (2)
John V. Winfield			1,686,374	(3)			68.6	%
1516 S. Bundy Drive, Suite 200 Los Angeles, California 90025

 

(1)	Unless otherwise indicated and subject to applicable community property laws, each person has sole voting and investment power with respect to the shares beneficially owned.
(2)	Percentages are calculated on the basis of 2,205,527 shares of Common Stock outstanding as of August 21, 2023, plus any securities that person has the right to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
(3)	Includes 233,195 shares that Mr. Winfield has a right to acquire pursuant to vested stock options.

 

Security Ownership of Management.

 

The following table sets forth, as of August 21, 2023, certain information with respect to the beneficial ownership of Common Stock of the Company owned by (i) each Director and each of the named Executive Officers, and (ii) all Directors and Executive Officers as a group.

 

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership (1)				Percent of Class (2)
John V. Winfield			1,686,374	(3)			68 .0	%
William J. Nance			47,946				2.0	%
John C. Love			8,561				*
David C. Gonzalez			44,769	(4)			1.8	%
Yvonne L. Murphy			2,282				*
All Directors and Executive Officers as a Group (5 persons)			1,789,932				72.9	%

 

*	Ownership does not exceed 1%.

 

(1)	Unless otherwise indicated and subject to applicable community property laws, each person has sole voting and investment power with respect to the shares beneficially owned.
(2)	Percentages are calculated on the basis of 2,205,527 shares of Common Stock outstanding at August 21, 2023, plus any securities that person has the right to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
(3)	Includes 233,195 shares that Mr. Winfield has a right to acquire pursuant to vested stock options.
(4)	Includes 18,000 shares that Mr. Gonzalez has a right to acquire pursuant to vested stock options.

 

Changes in Control.

 

There are no arrangements that may result in a change in control of the Company.

 

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

 

The following table sets forth information as of June 30, 2023 with respect to compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance, aggregated as follows:

 

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted average exercise price of outstanding options warrants and rights				Remaining available for future issuance under  equity compensation plans (excluding securities reflected in column (a))
		(a)				(b)				(c)
Equity compensation plans approved by security holders			251,195			$	15.95			None
Equity compensation plans not approved by security holders			None				N/A			None
Total			251,195			$	15.95			None

 

(a) There were 251,195 stock options outstanding as of June 30, 2023.

 

(b) Reflects the weighted average exercise price of all outstanding options.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Mr. Winfield owns 2.5% of Portsmouth. Director William Nance is a director and Chairman of the Audit Committee of Comstock Mining, Inc., since 2005.

 

Two general partners provided services to the Partnership through December 17, 2013. On December 18, 2013, the Partnership redeemed Evon’s partnership interest and Portsmouth Square became the sole general partner. The Partnership’s obligation to pay Evon, Justice’s former general partner, terminated as of December 18, 2013. Under the terms of the Justice Partnership Agreement, its general partner, Portsmouth, received annual compensation of one percent of Hotel Revenue up to the dissolution of the Partnership in December 2021. During each of the years ended June 30, 2023 and 2022, total compensation earned by Portsmouth under the new and previous agreements were $130,000 and $146,000, respectively. Amounts earned by Portsmouth are eliminated in consolidation. Effective with the dissolution of the Partnership, the compensation to Portsmouth from the hotel was terminated.

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth, and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

 

 

Director Independence

 

InterGroup’s common stock is listed on the NASDAQ Capital Market tier of the NASDAQ Stock Market LLC. InterGroup is a Smaller Reporting Company under the rules and regulations of the SEC. The Board of Directors of InterGroup currently consists of five members. With the exception of the Company’s President and CEO, John V. Winfield, all of InterGroup’s Board of Directors consists of “independent” directors as independence is defined by the applicable rules of the SEC and NASDAQ. There are no members of the Company’s compensation, nominating or audit committees that do not meet those independence standards.

 

Item 14. Principal Accounting Fees and Services

 

On January 31, 2022, the Audit Committee retained WithumSmith+Brown, PC, PCAOB ID: 100 (“Withum”) as the Company’s new independent registered public accounting firm upon the resignation of Moss Adams LLP, Irvine CA, PCAOB ID: 659 (“Moss Adams”) in December 2021. The aggregate fees billed for each of the last two fiscal years ended June 30, 2023 and 2022 for professional services rendered by Withum and Moss Adams are set forth in the table below. These fees were billed for audit of the Company’s annual financial statements, review of financial statements included in the Company’s Form 10-Q reports, and services provided in connection with statutory and regulatory filings and engagements for those fiscal years.

 

		Fiscal Year
		2023				2022
Audit fees – Withum		$	215,000			$	52,000
Tax fees – Withum			131,000				31,000
Audit fees – Moss Adams			-				207,000
Tax fees – Moss Adams			-				95,000
TOTAL:		$	346,000			$	385,000

 

Audit Committee Pre-Approval Policies

 

The Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm, subject to any de minimis exceptions that may be set for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion of the audit. The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Committee at its next scheduled meeting. All of the services described herein were approved by the Audit Committee pursuant to its pre-approval policies.

 

None of the hours expended on the independent registered public accounting firms’ engagement to audit the Company’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the independent registered public accounting firm’s full-time permanent employees.

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a)(1) Financial Statements

 

The following financial statements of the Company are included in Part II, Item 8 of this Report at pages 32 through 64:

 

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - June 30, 2023 and 2022

Consolidated Statements of Operations for Years Ended June 30, 2023 and 2022

Consolidated Statements of Shareholders’ Deficit for Years Ended June 30, 2023 and 2022

Consolidated Statements of Cash Flows for Years Ended June 30, 2023 and 2022

Notes to the Consolidated Financial Statements

 

(a)(2) Financial Statement Schedules

 

All other schedules for which provision is made in Regulation S-X have been omitted because they are not required or are not applicable or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

 

(a)(3) Exhibits

 

Set forth below is an index of applicable exhibits filed with this report according to exhibit table number.

 

Exhibit Number		Description
3.(i)		Articles of Incorporation:
3.1		Certificate of Incorporation, dated September 11, 1985, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4, filed on September 6, 1985 (Registration No. 33-00126) and Amendment 1 to that Registration Statement filed on October 23, 1985.
3.2		Restated Certificate of Incorporation, dated March 9, 1998, incorporated by reference to Exhibit 3 of the Company’s Amended Quarterly Report on Form 10-QSB/A for the period ended March 31, 1998, as filed on May 19, 1998.
3.3		Certificate of Amendment to Certificate of Incorporation, dated October 2, 1998, incorporated by reference to Exhibit 3 of the Company’s Quarterly report on Form 10-QSB for the period ended September 30, 1998, as filed on November 13, 1998.

 

 

3.4		Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on August 6, 2007, incorporated by reference to Exhibit 3.4 of the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2007 as filed on September 28, 2007.
3.(ii)		Amended and Restated By-Laws of The InterGroup Corporation, effective as of December 10, 2007, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed on December 12, 2007.
4.		Instruments defining the rights of security holders including indentures*
9.		Voting Trust Agreement: Voting Trust Agreement dated June 30, 1998 between John V. Winfield and The InterGroup Corporation is incorporated by reference to the Company’s Annual Report on Form 10-KSB filed with the Commission on September 28, 1998.
10.		Material Contracts:
10.1		1998 Stock Option Plan for Non-Employee Directors approved by the Board of Directors on December 8, 1998 and ratified by the shareholders on January 27, 1999 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on December 21, 1998).
10.2		1998 Stock Option Plan for Selected Key Officers, Employees and Consultants approved by the Board of Directors on December 8, 1998 and ratified by the shareholders on January 27, 1999 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on December 21, 1998).
10.3		The InterGroup Corporation 2007 Stock Compensation Plan for Non-Employee Directors (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on January 26, 2007).
10.4		Amended and Restated Agreement of Limited Partnership of Justice Investors, effective November 30, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q Report for the quarterly period ended December 31, 2010, filed with the Commission on February 11, 2011).
10.5		General Partner Compensation Agreement, dated December 1, 2008 (incorporated by reference to Exhibit 10.2 to Company’s Form 10-Q Report for the quarterly period ended December 31, 2008, filed with the Commission on February 13, 2009).
10.6		The InterGroup Corporation 2008 Restricted Stock Unit Plan, adopted by the Board of Directors on December 3, 2008, and ratified by the shareholders on February 18, 2009 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A, filed with the Commission on January 21, 2009).
10.7		Restricted Stock Unit Agreement, dated February 18, 2009, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009, as filed with the Commission on October 13, 2009).
10.8		The InterGroup Corporation 2010 Omnibus Employee Incentive Plan, approved by the shareholders and adopted by the Board of Directors on February 24, 2010 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A, filed with the Commission on January 27, 2010).

 

 

10.9		Employee Stock Option Agreement, dated March 16, 2010, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.9 of the Company’s report on Form 10-K for the fiscal year ended June 30, 2010, as filed with the Commission on September 27, 2010).
10.10		Franchise License Agreement, dated December 10, 2004, between Justice Investors and Hilton Hotels (incorporated by reference to Exhibit 10.10 of the Company’s amended report on Form 10-K/A for the fiscal year ended June 30, 2011, as filed with the Commission on August 24, 2012).
10.13		Employee Stock Option Agreement, dated February 28, 2012, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.13 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2014, as filed with the Commission on September 20, 2012).
10.16		Management Agreement, dated February 1, 2017, between Justice Operating Company, LLC and Aimbridge Management Company, LLC. (incorporated by reference to Exhibit 10.5 of the Company’s Form 10-K Report for the fiscal year ended June 30, 2017, as filed with the Commission on October 13, 2017). *
14		Code of Ethics (filed herewith).
21		Subsidiaries (filed herewith).
23.1		Consent of Independent Registered Public Accounting Firm Withum Smith+Brown, PC
31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbones-Oxley Act of 2002
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbones-Oxley Act of 2002
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith).
32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith).
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DFE		Inline XBRL Taxonomy Extension definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*

All Exhibits marked by one asterisk are incorporated herein by reference to the Trust’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission on September 6, 1985, Amendment No. 1 to Form S-4 as filed with the Securities and Exchange Commission on October 23, 1985, Exhibit 14 to Form 8 Amendment No. 1 to Form 8 filed with the Securities & Exchange Commission November 1987 and Form 8 Amendment No. 1 Item 4 filed with the Securities & Exchange Commission October 1988.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

			THE INTERGROUP CORPORATION
			(Registrant)
Date:	October 13, 2023		by	/s/ John V. Winfield
				John V. Winfield, President,
				Chairman of the Board and
				Chief Executive Officer
Date:	October 13, 2023		by	/s/ Ann Marie Blair
				Ann Marie Blair, Principal Financial Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signatures		Title and Position		Date
/s/ John V Winfield		President, Chief Executive Officer and		October 13, 2023
John V. Winfield		Chairman of the Board (Principal Executive Officer)
/s/ David C. Gonzalez		Chief Operating Officer		October 13, 2023
David C. Gonzalez
/s/ John C. Love		Director		October 13, 2023
John C. Love
/s/ Steve Grunwald		Director		October 13, 2023
Steve Grunwald
/s/ Yvonne L. Murphy		Director		October 13, 2023
Yvonne L. Murphy
/s/ William J. Nance		Director		October 13, 2023
William J. Nance

 

 

 

EXHIBIT 14

 

THE INTERGROUP CORPORATION
CODE OF ETHICS
FOR
SENIOR FINANCIAL OFFICERS

 

This Code of Ethics applies to The InterGroup Corporation (“InterGroup” or the “Company”) Senior Financial Officers. “Senior Financial Officers” shall include the principal executive officer, the principal accounting officer or controller, or persons performing similar functions, including InterGroup’s President and Chief Executive Officer, Chief Financial Officer, Treasurer, Controller, Vice President, the Company’s Board of Directors and such other individuals as determined from time to time by the Audit Committee of the Company for purposes of this Code of Ethics. The Company expects all employees, in carrying out their job responsibilities, to act in accordance with the highest standards of personal and professional integrity, to comply with all applicable laws, and to abide by InterGroup’s other corporate policies and procedures adopted from time to time by the Company. This Code of Ethics supplements the foregoing with respect to all Senior Financial Officers.

 

InterGroup’s Senior Financial Officers will:

 

1. Engage in and promote honest and ethical conduct, acting with integrity and exercising at all times their best independent judgment;

 

2. Avoid actual or apparent conflicts of interest between personal and professional relationships and disclose to the Company’s Audit Committee and counsel any material transaction or relationship that reasonably could be expected to give rise to such a conflict;

 

3. Produce full, fair, accurate, timely and understandable disclosure in reports and documents that InterGroup files with, or submits to, the Securities and Exchange Commission and in other public communications made by InterGroup;

 

4. Comply with applicable governmental laws, rules and regulations, as well as the rules and regulations of self-regulatory organizations of which InterGroup is a member;

 

5. Maintain the confidentiality of Company information, except when authorized or otherwise required to make any disclosure, and avoid the use of any Company information for personal advantage;

 

6. Promote ethical and honest behavior among employees under your supervision; and

 

7. Promptly report any possible violation of this Code of Ethics to the Audit Committee and the Company’s counsel.

 

All Senior Financial Officers are prohibited from directly or indirectly taking any action to coerce, manipulate, mislead or fraudulently influence InterGroup’s independent public accountant engaged in the performance of an audit or review of the financial statements of the Company for the purpose of rendering the financial statements of InterGroup misleading.

 

The Audit Committee of the Board of Directors shall approve any waiver or amendment of this Code of Ethics, and any such waiver or amendment shall be disclosed promptly as required by law and SEC regulations.

 

All Senior Financial Officers will be held accountable for their adherence to this Code of Ethics. Failure to observe the terms of this Code of Ethics may result in disciplinary action, up to and including termination of employment. Violations of this Code of Ethics may also constitute violations of law, and may result in civil and criminal penalties for the individual, his or her supervisor and/or InterGroup.

 

If a Senior Financial Officer has any questions regarding the best course of action in a particular situation, he or she should promptly contact the Chairman of the Audit Committee or the Company’s counsel. An individual may choose to remain anonymous in reporting any possible violation of this Code of Ethics.

 

 

 

EXHIBIT 21

 

SUBSIDIARIES OF THE INTERGROUP CORPORATION

 

(1)		Intergroup Summit Hills, Inc. (incorporated on August 12, 1993 in TX)
(2)		Intergroup Mariposa, Inc. (incorporated on June 23, 1994 in TX)
(3)		Intergroup Cross Keys, Inc. (incorporated on April 1, 1994 in MO)
(4)		Intergroup Bridgeton, Inc. (incorporated on May 12, 1994 in MO)
(5)		Intergroup Whisperwood, Inc. (incorporated on June 20, 1994 in PA)
(6)		Mutual Real Estate Corp. (incorporated on March 10, 1994 in TX)
(7)		Golden West Entertainment, Inc. (incorporated February 15, 1990 in CA)
(8)		Golden West Television Productions, Inc. (incorporated September 17, 1991 in CA)
(9)		Golden West Television Productions, Inc. (incorporated March 17, 1986 in NY)
(10)		Intergroup Meadowbrook Gardens, Inc. (incorporated on June 23, 1994 in NJ)
(11)		Intergroup Pine Lake, Inc. (incorporated on February 9, 1996 in KY)
(12)		Healthy Planet Communications, Inc. (incorporated July 3, 1997 in CA)
(13)		Portsmouth Square, Inc. (incorporated July 6, 1967 in CA) *
(14)		2301 Bel-Air Equity, Inc. (incorporated May 25, 2000 in CA)
(15)		11371 Ovada Properties, Inc. (incorporated May 25, 2000 in CA)
(16)		11361 Ovada Properties, Inc. (incorporated June 1, 2000 in CA)
(17)		11680 Bellagio Properties, Inc. (incorporated May 25, 2000 in CA)
(18)		11650 Bellagio Properties, Inc. (incorporated August 17, 2000 in CA)
(19)		636 Acanto Properties, Inc. (incorporated February 15, 2001 in CA)
(20)		614 Acanto Properties, LLC. (converted from 614 Acanto Properties Inc. November 16, 2020 in CA)
(21)		Intergroup Uluniu, Inc. (incorporated August 12, 2004 in HI)
(22)		850 Moraga Properties LLC (formed on October 19, 2010 in CA)
(23)		855 Moraga Properties LLC (formed on October 19, 2010 in CA)
(24)		11666 Bellagio Properties LLC (formed on July 8, 2015 in CA)
(25)		801 26th Street Properties LLC (formed on June 23, 2016 in CA)
(26)		11678 Bellagio Properties LLC (formed on July 3, 2003 in CA)
(27)		606 Acanto Properties LLC (formed on April 19, 2021 in CA)

 

Unless otherwise indicated, all subsidiaries are 100%-owned.

 

*	The InterGroup Corporation owns approximately 75.0% of Portsmouth Square, Inc.

 

 

Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm 

 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333 167570 and No. 333-144122) of The InterGroup Corporation (the “Company”), of our report dated October 13, 2023 (which includes an explanatory paragraph related to the Company’s ability to continue as a going concern), relating to the consolidated financial statements which appear in this Form 10-K.

 

/s/ WithumSmith+Brown, PC

 

East Brunswick, NJ

October 13, 2023

 

 

EXHIBIT 31.1

 

CERTIFICATION

 

I, John V. Winfield, certify that:

 

1. I have reviewed this annual report on Form 10-K of The InterGroup Corporation;

 

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(s) 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 the registrant’s board of directors (or persons performing equivalent functions):

 

(a) All significant deficiencies and material weakness 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: October 13, 2023

 

/s/ John V. Winfield
John V. Winfield
President and Chief Executive Officer
(Principal Executive Officer)

 

 

EXHIBIT 31.2

CERTIFICATION

 

I, Ann Marie Blair, certify that:

 

1. I have reviewed this annual report on Form 10-K of The InterGroup Corporation;

 

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(s) 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 the registrant’s board of directors (or persons performing equivalent functions):

 

(a) All significant deficiencies and material weakness 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: October 13, 2023

 

/s/ Ann Marie Blair
Ann Marie Blair
Principal Financial Officer

 

 

EXHIBIT 32.1

 

Certification of Principal Executive Officer 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 Annual Report of The InterGroup Corporation (the “Company”) on Form 10-K for the fiscal year ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John V. Winfield, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

 

	●	The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and
	●	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ John V. Winfield
John V. Winfield
President and Chief Executive Officer
(Principal Executive Officer)

 

Date: October 13, 2023

 

A signed original of this written statement required by Section 906 has been provided to The InterGroup Corporation and will be retained by The InterGroup Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

EXHIBIT 32.2

 

Certification of Principal Financial Officer 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 Annual Report of The InterGroup Corporation (the “Company”) on Form 10-K for the fiscal year ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ann Marie Blair, Corporate Controller of the Company, serving as its Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

 

	●	The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and
	●	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Ann Marie Blair
Ann Marie Blair
Principal Financial Officer

 

Date: October 13, 2023

 

A signed original of this written statement required by Section 906 has been provided to The InterGroup Corporation and will be retained by The InterGroup Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

 

v3.23.3

Cover - USD ($)	12 Months Ended
	Jun. 30, 2023	Oct. 13, 2023	Dec. 31, 2022
Cover [Abstract]
Document Type	10-K/A
Amendment Flag	true
Amendment Description	We are filing this Amendment No. 1 to our Form 10-K filed on October 16, 2023 to include all required IXBRL files.
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--06-30
Entity File Number	1-10324
Entity Registrant Name	THE INTERGROUP CORPORATION
Entity Central Index Key	0000069422
Entity Tax Identification Number	13-3293645
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1516 S. Bundy Drive
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90025
City Area Code	(310)
Local Phone Number	889-2500
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	INTG
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 31,358,000
Entity Common Stock, Shares Outstanding		2,205,927
Documents Incorporated by Reference [Text Block]	None
Document Financial Statement Error Correction [Flag]	false
Auditor Name	WithumSmith+Brown, PC
Auditor Location	East Brunswick, NJ
Auditor Firm ID	100

v3.23.3

Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Jun. 30, 2022
ASSETS
Investment in Hotel, net	$ 40,318,000	$ 37,267,000
Investment in real estate, net	48,057,000	48,025,000
Investment in marketable securities	18,345,000	11,049,000
Cash and cash equivalents	5,960,000	14,367,000
Restricted cash	6,914,000	8,982,000
Other assets	2,764,000	2,744,000
Deferred tax asset		3,612,000
Total assets	122,358,000	126,046,000
Liabilities:
Accounts payable and other liabilities	2,574,000	2,715,000
Accounts payable and other liabilities – Hotel	11,616,000	7,508,000
Due to securities broker	1,601,000	490,000
Obligations for securities sold	1,416,000	449,000
Other notes payable	2,954,000	3,521,000
Finance leases		183,000
Deferred tax liability	4,927,000
Mortgage notes payable - Hotel	107,117,000	108,747,000
Mortgage notes payable - real estate	84,757,000	85,437,000
Total liabilities	216,962,000	209,050,000
Commitments and contingencies - Note 17
Shareholders’ deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued
Common stock, $.01 par value, 4,000,000 shares authorized; 3,459,888 and 3,459,888 issued; 2,205,927 and 2,236,180 outstanding as of June 30, 2023 and 2022, respectively	33,000	33,000
Additional paid-in capital	2,445,000	3,277,000
Accumulated deficit	(52,835,000)	(46,116,000)
Treasury stock, at cost, 1,253,961 and 1,223,708 shares as of June 30, 2023 and 2022, respectively	(20,794,000)	(19,324,000)
Total InterGroup shareholders’ deficit	(71,151,000)	(62,130,000)
Non-controlling interest	(23,453,000)	(20,874,000)
Total shareholders’ deficit	(94,604,000)	(83,004,000)
Total liabilities and shareholders’ deficit	$ 122,358,000	$ 126,046,000

v3.23.3

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Jun. 30, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	4,000,000	4,000,000
Common stock, shares issued	3,459,888	3,459,888
Common stock, shares outstanding	2,205,927	2,236,180
Treasury stock, shares	1,253,961	1,223,708

v3.23.3

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Total revenues	$ 57,607,000	$ 47,219,000
Costs and operating expenses:
Hotel operating expenses	(34,457,000)	(27,451,000)
Real estate operating expenses	(10,017,000)	(8,694,000)
Depreciation and amortization expense	(5,464,000)	(4,754,000)
General and administrative expense	(3,333,000)	(2,649,000)
Total costs and operating expenses	(53,271,000)	(43,548,000)
Income from operations	4,336,000	3,671,000
Other (expense) income:
Interest expense - mortgages	(8,585,000)	(8,881,000)
Net realized (loss) gain on marketable securities	(1,712,000)	375,000
Net realized loss on marketable securities - Comstock		(2,581,000)
Net unrealized gain (loss) on marketable securities	2,838,000	(5,408,000)
Gain on debt forgiveness		2,000,000
Loss on debt extinguishment		(335,000)
Gain on insurance recovery	2,692,000
Impairment loss on other investments		(41,000)
Dividend and interest income	485,000	980,000
Trading and margin interest expense	(1,553,000)	(1,426,000)
Net other expense	(5,835,000)	(15,317,000)
Loss before income taxes	(1,499,000)	(11,646,000)
Income tax (expense) benefit	(8,433,000)	1,030,000
Net loss	(9,932,000)	(10,616,000)
Less: Net loss attributable to the noncontrolling interest	3,213,000	1,893,000
Net loss attributable to InterGroup	$ (6,719,000)	$ (8,723,000)
Net loss per share
Basic	$ (4.77)	$ (4.77)
Diluted
Net loss per share attributable to InterGroup
Basic	(3.92)	(3.92)
Diluted
Weighted average number of common shares outstanding	2,215,258	2,224,293
Weighted average number of diluted shares outstanding
Hotel [Member]
Revenues:
Total revenues	$ 42,027,000	$ 31,534,000
Real Estate [Member]
Revenues:
Total revenues	$ 15,580,000	$ 15,685,000

v3.23.3

Consolidated Statements of Shareholders' Deficit - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Jun. 30, 2021	$ 33,000	$ 2,172,000	$ (36,394,000)	$ (17,370,000)	$ (51,559,000)	$ (19,677,000)	$ (71,236,000)
Balance, shares at Jun. 30, 2021	3,404,982
Net Loss			(8,723,000)		(8,723,000)	(1,893,000)	(10,616,000)
Issuance of stock from exercise of stock options
Issuance of stock from exercise of stock options, shares	54,906						90,000
Stock options expense		4,000			4,000		$ 4,000
Distribution from Santa Fe		1,159,000			1,159,000		1,159,000
Reclassify non-controlling interest due to purchase of Justice			(999,999)		(999,999)	999,999
Investment in Portsmouth		(58,000)			(58,000)	41,000	(17,000)
Purchase of Partnership interest						(344,000)	(344,000)
Purchase of treasury stock				(1,954,000)	(1,954,000)		(1,954,000)
Balance at Jun. 30, 2022	$ 33,000	3,277,000	(46,116,000)	(19,324,000)	(62,130,000)	(20,874,000)	(83,004,000)
Balance, shares at Jun. 30, 2022	3,459,888
Net Loss			(6,719,000)		(6,719,000)	(3,213,000)	$ (9,932,000)
Issuance of stock from exercise of stock options, shares
Investment in Portsmouth		(832,000)			(832,000)	634,000	$ (198,000)
Purchase of treasury stock				(1,470,000)	(1,470,000)		(1,470,000)
Balance at Jun. 30, 2023	$ 33,000	$ 2,445,000	$ (52,835,000)	$ (20,794,000)	$ (71,151,000)	$ (23,453,000)	$ (94,604,000)
Balance, shares at Jun. 30, 2023	3,459,888

v3.23.3

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (9,932,000)	$ (10,616,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net unrealized (gain) loss on marketable securities	(2,838,000)	5,408,000
Deferred taxes	8,539,000	(1,472,000)
Gain on insurance recovery	(2,692,000)
Gain from debt forgiveness		(2,000,000)
Impairment loss on other investments		41,000
Depreciation and amortization	5,464,000	4,754,000
Amortization of loan cost	352,000	432,000
Amortization of other notes payable	(567,000)	(567,000)
Stock compensation expense		4,000
Changes in assets and liabilities:
Investment in marketable securities	(4,458,000)	19,335,000
Other assets	(20,000)	(1,123,000)
Accounts payable and other liabilities	(141,000)	(642,000)
Accounts payable and other liabilities – Hotel	4,108,000	764,000
Due to securities broker	1,111,000	(7,427,000)
Obligations for securities sold	967,000	(5,970,000)
Net cash (used in) provided by operating activities	(107,000)	921,000
Cash flows from investing activities:
Capital expenditures for property and equipment - Hotel	(5,866,000)	(1,926,000)
Capital expenditures for property and equipment - real estate	(2,314,000)	(2,760,000)
Distribution from Santa Fe		1,159,000
Investment in Portsmouth	(198,000)	(17,000)
Investment in Justice		(344,000)
Insurance proceeds for property damage claims	2,325,000
Net cash used in investing activities	(6,053,000)	(3,888,000)
Cash flows from financing activities:
Payments of mortgage, finance leases and other notes payable	(8,205,000)	(3,698,000)
Proceeds from mortgage and other notes payable	5,360,000	16,683,000
Issuance cost from refinance of long-term debt		(107,000)
Purchase of treasury stock	(1,470,000)	(1,954,000)
Net cash provided by (used in) financing activities	(4,315,000)	10,924,000
Net (decrease) increase in cash, cash equivalents and restricted cash:	(10,475,000)	7,957,000
Cash, cash equivalents and restricted cash at the beginning of the year	23,349,000	15,392,000
Cash, cash equivalents and restricted cash at the end of the year	12,874,000	23,349,000
Supplemental information:
Income taxes paid	74,000	1,975,000
Interests paid	$ 7,708,000	$ 7,663,000

v3.23.3

Consolidated Statements of Cash Flows (Parenthetical) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 5,960,000	$ 14,367,000
Restricted cash	$ 6,914,000	$ 8,982,000

v3.23.3

BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES	12 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES	NOTE 1 - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES   Description of the Business   The InterGroup Corporation, a Delaware corporation, (“InterGroup” or the “Company”) was formed to buy, develop, operate and dispose of real property and to engage in various investment activities to benefit the Company and its shareholders.   Effective February 19, 2021, the Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF), was liquidated and all of its assets including its 68.8% interest in Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI) were distributed to its shareholders in exchange for their Santa Fe common stock. In June 2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final tax returns.As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth and the Company’s President, Chairman of the Board and Chief Executive Officer, John V. Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.   Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest. Effective December 23, 2021, the partnership was dissolved. The financial statements of Justice were consolidated with those of Portsmouth.   Prior to its dissolution effective December 23, 2021, Justice owned and operated a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”). Mezzanine was a wholly owned subsidiary of the Partnership; Operating is a wholly owned subsidiary of Mezzanine. Effective December 23, 2021, Portsmouth replaced Justice as the single member of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.   Aimbridge Hospitality (“Aimbridge”) manages the Hotel, along with its five-level parking garage, under certain Hotel management agreement (“HMA”) with Operating. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.     In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate and investments in marketable securities. Properties include apartment complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All of the Company’s residential rental properties are managed in-house.   Principles of Consolidation   The consolidated financial statements include the accounts of the Company and Portsmouth. All significant inter-company transactions and balances have been eliminated.   Investment in Hotel, Net   Property and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years.   Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses).   The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2023 and 2022.   Investment in Real Estate, Net   Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized.   The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2023 and 2022.   The fair value of the tangible assets of an acquired property, which includes land, building and improvements, is determined by valuing the property as if they were vacant, and incorporates costs during the lease-up periods considering current market conditions and costs to execute similar leases such lost rental revenue and tenant improvements. The value of tangible assets is depreciated using straight-line method based upon the assets estimated useful lives.     Investment in Marketable Securities   Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations.   Other Investments, Net   Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non-marketable debt instruments. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2023 and 2022, the Company recorded impairment losses related to other investments of zero and $41,000, respectively.   Cash and Cash Equivalents   Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. As of June 30, 2023 and 2022, the Company does not have any cash equivalents.   Restricted Cash   Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel.   Other Assets   Other assets include prepaid insurance, accounts receivable, prepaid expenses, and other miscellaneous assets.   Accounts receivable from the Hotel and rental property customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Company had accounts receivable, net of $634,000 at July 1, 2022. As of June 30, 2023, and 2022, the allowance for doubtful accounts was $486,000 and $110,000, respectively. The Company extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. The temporary eviction moratorium imposed by the federal and state governmental authorities had delayed evictions during fiscal years 2022 and 2023.   Due to Securities Broker   The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability.   Obligation for Securities Sold   Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations.     Accounts Payable and Other Liabilities   Accounts payable and other liabilities include trade payables, advanced customer deposits, accrued wages, accrued real estate taxes, and other liabilities.   Treasury Stock   The Company records the acquisition of treasury stock under the cost method. During the years ended June 30, 2023 and 2022, the Company purchased 30,253 and 41,645 shares of treasury stock, respectively.   Fair Value of Financial Instruments   Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:   Level 1–inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.   Level 2–inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.   Level 3–inputs to the valuation methodology are unobservable and significant to the fair value.   Revenue Recognition   Performance obligations   We identified the following performance obligations for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:     ● Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.         ● Non-cancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.         ● Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.         ● Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.   Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.     We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered. See Note 3 – Revenue.   Revenue recognition from apartment rental commences when an apartment unit is placed in service and occupied by a rent-paying tenant. Apartment units are leased on a short-term basis, with no lease extending beyond one year.   Advertising Costs   Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $130,000 and $61,000 for the years ended June 30, 2023 and 2022, respectively.   Income Taxes   Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.   $0 and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were recorded.   Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions.   Earnings Per Share   Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted net income per share is similar to the computation of basic net income per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The basic and diluted earnings per share are the same for the fiscal year ended June 30, 2023 and 2022 because the Company had a net loss.   Use of Estimates   The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Actual results may differ from those estimates. Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets and when appropriate, records tax valuation allowances based on that evidence and estimates. Such estimates primarily relate to the recording of allowance for doubtful accounts which are based on management’s assessment of the collectability of accounts receivable as of the end of the fiscal year As of June 30, 2023 based on taxable income that may be available under tax law the deferred taxed asset is not more likely than not to be realized.   Reclassifications   Certain line items on the balance sheet as of June 30, 2023, for the years ended June 30, 2023 and 2022 have been reclassified to conform to the current period presentation. The related party relationship has been disclosed separately in the financial statements than the other debt obligations the Company has.     Debt Issuance Costs   Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense in the consolidated statement of operations.   Recently Issued and Adopted Accounting Pronouncements   As of June 30, 2023, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on the Company’s consolidated financial statements.   Going Concern   The Hotel financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition, the Hotel has recurring losses and has an accumulated deficit of $105,727,000.   Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.   The Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average daily rates to increase as it completes renovation up to the point of generating a positive cash flows.   The financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Hotel were unable to continue as a going concern.

v3.23.3

LIQUIDITY	12 Months Ended
	Jun. 30, 2023
Liquidity
LIQUIDITY	NOTE 2 – LIQUIDITY   Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the dealings by federal, state, and local civil authorities have a material detrimental impact on our liquidity. For the fiscal year ended June 30, 2023, our net cash flow used by operations was $107,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets. As the hospitality and travel environment continues to recover, the Company will continue to evaluate what services the Company brings back. During the fiscal year ended June 30, 2023, the Company continued to make capital improvements to the hotel in the amount of $5,866,000 and anticipates continuing its guest room upgrade program during the fiscal year 2024.   The Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due to securities brokers, of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively. These marketable securities are short-term investments and liquid in nature.     On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. On July 7, 2021, the maturity date was extended to July 31, 2022. Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup. All funds advanced to the Hotel have been eliminated in consolidated financial statements at June 30, 2023 and 2022.   On May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and $5,500 principal paydowns commencing in June 2024. During the fiscal year ending June 30, 2022, we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000. We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable.   On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022.   Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance at all of our properties.   Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will be successful with its plan.     The following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest payments.   SCHEDULE OF MATERIAL FINANCIAL OBLIGATION           Year     Year     Year     Year     Year             Total     2024     2025     2026     2027     2028     Thereafter   Mortgage and subordinated notes payable   $ 192,870,000     $ 108,420,000     $ 9,318,000     $ 1,168,000     $ 3,299,000     $ 1,771,000     $ 68,894,000   Related party notes payable     2,956,000       567,000       567,000       567,000       463,000       317,000       475,000   Interest     25,577,000       3,849,000       2,898,000       2,390,000       2,284,000       2,286,000       11,870,000   Total   $ 221,403,000     $ 112,836,000     $ 12,783,000     $ 4,125,000     $ 6,046,000     $ 4,374,000     $ 81,239,000

v3.23.3

REVENUE	12 Months Ended
	Jun. 30, 2023
Revenue from Contract with Customer [Abstract]
REVENUE	NOTE 3 – REVENUE   Our revenue from real estate is primarily rental income from residential and commercial property leases which is recorded when due from residents and is recognized monthly as earned. The revenue recognition rules under ASC 606 specifically eliminates rental revenue from the accounting standard.   The following table presents our Hotel revenue disaggregated by revenue streams.   SCHEDULE OF DISAGGREGATION OF REVENUE For the year ended June 30,   2023     2022   Hotel revenues:                 Hotel rooms   $ 35,684,000     $ 26,599,000   Food and beverage     2,625,000       1,471,000   Garage     2,790,000       3,112,000   Other operating departments     928,000       352,000   Total Hotel revenue   $ 42,027,000     $ 31,534,000     Contract assets and liabilities   We do not have any material contract assets as of June 30, 2023 and 2022, other than trade and other receivables, net on our consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.   We record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within accounts payable and other liabilities on our consolidated balance sheets and had a balance of $493,000 at July 1, 2022. During the year ended June 30, 2023, the entire $493,000 was recognized as revenue. Contract liabilities decreased to $290,000 as of June 30, 2023. The decrease as of June 30, 2023, was primarily driven by a decrease in advance deposits received from customers for services to be performed after June 30, 2023.Contract liabilities increased to $493,000 as of June 30, 2022 from $161,000 as of June 30, 2021. The increase for the twelve months ended June 30, 2022 was primarily driven by advance deposits received from customers for services to be performed after June 30, 2022.   Contract costs   We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers are less than one year.

v3.23.3

INVESTMENT IN HOTEL, NET	12 Months Ended
	Jun. 30, 2023
Investment In Hotel Net
INVESTMENT IN HOTEL, NET	NOTE 4 – INVESTMENT IN HOTEL, NET   Investment in Hotel consisted of the following as of:   SCHEDULE OF INVESTMENT IN HOTEL, NET           Accumulated     Net Book   June 30, 2023   Cost     Depreciation     Value                       Land   $ 2,738,000     $ -     $ 2,738,000   Finance lease ROU assets     1,805,000       (1,239,000 )     566,000   Furniture and equipment     38,727,000       (29,682,000 )     9,045,000   Building and improvements     64,665,000       (36,696,000 )     27,969,000   Investment in Hotel, net   $ 107,935,000     $ (67,617,000 )   $ 40,318,000               Accumulated     Net Book   June 30, 2022   Cost     Depreciation     Value                       Land   $ 2,738,000     $ -     $ 2,738,000   Finance lease ROU assets     1,805,000       (922,000 )     883,000   Furniture and equipment     32,860,000       (28,567,000 )     4,293,000   Building and improvements     64,665,000       (35,312,000 )     29,353,000   Investment in Hotel, net   $ 102,068,000     $ (64,801,000 )   $ 37,267,000

v3.23.3

INVESTMENT IN REAL ESTATE, NET	12 Months Ended
	Jun. 30, 2023
Real Estate [Abstract]
INVESTMENT IN REAL ESTATE, NET	NOTE 5 - INVESTMENT IN REAL ESTATE, NET   At June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States. These properties include sixteen apartment complexes, three single-family houses as strategic investments, and one commercial real estate property. The Company also owns unimproved land located in Maui, Hawaii.     Investment in real estate included the following:    SCHEDULE OF INVESTMENT IN REAL ESTATE As of June 30,   2023     2022   Land   $ 22,998,000     $ 22,998,000   Buildings, improvements and equipment     73,151,000       70,933,000   Accumulated depreciation     (50,022,000 )     (47,374,000 ) Investment in real estate, gross     46,127,000       46,557,000   Land held for development     1,930,000       1,468,000   Investment in real estate, net   $ 48,057,000     $ 48,025,000

v3.23.3

INVESTMENT IN MARKETABLE SECURITIES	12 Months Ended
	Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]
INVESTMENT IN MARKETABLE SECURITIES	NOTE 6 - INVESTMENT IN MARKETABLE SECURITIES   The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested in corporate bonds and income producing securities, which may include interests in real estate-based companies and REITs, where financial benefit could inure to its shareholders through income and/or capital gain.   At June 30, 2023 and 2022, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:   SCHEDULE OF TRADING SECURITIES           Gross     Gross     Net         Investment   Cost     Unrealized Gain     Unrealized Loss     Unrealized Gain (Loss)     Fair Value   As of June 30, 2023                                         Corporate Equities   $ 15,419,000     $ 3,713,000     $ (787,000 )   $ 2,926,000     $ 18,345,000                                             As of June 30, 2022                                         Corporate Equities   $ 11,150,000     $ 1,474,000     $ (1,575,000 )   $ (101,000 )   $ 11,049,000     Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the years ended June 30, 2023 and 2022, respectively.   SCHEDULE OF NET GAIN LOSS ON MARKETABLE SECURITIES COMPRISING OF REALIZED AND UNREALIZED GAINS (LOSSES) For the year ended June 30,   2023     2022   Realized (loss) gain on marketable securities   $ (1,712,000 )   $ 375,000   Realized loss on marketable securities related to Comstock     -       (2,581,000 ) Unrealized gain (loss) on marketable securities     2,838,000       (5,408,000 ) Net gain (loss) on marketable securities   $ 1,126,000     $ (7,614,000 )

v3.23.3

FAIR VALUE MEASUREMENTS	12 Months Ended
	Jun. 30, 2023
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	NOTE 7 - FAIR VALUE MEASUREMENTS   The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).     The assets measured at fair value on a recurring basis are as follows:   SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIS As of June 30, 2023   Level 1   Assets:         Investment in marketable securities:         REITs and real estate companies   $ 6,985,000   Technology     2,779,000   T-Notes     2,093,000   Financial services     1,865,000   Consumer cyclical     1,689,000   Basic materials     1,047,000   Healthcare     739,000   Communication services     566,000   Industrial     485,000   Utilities     97,000   Marketable securities   $ 18,345,000     As of June 30, 2022   Level 1   Assets:         Investment in marketable securities:         REITs and real estate companies   $ 3,289,000   Communication services     2,787,000   Financial services     1,755,000   Technology     815,000   Basic material     769,000   Consumer cyclical     693,000   Industrial     385,000   Energy     279,000   Other     277,000   Marketable securities   $ 11,049,000     The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date.   Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above are “Other investments in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:   SCHEDULE OF FAIR VALUE MEASUREMENTS ON NON-RECURRING BASIS                 Net loss for the   Assets   Level 3     June 30, 2022     year ended June 30, 2022                             Other non-marketable investments   $ -     $ -     $ (41,000 )     For fiscal years ended June 30, 2023 and 2022, we received distribution from other non-marketable investments of zero and $41,000, respectively.   Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. When determining the fair value of these investments on a non-recurring basis, the Company uses valuation techniques such as the market approach and the unobservable inputs include factors such as conversion ratios and the stock price of the underlying convertible instruments. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

v3.23.3

OTHER ASSETS	12 Months Ended
	Jun. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
OTHER ASSETS	NOTE 8 – OTHER ASSETS   Other assets consist of the following as of June 30:   SCHEDULE OF OTHER ASSETS, NET     2023     2022   Accounts receivable, net   $ 631,000     $ 634,000   Prepaid expenses     648,000       775,000   Miscellaneous assets     681,000       652,000   Prepaid taxes     697,000       683,000   Total other assets   $ 2,657,000     $ 2,744,000

v3.23.3

OTHER FINANCING TRANSACTIONS	12 Months Ended
	Jun. 30, 2023
Other Financing Transactions
OTHER FINANCING TRANSACTIONS	NOTE 9 –OTHER FINANCING TRANSACTIONS   The following summarizes the balances of other notes payable as of June 30, 2023 and 2022, respectively.    SUMMARY OF OTHER NOTES PAYABLE As of June 30,   2023     2022                 Note payable – Hilton   $ 2,058,000     $ 2,375,000   Note payable – Aimbridge     896,000       1,146,000   Total other notes payable   $ 2,954,000     $ 3,521,000     Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $317,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.   On February 1, 2017, Operating entered an HMA with Ambridge to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in aggregate subject to certain conditions. The HMA also provides for Ambridge to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second anniversary of the takeover date. During the first quarter of fiscal year 2021, the Hotel obtained approval from Ambridge to use the key money for hotel operations and the funds were exhausted by December 31, 2020. The unamortized portion of the key money in the amount of $896,000 and $1,146,000 are included in other notes payable in the consolidated balance sheets at June 30, 2023 and 2022, respectively.     On April 9, 2020, Justice entered into a loan agreement (“SBA Loan – Justice”) with CIBC Bank USA under the CARES Act administered by the U.S. Small Business Administration (the “SBA”). On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ended June 30, 2022.   Future minimum principal payments for all other financing transactions are as follows:   SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS For the year ending June 30,       2024   $ 567,000   2025     567,000   2026     567,000   2027     463,000   2028     317,000   Thereafter     475,000   Long term debt   $ 2,956,000     To fund the redemption of limited partnership interests and to repay the prior mortgage of $42,940,000, Justice obtained a $97,000,000 mortgage loan and a $20,000,000 mezzanine loan in December 2013. The mortgage loan is secured by the Partnership’s principal asset, the Hotel. The mortgage loan bears an interest rate of 5.275% per annum with interest only payments due through January 2017. Beginning in February 2017, the loan began to amortize over a thirty-year period through its maturity date of January 2024. Outstanding principal balance on the loan was $89,114,000 and $90,745,000 as of June 30, 2023 and 2022, respectively. As additional security for the mortgage loan, there is a limited guaranty executed by Portsmouth in favor of the mortgage lender. The mezzanine loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of the mezzanine lender. On July 31, 2019, Mezzanine refinanced the mezzanine loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan which had a 9.75% per annum interest rate was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.   Effective May 11, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain certain net worth and liquidity. As of June 30, 2023, InterGroup is in compliance with both requirements. Justice Operating Company, LLC has not been meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox by the Lender for all cash collected by the Hotel. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.     On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.   As disclosed in its Definitive Information Statement on Schedule 14C, filed with the SEC on January 25, 2021, Santa Fe received shareholder approval to distribute its assets, as described and subsequently dissolve, all as set forth in the Information Statement. As InterGroup formerly owned 83.7% of the outstanding common stock of Santa Fe, the Company received cash of $5,013,000 and 422,998 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe. As a former 3.7% shareholder of Santa Fe, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, received cash of $221,000 and 18,641 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe. On April 12, 2021, Santa Fe received a filed stamped copy of its Articles of Dissolution from the State of Nevada, and Santa Fe is effectively fully dissolved and no longer in legal existence. In June 2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final tax returns.   Four of the Portsmouth directors serve as directors of InterGroup. The Company’s Vice President Real Estate was elected President of Portsmouth in May 2021. The Company’s director and Chairman of the Audit Committee, William J. Nance, serves as Comstock’s director and Chairman of the Audit and Finance, Compensation and Nominating and Governance Committees of Comstock.   As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

v3.23.3

MORTGAGE NOTES PAYABLE	12 Months Ended
	Jun. 30, 2023
Debt Disclosure [Abstract]
MORTGAGE NOTES PAYABLE	NOTE 10 – MORTGAGE NOTES PAYABLE   On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership was the sole member of Mezzanine until its dissolution in December 2021 when Portsmouth replaced the Partnership as the sole member of Mezzanine. Mezzanine is the sole member of Operating.   The Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.   The Mortgage Loan is secured by Operating’s principal asset, the Hilton San Francisco-Financial District (the “Property”). The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is 10 years with interest only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.   The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. Interest only payments were due monthly. On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. As additional security for the new mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).   The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership was required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for the $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements. Justice Operating Company, LLC is not meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company. The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations for at least the next twelve months and beyond. Additionally, Operating’s DSCR for the fourth quarter of fiscal year 2023 was 0.23 for the Mortgage Loan and 0.19 for the Mezzanine Loan.     Each of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements.   In July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing. Interest rate on the three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained an $830,000 mortgage note payable on one of its unencumbered California properties and received net proceeds of $826,000. The interest rate on the mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.   On October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031.   On June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $522,000 as a result of the refinance. The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052.   On May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and $5,500 principal paydowns commencing in June 2024.     Each mortgage notes payable is secured by real estate or the Hotel. As of June 30, 2023 and 2022, the mortgage notes payables are summarized as follows:  SCHEDULE OF MORTGAGE NOTE PAYABLE     As of June 30, 2023                     Number     Note   Note   Mortgage     Interest   Property   of Units     Origination Date   Maturity Date   Balance     Rate                               SF Hotel     544 rooms     December 2013   January 2024   $ 87,240,000       5.28 % SF Hotel     544 rooms     July 2019   January 2024     20,000,000       7.25 %             Mortgage notes payable – Hotel     107,240,000                       Debt issuance costs         (123,000 )                     Total mortgage notes payable – Hotel   $ 107,117,000                                             Florence     157     March 2015   April 2025   $ 2,917,000       3.87 % Las Colinas     358     October 2021   November 2031     28,800,000       2.95 % Morris County     151     April 2020   May 2030     17,208,000       3.17 % St. Louis     264     May 2023   May 2025     5,360,000       8.60 % Los Angeles     4     July 2021   July 2051     1,112,000       3.50 % Los Angeles     2     July 2021   July 2051     674,000       3.50 % Los Angeles     1     June 2021   August 2051     886,000       3.50 % Los Angeles     31     October 2020   November 2030     8,291,000       2.52 % Los Angeles     30     June 2022   July 2052     5,762,000       4.40 % Los Angeles     14     January 2021   February 2031     2,645,000       3.05 % Los Angeles     12     June 2016   June 2026     1,974,000       3.59 % Los Angeles     9     June 2020   July 2030     2,443,000       3.09 % Los Angeles     9     November 2020   December 2030     1,891,000       3.05 % Los Angeles     8     July 2021   July 2051     1,535,000       3.50 % Los Angeles     7     August 2012   September 2042     751,000       3.75 % Los Angeles     4     June 2021   August 2051     1,112,000       3.50 % Los Angeles     1     June 2021   August 2051     534,000       3.50 % Los Angeles     4     July 2021   August 2051     800,000       3.50 % Los Angeles     1     September 2018   October 2048     934,000       3.50 %             Mortgage notes payable – real estate     85,629,000                       Debt issuance costs         (872,000 )                     Total mortgage notes payable – real estate   $ 84,757,000                   As of June 30, 2022                     Number     Note   Note   Mortgage     Interest   Property   of Units     Origination Date   Maturity Date   Balance     Rate                               SF Hotel     544 rooms     December 2013   January 2024   $ 89,114,000       5.28 % SF Hotel     544 rooms     July 2019   January 2024     20,000,000       7.25 %             Mortgage notes payable – Hotel     109,114,000                       Debt issuance costs         (367,000 )                     Total mortgage notes payable – Hotel   $ 108,747,000                                             Florence     157     March 2015   April 2025   $ 2,998,000       3.87 % Las Colinas     358     October 2021   November 2031     28,801,000       2.95 % Morris County     151     April 2020   May 2030     17,598,000       3.17 % St. Louis     264     May 2013   May 2023     4,958,000       4.05 % Los Angeles     4     July 2021   July 2051     1,135,000       3.50 % Los Angeles     2     July 2021   July 2051     688,000       3.50 % Los Angeles     1     June 2021   August 2051     904,000       3.50 % Los Angeles     31     October 2020   November 2030     8,400,000       2.52 % Los Angeles     30     June 2022   July 2052     5,850,000       4.40 % Los Angeles     14     January 2021   February 2031     2,704,000       3.05 % Los Angeles     12     June 2016   June 2026     2,026,000       3.59 % Los Angeles     9     June 2020   July 2030     2,498,000       3.09 % Los Angeles     9     November 2020   December 2030     1,934,000       3.05 % Los Angeles     8     July 2021   July 2051     1,567,000       3.50 % Los Angeles     7     August 2012   September 2042     774,000       3.75 % Los Angeles     4     June 2021   August 2051     1,135,000       3.50 % Los Angeles     1     June 2021   August 2051     545,000       3.50 % Los Angeles     4     July 2021   August 2051     816,000       3.50 % Los Angeles     1     September 2018   October 2048     956,000       4.75 %             Mortgage notes payable – real estate     86,287,000                       Debt issuance costs         (850,000 )                     Total mortgage notes payable – real estate   $ 85,437,000             Future minimum payments for all mortgage notes payable are as follows:  SCHEDULE OF FUTURE MINIMUM PAYMENT FOR MORTGAGE NOTES PAYABLE For the year ending June 30,       2024   $ 108,420,000   2025     9,318,000   2026     1,168,000   2027     3,299,000   2028     1,771,000   Thereafter     68,894,000   Total Mortgage Notes payable   $ 192,870,000

v3.23.3

MANAGEMENT AGREEMENTS	12 Months Ended
	Jun. 30, 2023
Management Agreements
MANAGEMENT AGREEMENTS	NOTE 11 – MANAGEMENT AGREEMENTS   Operating entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel, along with its five-level parking garage, with an effective date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.   For the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000, respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated statements of operations. As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house.

v3.23.3

CONCENTRATION OF CREDIT RISK	12 Months Ended
	Jun. 30, 2023
Risks and Uncertainties [Abstract]
CONCENTRATION OF CREDIT RISK	NOTE 12 – CONCENTRATION OF CREDIT RISK   As of June 30, 2023 and 2022, receivables related to Hotel customers were $419,000 and $377,000, respectively. Usually, credit extended to the Company’s tenants at its rental properties is of low risk as leases do not extend beyond one year and if tenants become delinquent, local eviction laws are used to evict tenants. However, as of June 30, 2023 and 2022 accounts receivable from the Company’s rental properties was $698,000 and $366,000, respectively and allowance for doubtful accounts was $486,000 and $110,000, respectively. This unusual large gross receivable amounts from our rental properties was due to temporary eviction moratorium imposed by the federal and state governmental authorities since the beginning of the COVID19 pandemic. Under the eviction moratorium, the Company was not allowed to evict tenants for non-payment of rent. In the State of California, the “Los Angeles County’s COVID-19 Tenant Protection Resolution” expired on March 31, 2023, thereby lifting the eviction moratorium but allowing the tenants additional time to for their past due rent. For tenants that owe rent from March 1, 2020 through September 30, 2021, tenants must pay by August 1, 2023; for tenants that owe rent from October 1, 2021 through January 31, 2023, tenants must pay by February 1, 2024. The Company will continue to pursue its collections to the full extent allowed by the various governmental housing authorities around the country.   The Company maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits. Any loss incurred or a lack of access to such funds could have significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

v3.23.3

INCOME TAXES	12 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 13 – INCOME TAXES   The provision for the Company’s income tax (expense) benefit is comprised of the following: SCHEDULE OF INCOME TAX (EXPENSE) BENEFIT  For the years ended June 30,   2023     2022                 Federal                 Current tax   $ (116,000 )   $ (113,000 ) Deferred tax     6,419,000       884,000   Federal income tax (expense) benefit, total     6,303,000       771,000                     State                 Current tax     9,000       (330,000 ) Deferred tax     2,121,000       589,000   State income tax (expense) benefit, total     2,130,000       259,000                     Income Tax (expense) benefit   $ (8,433,000 )   $ 1,030,000       The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before taxes as a result of the following differences: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION  For the years ended June 30,   2023     2022                 Statutory federal tax rate   $ (315,000 )   $ 2,446,000   State income taxes, net of federal tax benefit     (375,000 )     204,000   Dividend received deduction     (18,000 )     103,000   PPP Loan forgiveness     -       1,391,000   Provision to return adjustment     (334,000 )     634,000   Deferral true up – Justice difference in basis of fixed assets     -       11,621,000   Net operating loss true up     (275,000 )     32,000   Valuation allowance     10,232,000       (15,201,000 ) Payable true up     (249,000 )     (311,000 ) State rate change impact     (352,000 )     -   Other     119,000       111,000   Income tax expense (benefit)   $ (8,433,000 )   $ 1,030,000     The components of the deferred tax asset and liabilities are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES      June 30, 2023     June 30, 2022   Deferred tax assets:                 Net operating loss carryforwards   $ 13,187,000     $ 11,075,000   Deferred gains on real estate sale and depreciation     15,054,000       10,418,000   Capital loss carryforwards     1,919,000       1,322,000   Accruals and reserves     843,000       831,000   Interest expense     3,185,000       2,231,000   Tax credits     566,000       566,000   State taxes     139,000       -   Other     204,000       247,000   Deferred Tax Asset before Valuation Allowance     35,097,000       26,690,000   Valuation Allowance     (33,784,000 )     (22,775,000 ) Deferred Tax Asset after Valuation Allowance     1,313,000       3,915,000   Deferred tax liabilities:                 Deferred gains on real estate sale and depreciation     (4,796,000 )     -   Unrealized gain on marketable securities     (746,000 )     (9,000 ) Gain on insurance claim     (696,000 )     -   Other     -       -   State taxes     -       (294,000 ) Deferred Tax Liability     (6,238,000 )     (303,000 ) Net deferred tax (liability) asset   $ (4,925,000 )   $ 3,612,000     Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2023, it has been determined that it is more likely than not that the deferred tax asset will not be recognized. Thus, there is a valuation allowance of $33,784,000 as of June 30, 2023. This was an increase of $11,009,000 from June 30, 2022.   As of June 30, 2023, the Company had net operating loss carryforwards (“NOL”) available for carryforward of approximately $41,835,000 and $51,289,000 for federal and state purposes, respectively. Of the $41,835,000 federal NOL carryforwards, $14,707,000 expire in varying amounts through 2037 and $27,128,000 of post-2017 NOLs can be carried forward indefinitely. Note that the post-2017 NOLs may only offset 80% of future taxable income. The Company had capital loss carryforwards of $6,936,000 for federal and state purposes. The capital losses begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of $524,000 which expire in various years.   Below is the breakdown of the net operating losses for Intergroup and Portsmouth. SCHEDULE OF ESTIMATED NET OPERATING LOSSES (NOLS)      Federal     State   InterGroup   $ -     $ 2,789,000   Portsmouth     41,835,000       48,500,000       $ 41,835,000     $ 51,289,000       As of June 30, 2022, the Company had net operating loss (“NOL”) carryforwards of approximately $35,483,000 and $41,238,000 for federal and state purposes, respectively. Of the $35,483,000 federal NOL’s carryforwards, $14,697,000 expire in varying amount through 2037 and $20,786,000 of post 2017 NOL’s can be carried forward indefinitely. Note that the post 2017 NOL’s may only offset 80% of future taxable income. The Company had federal and state capital loss carryforwards of $3,985,000 and $5,547,000, respectively. The capital losses begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of $524,000 which expire in various years.   Utilization of certain tax attributes may be subject a substantial annual limitation if it should be determined that there has been a change in the ownership of more than 50 percent of the value of the Company’s stock, pursuant to Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.   The corporation files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state, and local jurisdictions, where applicable.   As of June 30, 2023, tax years beginning in fiscal 2019 and 2018 remain open to examination by the federal and state tax jurisdictions, respectively, and are subject to the statute of limitations.   Uncertain Tax Positions   The Company regularly evaluates the likelihood of realizing the benefit from income tax positions that it has taken in various federal, state, and foreign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more likely than not that the position will be sustained, a benefit will be recognized at the largest amount that it believes is cumulatively greater than 50% likely to be realized. The following table summarizes changes in the amount of the Company’s unrecognized tax benefits for uncertain tax positions:    SCHEDULE OF UNCERTAIN TAX POSITIONS Unrecognized Tax Benefits at June 30, 2022   $ -   Unrecognized Tax Benefits at June 30, 2022   $ -   Increase in tax positions taken     1,665,000   Decrease in tax positions taken     -   Unrecognized Tax Benefits at June 30, 2023   $ 1,665,000     $0 and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were recorded.

v3.23.3

SEGMENT INFORMATION	12 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
SEGMENT INFORMATION	NOTE 14 – SEGMENT INFORMATION   The Company operates in three reportable segments, the operation of the Hotel (“Hotel Operations”), the operation of its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.   Information below represents reported segments for the years ended June 30, 2023 and 2022. Segment income from Hotel operations consists of the operation of the Hotel and operation of the garage. Segment income from real estate operations consists of the operation of the rental properties. Loss from investments consists of net investment gain (loss), dividend and interest income and investment related expenses.   SCHEDULE OF SEGMENT REPORTING INFORMATION  As of and for the year ended   Hotel     Real Estate     Investment               June 30, 2023   Operations     Operations     Transactions     Other     Total   Revenues   $ 42,027,000     $ 15,580,000     $ -     $ -     $ 57,607,000   Segment operating expenses     (34,457,000 )     (10,017,000 )     -       (3,333,000 )     (47,807,000 ) Segment income (loss) from operations     7,570,000       5,563,000       -       (3,333,000 )     9,800,000   Interest expense - mortgages     (6,467,000 )     (2,118,000 )     -       -       (8,585,000 ) Gain on insurance recovery     -       2,692,000       -       -       2,692,000   Depreciation and amortization expense     (2,815,000 )     (2,649,000 )     -       -       (5,464,000 ) Gain from investments     -       -       58,000       -       58,000   Income tax expense     -       -       -       (8,433,000 )     (8,433,000 ) Net income (loss)   $ (1,712,000 )   $ 3,488,000     $ 58,000     $ (11,766,000 )   $ (9,932,000 ) Total assets   $ 46,393,000     $ 48,057,000     $ 18,345,000     $ 9,563,000     $ 122,358,000     As of and for the year ended   Hotel     Real Estate     Investment               June 30, 2022   Operations     Operations     Transactions     Other     Total   Revenues   $ 31,534,000     $ 15,685,000     $ -     $ -     $ 47,219,000   Segment operating expenses     (27,451,000 )     (8,694,000 )     -       (2,651,000 )     (38,796,000 ) Segment income (loss) from operations     4,083,000       6,991,000       -       (2,651,000 )     8,423,000   Interest expense - mortgage     (6,549,000 )     (2,332,000 )     -       -       (8,881,000 ) Gain on debt forgiveness     2,000,000       (335,000 )     -       -       1,665,000   Depreciation and amortization expense     (2,310,000 )     (2,444,000 )     -       -       (4,754,000 ) Loss from investments     -       -       (8,101,000 )     -       (8,101,000 ) Income tax benefit     -       -       -       1,030,000       1,030,000   Net income (loss)   $ (2,776,000 )   $ 1,880,000     $ (8,101,000 )   $ (1,621,000 )   $ (10,618,000 ) Total assets   $ 46,847,000     $ 48,025,000     $ 11,049,000     $ 21,125,000     $ 126,046,000

v3.23.3

STOCK-BASED COMPENSATION PLANS	12 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
STOCK-BASED COMPENSATION PLANS	NOTE 15 – STOCK-BASED COMPENSATION PLANS   The Company follows the Statement of Financial Accounting Standards 123 (Revised), “Share-Based Payments” (“SFAS No. 123R”), which was primarily codified into ASC Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units.   The Company currently has one equity compensation plan, which is the Intergroup 2010 Omnibus Employee Incentive Plan. The plan has been approved by the Company’s stockholders and are described below. Any outstanding options issued under the Key Employee Plan or the Non-Employee Director Plan remain effective in accordance with their terms.   As of June 30, 2023 and 2022, there were no RSUs outstanding.     Intergroup Corporation 2010 Omnibus Employee Incentive Plan   On February 24, 2010, the shareholders of the Company approved The Intergroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”), which was formally adopted by the Board of Directors following the annual meeting of shareholders. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest based on 5 years of continuous service. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the 2010 Incentive Plan. The 2010 Incentive plan as modified in December 2013, authorizes a total of up to 400,000 shares of common stock to be issued as equity compensation to officers and employees of the Company in an amount and in a manner to be determined by the Compensation Committee in accordance with the terms of the 2010 Incentive Plan. The 2010 Incentive Plan authorizes the awards of several types of equity compensation including stock options, stock appreciation rights, performance awards and other stock-based compensation. The 2010 Incentive Plan had an original expiration date of February 23, 2020, if not terminated sooner by the Board of Directors upon recommendation of the Compensation Committee. Any awards issued under the 2010 Incentive Plan will expire under the terms of the grant agreement.   The shares of common stock to be issued under the 2010 Incentive Plan have been registered under the Securities Act, pursuant to a registration statement filed on Form S-8 by the Company on June 16, 2010. Once received, shares of common stock issued under the Plan will be freely transferable subject to any requirements of Section 16 (b) of the Exchange Act.   On March 16, 2010, the Compensation Committee authorized the grant of 100,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive Plan. The exercise price of the options is $10.30, which is 100% of the fair market value of the Company’s Common Stock as determined by reference to the closing price of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the date of grant. The options had an original expiration date ten years from the date of grant, unless terminated earlier in accordance with the terms of the 2010 Incentive Plan. The options shall be subject to both time and market-based vesting requirements, each of which must be satisfied before options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2022, all the market vesting requirements have been met.   On December 28, 2019, the Compensation Committee of the Board of Directors recommended to the Board amendments to the 2010 Incentive Plan which would amend Section 1.3 to extend the term from ten years to sixteen years, and Section 6.4 to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to twenty years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.     In February 2012, the Compensation Committee awarded 90,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 90,000 shares of common stock. The per share exercise price of the options is $19.77 which is the fair value of the Company’s Common Stock as reported on NASDAQ on February 28, 2012. The options expire ten years from the date of grant. The options are subject to both time and market-based vesting requirements, each of which must be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter. On January 21, 2022, Mr. Winfield exercised 90,000 of his vested stock options by surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 54,906 shares. No additional compensation expense was recorded related to the issuance. This intrinsic value of the cashless exercise of 54,906 stock options was approximately $2,784,000 at January 21, 2022 when the Company’s stock closing stock price was $50.70.   On December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.   In March 2017, the Compensation Committee awarded 18,000 stock options to the Company’s Chief Operating Officer, David C. Gonzalez, to purchase up to 18,000 shares of common stock. The per share exercise price of the options is $27.30 which is the fair value of the Company’s Common Stock as reported on NASDAQ Capital Market on March 2, 2017. The options expire ten years from the date of grant. Pursuant to the time vesting requirements, the options vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant. All 18,000 shares are vested as of June 30, 2022.   During the years ended June 30, 2023 and 2022, the Company recorded stock option compensation expense of zero and $4,000, respectively, related to stock options previously issued. As of June 30, 2023, all compensation related to stock options has been fully amortized.   Option-pricing models require the input of various subjective assumptions, including the option’s expected life, estimated forfeiture rates and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.     The following table summarizes the stock options activity from July 1, 2021 through June 30, 2023:   SCHEDULE OF STOCK OPTION ACTIVITY         Number of     Weighted Average     Weighted Average     Aggregate           Shares     Exercise Price     Remaining Life     Intrinsic Value                                 Outstanding at   July 1, 2021     341,195     $ 16.95       2.83 years     $ 8,890,000   Granted         -       -       -       -   Exercised         (90,000 )     19.77       -       -   Forfeited         -       -       -       -   Exchanged         -       -       -       -   Outstanding at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Exercisable at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Vested at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Outstanding at   July 1, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Granted         -       -       -       -   Exercised         -       -       -       -   Forfeited         -       -       -       -   Exchanged         -       -       -       -   Outstanding at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000   Exercisable at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000   Vested and expected                                     to vest at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000

v3.23.3

RELATED PARTY TRANSACTIONS	12 Months Ended
	Jun. 30, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 16 – RELATED PARTY TRANSACTIONS   As discussed in Note 9 – Related Party and Other Financing Transactions, upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, respectively, net of loan amortization costs of zero, respectively, and are eliminated in the consolidated balance sheets of InterGroup. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.     As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.   As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

v3.23.3

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 17 – COMMITMENTS AND CONTINGENCIES   Cash Management Agreement   As part of the Hotel refinancing effective December 18, 2013, Operating entered into a Cash Management Agreement with Bank of America, N.A. (“Lender”) and Wells Fargo Bank, N.A. (“Cash Management Bank”) whereby all cash received by Operating is to be deposited into a business checking account controlled by the Cash Management Bank up to the loan maturity date. Additionally, other terms of the Cash Management Agreement provide that effective February 2019 or upon a Property Improvement Plan (“PIP”) requirement by Hilton (“Franchisor”) deemed the “Cash Sweep Period” during which all excess cash generated by Operating beyond the monthly budgeted expenses and debt services including principal and interest, insurance reserves, real estate taxes reserve, Furniture, fixtures, and equipment (“FF&E”) reserves, for the senior and mezzanine loans, will be held by the Cash Management Bank for future hotel improvements as required by the date or a PIP. Currently, any and all funds are being controlled by the Cash Management Bank according to the Cash Management Agreement.     Franchise Agreements   The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004. The term of the License agreement was for an initial period of 15 years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement which amongst other things extended the License Agreement through 2030, and also provided the Partnership certain key money cash incentives to be earned through 2030.   Since the opening of the Hotel as a full brand Hilton in January 2006, Justice has incurred monthly royalties, program fees and information technology recapture charges equal to a percentage of the Hotel’s gross room revenue. Fees for such services during fiscal year 2023 and 2022 totaled approximately $3,029,000 and $2,107,000, respectively.   Employees   The Company’s corporate office and multifamily operations had 32 employees and the hotel operations had 187 employees as of June 30, 2023. On February 3, 2017, Aimbridge assumed all labor union agreements and provides all funding for all payroll and related costs. As of June 30, 2023, approximately 90% of those employees were represented by one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and a new Memorandum of Understanding (“MOU”) was signed June 26, 2023. CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed on April 26, 2023. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.   Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Company and Aimbridge. The Company expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA and incorporates these principles into its operating and budgetary practices.   Legal Matters   Portsmouth Square, Inc., through its operating company Justice Investors Operating Company, LLC, a Delaware limited liability company (the “Company”), is the owner of the real property located at 750 Kearny Street in San Francisco, currently improved with a 27 – story building which houses a Hilton Hotel (the “Property”). The Property was purchased and improved pursuant to the terms of a series of agreements with the City and County of San Francisco (the “City”) in the early 1970’s. The terms of the agreements and subsequent approvals and permits included a condition by which the Company was required to construct an ornamental overhead pedestrian bridge across Kearny Street, connecting the Property to a nearby City park and underground parking garage known as Portsmouth Square (the “Bridge”). Included in the approval process was the City’s issuance of a Major Encroachment Permit (“Permit”) allowing the Bridge to span over Kearney Street. As of May 24, 2022, the City has purported to revoke the Permit and on June 13, 2022, has directed the Company to submit a general bridge removal and restoration plan (the “Plan”) at the Company’s expense. The Company disputes the legality of the purported revocation of the Permit. The Company further disputes the existence of any legal or contractual obligation to remove the Bridge at its expense. In particular, representatives of the Company participated in meetings with the City on and at various times after August 1, 2019, to discuss a collaborative process for the possible removal of the Bridge. Until the purported revocation of the Permit in 2022, the City representatives repeatedly and consistently promised and agreed that the City will pay for the associated costs of any Bridge removal. Nevertheless, without waiving any rights, in an effort to understand all of the available options, and to provide a response to the City’s directives, the Company has engaged a Project Manager, a structural engineering firm and an architect to advise on the development of a Plan for the Bridge removal, as well as the reconstruction of the front of the Hilton Hotel. The Company has been working cooperatively with the City on the process for removal of the Bridge and its related physical encroachments, including obtaining regulatory approvals and permits. A final Plan is currently not expected to be completed until late calendar year of 2023, and permits are unlikely to be obtained until mid-2024 at the earliest. The Company is currently in discussion with the City regarding both the process and financial responsibility for the implementation of the Plan and reconstruction of the impacted portions of the Hotel. Those discussions are expected to continue through the Autumn of 2023.   The Company may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.

v3.23.3

SUBSEQUENT EVENTS	12 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 18 – SUBSEQUENT EVENTS   The Company evaluated subsequent events through the date that the accompanying financial statements were issued, and has determined that no material subsequent events exist through the date of this filing.

v3.23.3

BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies)	12 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Description of the Business	Description of the Business   The InterGroup Corporation, a Delaware corporation, (“InterGroup” or the “Company”) was formed to buy, develop, operate and dispose of real property and to engage in various investment activities to benefit the Company and its shareholders.   Effective February 19, 2021, the Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF), was liquidated and all of its assets including its 68.8% interest in Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI) were distributed to its shareholders in exchange for their Santa Fe common stock. In June 2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final tax returns.As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth and the Company’s President, Chairman of the Board and Chief Executive Officer, John V. Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.   Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest. Effective December 23, 2021, the partnership was dissolved. The financial statements of Justice were consolidated with those of Portsmouth.   Prior to its dissolution effective December 23, 2021, Justice owned and operated a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”). Mezzanine was a wholly owned subsidiary of the Partnership; Operating is a wholly owned subsidiary of Mezzanine. Effective December 23, 2021, Portsmouth replaced Justice as the single member of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.   Aimbridge Hospitality (“Aimbridge”) manages the Hotel, along with its five-level parking garage, under certain Hotel management agreement (“HMA”) with Operating. The term of the management agreement is for an initial period of ten years commencing on the February 3, 2017 date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.     In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate and investments in marketable securities. Properties include apartment complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All of the Company’s residential rental properties are managed in-house.
Principles of Consolidation	Principles of Consolidation   The consolidated financial statements include the accounts of the Company and Portsmouth. All significant inter-company transactions and balances have been eliminated.
Investment in Hotel, Net	Investment in Hotel, Net   Property and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years.   Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses).   The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2023 and 2022.
Investment in Real Estate, Net	Investment in Real Estate, Net   Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized.   The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2023 and 2022.   The fair value of the tangible assets of an acquired property, which includes land, building and improvements, is determined by valuing the property as if they were vacant, and incorporates costs during the lease-up periods considering current market conditions and costs to execute similar leases such lost rental revenue and tenant improvements. The value of tangible assets is depreciated using straight-line method based upon the assets estimated useful lives.
Investment in Marketable Securities	Investment in Marketable Securities   Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations.
Other Investments, Net	Other Investments, Net   Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non-marketable debt instruments. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2023 and 2022, the Company recorded impairment losses related to other investments of zero and $41,000, respectively.
Cash and Cash Equivalents	Cash and Cash Equivalents   Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. As of June 30, 2023 and 2022, the Company does not have any cash equivalents.
Restricted Cash	Restricted Cash   Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel.
Other Assets	Other Assets   Other assets include prepaid insurance, accounts receivable, prepaid expenses, and other miscellaneous assets.   Accounts receivable from the Hotel and rental property customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Company had accounts receivable, net of $634,000 at July 1, 2022. As of June 30, 2023, and 2022, the allowance for doubtful accounts was $486,000 and $110,000, respectively. The Company extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. The temporary eviction moratorium imposed by the federal and state governmental authorities had delayed evictions during fiscal years 2022 and 2023.
Due to Securities Broker	Due to Securities Broker   The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability.
Obligation for Securities Sold	Obligation for Securities Sold   Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations.
Accounts Payable and Other Liabilities	Accounts Payable and Other Liabilities   Accounts payable and other liabilities include trade payables, advanced customer deposits, accrued wages, accrued real estate taxes, and other liabilities.
Treasury Stock	Treasury Stock   The Company records the acquisition of treasury stock under the cost method. During the years ended June 30, 2023 and 2022, the Company purchased 30,253 and 41,645 shares of treasury stock, respectively.
Fair Value of Financial Instruments	Fair Value of Financial Instruments   Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:   Level 1–inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.   Level 2–inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.   Level 3–inputs to the valuation methodology are unobservable and significant to the fair value.
Revenue Recognition	Revenue Recognition   Performance obligations   We identified the following performance obligations for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:     ● Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.         ● Non-cancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.         ● Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.         ● Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.   Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.     We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered. See Note 3 – Revenue.   Revenue recognition from apartment rental commences when an apartment unit is placed in service and occupied by a rent-paying tenant. Apartment units are leased on a short-term basis, with no lease extending beyond one year.
Advertising Costs	Advertising Costs   Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $130,000 and $61,000 for the years ended June 30, 2023 and 2022, respectively.
Income Taxes	Income Taxes   Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.   $0 and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were recorded.   Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions.
Earnings Per Share	Earnings Per Share   Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted net income per share is similar to the computation of basic net income per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The basic and diluted earnings per share are the same for the fiscal year ended June 30, 2023 and 2022 because the Company had a net loss.
Use of Estimates	Use of Estimates   The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Actual results may differ from those estimates. Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets and when appropriate, records tax valuation allowances based on that evidence and estimates. Such estimates primarily relate to the recording of allowance for doubtful accounts which are based on management’s assessment of the collectability of accounts receivable as of the end of the fiscal year As of June 30, 2023 based on taxable income that may be available under tax law the deferred taxed asset is not more likely than not to be realized.
Reclassifications	Reclassifications   Certain line items on the balance sheet as of June 30, 2023, for the years ended June 30, 2023 and 2022 have been reclassified to conform to the current period presentation. The related party relationship has been disclosed separately in the financial statements than the other debt obligations the Company has.
Debt Issuance Costs	Debt Issuance Costs   Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense in the consolidated statement of operations.
Recently Issued and Adopted Accounting Pronouncements	Recently Issued and Adopted Accounting Pronouncements   As of June 30, 2023, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on the Company’s consolidated financial statements.
Going Concern	Going Concern   The Hotel financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition, the Hotel has recurring losses and has an accumulated deficit of $105,727,000.   Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.   The Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average daily rates to increase as it completes renovation up to the point of generating a positive cash flows.   The financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Hotel were unable to continue as a going concern.

v3.23.3

LIQUIDITY (Tables)	12 Months Ended
	Jun. 30, 2023
Liquidity
SCHEDULE OF MATERIAL FINANCIAL OBLIGATION	The following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest payments.   SCHEDULE OF MATERIAL FINANCIAL OBLIGATION           Year     Year     Year     Year     Year             Total     2024     2025     2026     2027     2028     Thereafter   Mortgage and subordinated notes payable   $ 192,870,000     $ 108,420,000     $ 9,318,000     $ 1,168,000     $ 3,299,000     $ 1,771,000     $ 68,894,000   Related party notes payable     2,956,000       567,000       567,000       567,000       463,000       317,000       475,000   Interest     25,577,000       3,849,000       2,898,000       2,390,000       2,284,000       2,286,000       11,870,000   Total   $ 221,403,000     $ 112,836,000     $ 12,783,000     $ 4,125,000     $ 6,046,000     $ 4,374,000     $ 81,239,000

v3.23.3

REVENUE (Tables)	12 Months Ended
	Jun. 30, 2023
Revenue from Contract with Customer [Abstract]
SCHEDULE OF DISAGGREGATION OF REVENUE	The following table presents our Hotel revenue disaggregated by revenue streams.   SCHEDULE OF DISAGGREGATION OF REVENUE For the year ended June 30,   2023     2022   Hotel revenues:                 Hotel rooms   $ 35,684,000     $ 26,599,000   Food and beverage     2,625,000       1,471,000   Garage     2,790,000       3,112,000   Other operating departments     928,000       352,000   Total Hotel revenue   $ 42,027,000     $ 31,534,000

v3.23.3

INVESTMENT IN HOTEL, NET (Tables)	12 Months Ended
	Jun. 30, 2023
Investment In Hotel Net
SCHEDULE OF INVESTMENT IN HOTEL, NET	Investment in Hotel consisted of the following as of:   SCHEDULE OF INVESTMENT IN HOTEL, NET           Accumulated     Net Book   June 30, 2023   Cost     Depreciation     Value                       Land   $ 2,738,000     $ -     $ 2,738,000   Finance lease ROU assets     1,805,000       (1,239,000 )     566,000   Furniture and equipment     38,727,000       (29,682,000 )     9,045,000   Building and improvements     64,665,000       (36,696,000 )     27,969,000   Investment in Hotel, net   $ 107,935,000     $ (67,617,000 )   $ 40,318,000               Accumulated     Net Book   June 30, 2022   Cost     Depreciation     Value                       Land   $ 2,738,000     $ -     $ 2,738,000   Finance lease ROU assets     1,805,000       (922,000 )     883,000   Furniture and equipment     32,860,000       (28,567,000 )     4,293,000   Building and improvements     64,665,000       (35,312,000 )     29,353,000   Investment in Hotel, net   $ 102,068,000     $ (64,801,000 )   $ 37,267,000

v3.23.3

INVESTMENT IN REAL ESTATE, NET (Tables)	12 Months Ended
	Jun. 30, 2023
Real Estate [Abstract]
SCHEDULE OF INVESTMENT IN REAL ESTATE	Investment in real estate included the following:    SCHEDULE OF INVESTMENT IN REAL ESTATE As of June 30,   2023     2022   Land   $ 22,998,000     $ 22,998,000   Buildings, improvements and equipment     73,151,000       70,933,000   Accumulated depreciation     (50,022,000 )     (47,374,000 ) Investment in real estate, gross     46,127,000       46,557,000   Land held for development     1,930,000       1,468,000   Investment in real estate, net   $ 48,057,000     $ 48,025,000

v3.23.3

INVESTMENT IN MARKETABLE SECURITIES (Tables)	12 Months Ended
	Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]
SCHEDULE OF TRADING SECURITIES	At June 30, 2023 and 2022, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:   SCHEDULE OF TRADING SECURITIES           Gross     Gross     Net         Investment   Cost     Unrealized Gain     Unrealized Loss     Unrealized Gain (Loss)     Fair Value   As of June 30, 2023                                         Corporate Equities   $ 15,419,000     $ 3,713,000     $ (787,000 )   $ 2,926,000     $ 18,345,000                                             As of June 30, 2022                                         Corporate Equities   $ 11,150,000     $ 1,474,000     $ (1,575,000 )   $ (101,000 )   $ 11,049,000
SCHEDULE OF NET GAIN LOSS ON MARKETABLE SECURITIES COMPRISING OF REALIZED AND UNREALIZED GAINS (LOSSES)	Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the years ended June 30, 2023 and 2022, respectively.   SCHEDULE OF NET GAIN LOSS ON MARKETABLE SECURITIES COMPRISING OF REALIZED AND UNREALIZED GAINS (LOSSES) For the year ended June 30,   2023     2022   Realized (loss) gain on marketable securities   $ (1,712,000 )   $ 375,000   Realized loss on marketable securities related to Comstock     -       (2,581,000 ) Unrealized gain (loss) on marketable securities     2,838,000       (5,408,000 ) Net gain (loss) on marketable securities   $ 1,126,000     $ (7,614,000 )

v3.23.3

FAIR VALUE MEASUREMENTS (Tables)	12 Months Ended
	Jun. 30, 2023
Fair Value Disclosures [Abstract]
SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIS	The assets measured at fair value on a recurring basis are as follows:   SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIS As of June 30, 2023   Level 1   Assets:         Investment in marketable securities:         REITs and real estate companies   $ 6,985,000   Technology     2,779,000   T-Notes     2,093,000   Financial services     1,865,000   Consumer cyclical     1,689,000   Basic materials     1,047,000   Healthcare     739,000   Communication services     566,000   Industrial     485,000   Utilities     97,000   Marketable securities   $ 18,345,000     As of June 30, 2022   Level 1   Assets:         Investment in marketable securities:         REITs and real estate companies   $ 3,289,000   Communication services     2,787,000   Financial services     1,755,000   Technology     815,000   Basic material     769,000   Consumer cyclical     693,000   Industrial     385,000   Energy     279,000   Other     277,000   Marketable securities   $ 11,049,000
SCHEDULE OF FAIR VALUE MEASUREMENTS ON NON-RECURRING BASIS	SCHEDULE OF FAIR VALUE MEASUREMENTS ON NON-RECURRING BASIS                 Net loss for the   Assets   Level 3     June 30, 2022     year ended June 30, 2022                             Other non-marketable investments   $ -     $ -     $ (41,000 )

v3.23.3

OTHER ASSETS (Tables)	12 Months Ended
	Jun. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
SCHEDULE OF OTHER ASSETS, NET	Other assets consist of the following as of June 30:   SCHEDULE OF OTHER ASSETS, NET     2023     2022   Accounts receivable, net   $ 631,000     $ 634,000   Prepaid expenses     648,000       775,000   Miscellaneous assets     681,000       652,000   Prepaid taxes     697,000       683,000   Total other assets   $ 2,657,000     $ 2,744,000

v3.23.3

OTHER FINANCING TRANSACTIONS (Tables)	12 Months Ended
	Jun. 30, 2023
Other Financing Transactions
SUMMARY OF OTHER NOTES PAYABLE	The following summarizes the balances of other notes payable as of June 30, 2023 and 2022, respectively.    SUMMARY OF OTHER NOTES PAYABLE As of June 30,   2023     2022                 Note payable – Hilton   $ 2,058,000     $ 2,375,000   Note payable – Aimbridge     896,000       1,146,000   Total other notes payable   $ 2,954,000     $ 3,521,000
SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS	Future minimum principal payments for all other financing transactions are as follows:   SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS For the year ending June 30,       2024   $ 567,000   2025     567,000   2026     567,000   2027     463,000   2028     317,000   Thereafter     475,000   Long term debt   $ 2,956,000

v3.23.3

MORTGAGE NOTES PAYABLE (Tables)	12 Months Ended
	Jun. 30, 2023
Debt Disclosure [Abstract]
SCHEDULE OF MORTGAGE NOTE PAYABLE	Each mortgage notes payable is secured by real estate or the Hotel. As of June 30, 2023 and 2022, the mortgage notes payables are summarized as follows:  SCHEDULE OF MORTGAGE NOTE PAYABLE     As of June 30, 2023                     Number     Note   Note   Mortgage     Interest   Property   of Units     Origination Date   Maturity Date   Balance     Rate                               SF Hotel     544 rooms     December 2013   January 2024   $ 87,240,000       5.28 % SF Hotel     544 rooms     July 2019   January 2024     20,000,000       7.25 %             Mortgage notes payable – Hotel     107,240,000                       Debt issuance costs         (123,000 )                     Total mortgage notes payable – Hotel   $ 107,117,000                                             Florence     157     March 2015   April 2025   $ 2,917,000       3.87 % Las Colinas     358     October 2021   November 2031     28,800,000       2.95 % Morris County     151     April 2020   May 2030     17,208,000       3.17 % St. Louis     264     May 2023   May 2025     5,360,000       8.60 % Los Angeles     4     July 2021   July 2051     1,112,000       3.50 % Los Angeles     2     July 2021   July 2051     674,000       3.50 % Los Angeles     1     June 2021   August 2051     886,000       3.50 % Los Angeles     31     October 2020   November 2030     8,291,000       2.52 % Los Angeles     30     June 2022   July 2052     5,762,000       4.40 % Los Angeles     14     January 2021   February 2031     2,645,000       3.05 % Los Angeles     12     June 2016   June 2026     1,974,000       3.59 % Los Angeles     9     June 2020   July 2030     2,443,000       3.09 % Los Angeles     9     November 2020   December 2030     1,891,000       3.05 % Los Angeles     8     July 2021   July 2051     1,535,000       3.50 % Los Angeles     7     August 2012   September 2042     751,000       3.75 % Los Angeles     4     June 2021   August 2051     1,112,000       3.50 % Los Angeles     1     June 2021   August 2051     534,000       3.50 % Los Angeles     4     July 2021   August 2051     800,000       3.50 % Los Angeles     1     September 2018   October 2048     934,000       3.50 %             Mortgage notes payable – real estate     85,629,000                       Debt issuance costs         (872,000 )                     Total mortgage notes payable – real estate   $ 84,757,000                   As of June 30, 2022                     Number     Note   Note   Mortgage     Interest   Property   of Units     Origination Date   Maturity Date   Balance     Rate                               SF Hotel     544 rooms     December 2013   January 2024   $ 89,114,000       5.28 % SF Hotel     544 rooms     July 2019   January 2024     20,000,000       7.25 %             Mortgage notes payable – Hotel     109,114,000                       Debt issuance costs         (367,000 )                     Total mortgage notes payable – Hotel   $ 108,747,000                                             Florence     157     March 2015   April 2025   $ 2,998,000       3.87 % Las Colinas     358     October 2021   November 2031     28,801,000       2.95 % Morris County     151     April 2020   May 2030     17,598,000       3.17 % St. Louis     264     May 2013   May 2023     4,958,000       4.05 % Los Angeles     4     July 2021   July 2051     1,135,000       3.50 % Los Angeles     2     July 2021   July 2051     688,000       3.50 % Los Angeles     1     June 2021   August 2051     904,000       3.50 % Los Angeles     31     October 2020   November 2030     8,400,000       2.52 % Los Angeles     30     June 2022   July 2052     5,850,000       4.40 % Los Angeles     14     January 2021   February 2031     2,704,000       3.05 % Los Angeles     12     June 2016   June 2026     2,026,000       3.59 % Los Angeles     9     June 2020   July 2030     2,498,000       3.09 % Los Angeles     9     November 2020   December 2030     1,934,000       3.05 % Los Angeles     8     July 2021   July 2051     1,567,000       3.50 % Los Angeles     7     August 2012   September 2042     774,000       3.75 % Los Angeles     4     June 2021   August 2051     1,135,000       3.50 % Los Angeles     1     June 2021   August 2051     545,000       3.50 % Los Angeles     4     July 2021   August 2051     816,000       3.50 % Los Angeles     1     September 2018   October 2048     956,000       4.75 %             Mortgage notes payable – real estate     86,287,000                       Debt issuance costs         (850,000 )                     Total mortgage notes payable – real estate   $ 85,437,000
SCHEDULE OF FUTURE MINIMUM PAYMENT FOR MORTGAGE NOTES PAYABLE	Future minimum payments for all mortgage notes payable are as follows:  SCHEDULE OF FUTURE MINIMUM PAYMENT FOR MORTGAGE NOTES PAYABLE For the year ending June 30,       2024   $ 108,420,000   2025     9,318,000   2026     1,168,000   2027     3,299,000   2028     1,771,000   Thereafter     68,894,000   Total Mortgage Notes payable   $ 192,870,000

v3.23.3

INCOME TAXES (Tables)	12 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
SCHEDULE OF INCOME TAX (EXPENSE) BENEFIT	The provision for the Company’s income tax (expense) benefit is comprised of the following: SCHEDULE OF INCOME TAX (EXPENSE) BENEFIT  For the years ended June 30,   2023     2022                 Federal                 Current tax   $ (116,000 )   $ (113,000 ) Deferred tax     6,419,000       884,000   Federal income tax (expense) benefit, total     6,303,000       771,000                     State                 Current tax     9,000       (330,000 ) Deferred tax     2,121,000       589,000   State income tax (expense) benefit, total     2,130,000       259,000                     Income Tax (expense) benefit   $ (8,433,000 )   $ 1,030,000
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION	The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before taxes as a result of the following differences: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION  For the years ended June 30,   2023     2022                 Statutory federal tax rate   $ (315,000 )   $ 2,446,000   State income taxes, net of federal tax benefit     (375,000 )     204,000   Dividend received deduction     (18,000 )     103,000   PPP Loan forgiveness     -       1,391,000   Provision to return adjustment     (334,000 )     634,000   Deferral true up – Justice difference in basis of fixed assets     -       11,621,000   Net operating loss true up     (275,000 )     32,000   Valuation allowance     10,232,000       (15,201,000 ) Payable true up     (249,000 )     (311,000 ) State rate change impact     (352,000 )     -   Other     119,000       111,000   Income tax expense (benefit)   $ (8,433,000 )   $ 1,030,000
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES	The components of the deferred tax asset and liabilities are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES      June 30, 2023     June 30, 2022   Deferred tax assets:                 Net operating loss carryforwards   $ 13,187,000     $ 11,075,000   Deferred gains on real estate sale and depreciation     15,054,000       10,418,000   Capital loss carryforwards     1,919,000       1,322,000   Accruals and reserves     843,000       831,000   Interest expense     3,185,000       2,231,000   Tax credits     566,000       566,000   State taxes     139,000       -   Other     204,000       247,000   Deferred Tax Asset before Valuation Allowance     35,097,000       26,690,000   Valuation Allowance     (33,784,000 )     (22,775,000 ) Deferred Tax Asset after Valuation Allowance     1,313,000       3,915,000   Deferred tax liabilities:                 Deferred gains on real estate sale and depreciation     (4,796,000 )     -   Unrealized gain on marketable securities     (746,000 )     (9,000 ) Gain on insurance claim     (696,000 )     -   Other     -       -   State taxes     -       (294,000 ) Deferred Tax Liability     (6,238,000 )     (303,000 ) Net deferred tax (liability) asset   $ (4,925,000 )   $ 3,612,000
SCHEDULE OF ESTIMATED NET OPERATING LOSSES (NOLS)	Below is the breakdown of the net operating losses for Intergroup and Portsmouth. SCHEDULE OF ESTIMATED NET OPERATING LOSSES (NOLS)      Federal     State   InterGroup   $ -     $ 2,789,000   Portsmouth     41,835,000       48,500,000       $ 41,835,000     $ 51,289,000
SCHEDULE OF UNCERTAIN TAX POSITIONS	SCHEDULE OF UNCERTAIN TAX POSITIONS Unrecognized Tax Benefits at June 30, 2022   $ -   Unrecognized Tax Benefits at June 30, 2022   $ -   Increase in tax positions taken     1,665,000   Decrease in tax positions taken     -   Unrecognized Tax Benefits at June 30, 2023   $ 1,665,000

v3.23.3

SEGMENT INFORMATION (Tables)	12 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
SCHEDULE OF SEGMENT REPORTING INFORMATION	SCHEDULE OF SEGMENT REPORTING INFORMATION  As of and for the year ended   Hotel     Real Estate     Investment               June 30, 2023   Operations     Operations     Transactions     Other     Total   Revenues   $ 42,027,000     $ 15,580,000     $ -     $ -     $ 57,607,000   Segment operating expenses     (34,457,000 )     (10,017,000 )     -       (3,333,000 )     (47,807,000 ) Segment income (loss) from operations     7,570,000       5,563,000       -       (3,333,000 )     9,800,000   Interest expense - mortgages     (6,467,000 )     (2,118,000 )     -       -       (8,585,000 ) Gain on insurance recovery     -       2,692,000       -       -       2,692,000   Depreciation and amortization expense     (2,815,000 )     (2,649,000 )     -       -       (5,464,000 ) Gain from investments     -       -       58,000       -       58,000   Income tax expense     -       -       -       (8,433,000 )     (8,433,000 ) Net income (loss)   $ (1,712,000 )   $ 3,488,000     $ 58,000     $ (11,766,000 )   $ (9,932,000 ) Total assets   $ 46,393,000     $ 48,057,000     $ 18,345,000     $ 9,563,000     $ 122,358,000     As of and for the year ended   Hotel     Real Estate     Investment               June 30, 2022   Operations     Operations     Transactions     Other     Total   Revenues   $ 31,534,000     $ 15,685,000     $ -     $ -     $ 47,219,000   Segment operating expenses     (27,451,000 )     (8,694,000 )     -       (2,651,000 )     (38,796,000 ) Segment income (loss) from operations     4,083,000       6,991,000       -       (2,651,000 )     8,423,000   Interest expense - mortgage     (6,549,000 )     (2,332,000 )     -       -       (8,881,000 ) Gain on debt forgiveness     2,000,000       (335,000 )     -       -       1,665,000   Depreciation and amortization expense     (2,310,000 )     (2,444,000 )     -       -       (4,754,000 ) Loss from investments     -       -       (8,101,000 )     -       (8,101,000 ) Income tax benefit     -       -       -       1,030,000       1,030,000   Net income (loss)   $ (2,776,000 )   $ 1,880,000     $ (8,101,000 )   $ (1,621,000 )   $ (10,618,000 ) Total assets   $ 46,847,000     $ 48,025,000     $ 11,049,000     $ 21,125,000     $ 126,046,000

v3.23.3

STOCK-BASED COMPENSATION PLANS (Tables)	12 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
SCHEDULE OF STOCK OPTION ACTIVITY	The following table summarizes the stock options activity from July 1, 2021 through June 30, 2023:   SCHEDULE OF STOCK OPTION ACTIVITY         Number of     Weighted Average     Weighted Average     Aggregate           Shares     Exercise Price     Remaining Life     Intrinsic Value                                 Outstanding at   July 1, 2021     341,195     $ 16.95       2.83 years     $ 8,890,000   Granted         -       -       -       -   Exercised         (90,000 )     19.77       -       -   Forfeited         -       -       -       -   Exchanged         -       -       -       -   Outstanding at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Exercisable at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Vested at   June 30, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Outstanding at   July 1, 2022     251,195     $ 15.95       2.60 years     $ 6,628,000   Granted         -       -       -       -   Exercised         -       -       -       -   Forfeited         -       -       -       -   Exchanged         -       -       -       -   Outstanding at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000   Exercisable at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000   Vested and expected                                     to vest at   June 30, 2023     251,195     $ 15.95       1.60 years     $ 4,957,000

v3.23.3

BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Details Narrative) - USD ($)		1 Months Ended		12 Months Ended
	Jul. 15, 2021	Jun. 30, 2022	Mar. 31, 2021	Jun. 30, 2023	Jun. 30, 2022	Jul. 01, 2022	Feb. 19, 2021
Property, Plant and Equipment [Line Items]
Cash received distribtion			$ 5,013,000
Impairment losses related to other investments				$ 0	$ 41,000
Cash equivalents		$ 0		0	0
Accounts receivable		634,000		631,000	634,000	$ 634,000
Allowance for doubtful accounts		110,000		$ 486,000	$ 110,000
Acquisition of treasury stock				30,253	41,645
Advertising cost				$ 130,000	$ 61,000
Unrecognized tax benefits				1,665,000
Notes payable		108,747,000		107,117,000	$ 108,747,000
Accumulated deficit				$ 105,727,000
Buildings Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				3 years
Buildings Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				39 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				3 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				7 years
Rental Property [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				5 years
Rental Property [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				40 years
Building and Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				5 years
Building and Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives				10 years
Santa Fe [Member]
Property, Plant and Equipment [Line Items]
Cash received distribtion		$ 1,159,000	$ 221,000
Santa Fe Financial Corporation [Member]
Property, Plant and Equipment [Line Items]
Minority interest ownership percentage							83.70%
Portsmouth Square, Inc [Member]
Property, Plant and Equipment [Line Items]
Minority interest ownership percentage				75.70%			68.80%
Non-controlling interest percentage	0.70%
Limited liability interest percentage	100.00%
Portsmouth Square, Inc [Member] | John V. Winfield [Member]
Property, Plant and Equipment [Line Items]
Non-controlling interest percentage				2.50%

v3.23.3

SCHEDULE OF MATERIAL FINANCIAL OBLIGATION (Details)	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
Long-term Debt	$ 221,403,000
Year 2023	112,836,000
Year 2024	12,783,000
Year 2025	4,125,000
Year 2026	6,046,000
Year 2027	4,374,000
Thereafter	81,239,000
Mortgage Notes Payable [Member]
Debt Instrument [Line Items]
Long-term Debt	192,870,000
Year 2023	108,420,000
Year 2024	9,318,000
Year 2025	1,168,000
Year 2026	3,299,000
Year 2027	1,771,000
Thereafter	68,894,000
Related Party Notes Payable [Member]
Debt Instrument [Line Items]
Long-term Debt	2,956,000
Year 2023	567,000
Year 2024	567,000
Year 2025	567,000
Year 2026	463,000
Year 2027	317,000
Thereafter	475,000
Interest [Member]
Debt Instrument [Line Items]
Long-term Debt	25,577,000
Year 2023	3,849,000
Year 2024	2,898,000
Year 2025	2,390,000
Year 2026	2,284,000
Year 2027	2,286,000
Thereafter	$ 11,870,000

v3.23.3

LIQUIDITY (Details Narrative) - USD ($)							1 Months Ended	12 Months Ended
	Jul. 07, 2023	May 31, 2023	Nov. 19, 2021	Oct. 14, 2021	Feb. 03, 2021	Dec. 16, 2020	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021	Jan. 31, 2017
Net cash flow used for operations								$ 107,000	$ (921,000)
Cash and cash equivalents							$ 14,367,000	5,960,000	14,367,000
Restricted cash							8,982,000	6,914,000	8,982,000
Marketable securities							$ 10,110,000	$ 15,328,000	10,110,000
Debt instrument, face amount		$ 5,500
Maturity date, description		June 2024		November 2031			July 2052	The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024
Notes payable		$ 4,823,000					$ 14,200,000	$ 15,700,000	14,200,000
Proceeds from other debt		$ 5,360,000						5,360,000	$ 16,683,000
Debt instrument interest rate		3.10%
Proceeds from loans		$ 16,683,000
Debt instrument interest rate, percentage		3.10%		2.95%			4.40%		4.40%		5.275%
Gain on debt extinguishment									$ (335,000)
Maximum [Member]
Notes payable	$ 20,000,000									$ 16,000,000
Loan Modification Agreement [Member] | Maximum [Member]
Notes payable										11,350,000
Second SBA Loan [Member] | CIBC Bank USA [Member]
Maturity date					Feb. 03, 2026
Proceeds from loans					$ 2,000,000
Debt instrument interest rate, percentage					1.00%
Gain on debt extinguishment			$ 2,000,000
Portsmouth Square, Inc [Member] | Guest Room [Member]
Payments for capital improvements								5,866,000
Justice Investors Limited Partnership and InterGroup [Member] | Loan Modification Agreement [Member]
Debt instrument, face amount						$ 10,000,000				16,000,000
Maturity date						Jul. 31, 2021
Maturity date, description	maturity date was extended to July 31, 2025					maturity date was extended to July 31, 2022
Notes payable							$ 14,200,000	$ 15,700,000	$ 14,200,000	$ 11,350,000

v3.23.3

SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Total Hotel revenue	$ 57,607,000	$ 47,219,000
Hotel Rooms [Member]
Disaggregation of Revenue [Line Items]
Total Hotel revenue	35,684,000	26,599,000
Food and Beverage [Member]
Disaggregation of Revenue [Line Items]
Total Hotel revenue	2,625,000	1,471,000
Garage [Member]
Disaggregation of Revenue [Line Items]
Total Hotel revenue	2,790,000	3,112,000
Other Operating Departments [Member]
Disaggregation of Revenue [Line Items]
Total Hotel revenue	928,000	352,000
Hotel [Member]
Disaggregation of Revenue [Line Items]
Total Hotel revenue	$ 42,027,000	$ 31,534,000

v3.23.3

REVENUE (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2022	Jun. 30, 2021
Revenue from Contract with Customer [Abstract]
Contract with customer, liability	$ 290,000	$ 493,000	$ 493,000	$ 161,000
Contract with customer liability recognized as revenue	$ 493,000

v3.23.3

SCHEDULE OF INVESTMENT IN HOTEL, NET (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Line Items]
Cost	$ 107,935,000	$ 102,068,000
Accumulated depreciation	(67,617,000)	(64,801,000)
Net book value	40,318,000	37,267,000
Land [Member]
Property, Plant and Equipment [Line Items]
Cost	2,738,000	2,738,000
Accumulated depreciation
Net book value	2,738,000	2,738,000
Finance Lease ROU Assets [Member]
Property, Plant and Equipment [Line Items]
Cost	1,805,000	1,805,000
Accumulated depreciation	(1,239,000)	(922,000)
Net book value	566,000	883,000
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	38,727,000	32,860,000
Accumulated depreciation	(29,682,000)	(28,567,000)
Net book value	9,045,000	4,293,000
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	64,665,000	64,665,000
Accumulated depreciation	(36,696,000)	(35,312,000)
Net book value	$ 27,969,000	$ 29,353,000

v3.23.3

SCHEDULE OF INVESTMENT IN REAL ESTATE (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Real Estate [Abstract]
Land	$ 22,998,000	$ 22,998,000
Buildings, improvements and equipment	73,151,000	70,933,000
Accumulated depreciation	(50,022,000)	(47,374,000)
Investment in real estate, gross	46,127,000	46,557,000
Land held for development	1,930,000	1,468,000
Investment in real estate, net	$ 48,057,000	$ 48,025,000

v3.23.3

SCHEDULE OF TRADING SECURITIES (Details) - Equity Securities [Member] - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Financing Receivable, Past Due [Line Items]
Cost	$ 15,419,000	$ 11,150,000
Gross unrealized gain	3,713,000	1,474,000
Gross unrealized loss	(787,000)	(1,575,000)
Net unrealized loss	2,926,000	(101,000)
Fair value	$ 18,345,000	$ 11,049,000

v3.23.3

SCHEDULE OF NET GAIN LOSS ON MARKETABLE SECURITIES COMPRISING OF REALIZED AND UNREALIZED GAINS (LOSSES) (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Realized (loss) gain on marketable securities	$ (1,712,000)	$ 375,000
Realized loss on marketable securities related to Comstock		(2,581,000)
Unrealized gain (loss) on marketable securities	2,838,000	(5,408,000)
Net gain (loss) on marketable securities	$ 1,126,000	$ (7,614,000)

v3.23.3

SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIS (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 18,345,000	$ 11,049,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	18,345,000	11,049,000
Fair Value, Inputs, Level 1 [Member] | REITs And Real Estate Companies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	6,985,000	3,289,000
Fair Value, Inputs, Level 1 [Member] | Technology [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,779,000	815,000
Fair Value, Inputs, Level 1 [Member] | T Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,093,000
Fair Value, Inputs, Level 1 [Member] | Financial Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	1,865,000	1,755,000
Fair Value, Inputs, Level 1 [Member] | Consumer Cyclical [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	1,689,000	693,000
Fair Value, Inputs, Level 1 [Member] | Basic Materials [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	1,047,000	769,000
Fair Value, Inputs, Level 1 [Member] | Health Care [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	739,000
Fair Value, Inputs, Level 1 [Member] | Communication Services [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	566,000	2,787,000
Fair Value, Inputs, Level 1 [Member] | Industrial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	485,000	385,000
Fair Value, Inputs, Level 1 [Member] | Utilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 97,000
Fair Value, Inputs, Level 1 [Member] | Energy [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		279,000
Fair Value, Inputs, Level 1 [Member] | Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		$ 277,000

v3.23.3

SCHEDULE OF FAIR VALUE MEASUREMENTS ON NON-RECURRING BASIS (Details)	12 Months Ended
	Jun. 30, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other non-marketable investments
Net loss	(41,000)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other non-marketable investments

v3.23.3

FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Fair Value Disclosures [Abstract]
Proceeds from other non-marketable investments		$ 41,000

v3.23.3

SCHEDULE OF OTHER ASSETS, NET (Details) - USD ($)	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Accounts receivable, net	$ 631,000	$ 634,000	$ 634,000
Prepaid expenses	648,000		775,000
Miscellaneous assets	681,000		652,000
Prepaid taxes	697,000		683,000
Total other assets	$ 2,657,000		$ 2,744,000

v3.23.3

SUMMARY OF OTHER NOTES PAYABLE (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Defined Benefit Plan Disclosure [Line Items]
Total other notes payable	$ 2,954,000	$ 3,521,000
Note Payable - Hilton [Member]
Defined Benefit Plan Disclosure [Line Items]
Total other notes payable	2,058,000	2,375,000
Note Payable Aimbridge [Member]
Defined Benefit Plan Disclosure [Line Items]
Total other notes payable	$ 896,000	$ 1,146,000

v3.23.3

SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS (Details)	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
2024	$ 112,836,000
2025	12,783,000
2026	4,125,000
2027	6,046,000
2028	4,374,000
Thereafter	81,239,000
Long term debt	221,403,000
Related Party Debt And Other Notes Payable [Member]
Debt Instrument [Line Items]
2024	567,000
2025	567,000
2026	567,000
2027	463,000
2028	317,000
Thereafter	475,000
Long term debt	$ 2,956,000

v3.23.3

OTHER FINANCING TRANSACTIONS (Details Narrative) - USD ($)								1 Months Ended			12 Months Ended
	Jul. 07, 2023	May 31, 2023	Nov. 19, 2021	Oct. 14, 2021	Feb. 03, 2021	Dec. 16, 2020	Feb. 03, 2017	Jun. 30, 2022	Mar. 31, 2021	Jul. 02, 2014	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021	Feb. 19, 2021	Jul. 31, 2019	May 11, 2017	Jan. 31, 2017	Dec. 31, 2013
Debt instrument, payment terms				10 years			10 years	5 years
Key money incentive fee											$ 505,000	$ 525,000
Debt instrument, convertible, remaining discount amortization period							8 years
Other notes payable								$ 3,521,000			2,954,000	$ 3,521,000
Proceeds from loans		$ 16,683,000
Interest rate		3.10%		2.95%				4.40%				4.40%					5.275%
Gain on debt extinguishment												$ (335,000)
Outstanding loan principal amount								$ 90,745,000			$ 89,114,000	90,745,000
Debt instrument, maturity date, description		June 2024		November 2031				July 2052			The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024
Debt instrument, face amount		$ 5,500
Notes payable		$ 4,823,000						$ 14,200,000			$ 15,700,000	14,200,000
Cash received in liquidation									$ 5,013,000
Santa Fe [Member] | Management [Member]
Equity investment interest									3.70%
Maximum [Member]
Notes payable	$ 20,000,000												$ 16,000,000
Unsecured Debt [Member]
Debt instrument, payment terms										with a term of 2 years
Interest rate										12.00%
Debt instrument, maturity date, description										The loan was extended to July 31, 2023
Debt instrument, face amount										$ 4,250,000
Loan fee percentage										3.00%
Santa Fe [Member]
Cash received in liquidation								1,159,000	$ 221,000
Shares received in liquidation									18,641
Proceeds from other investments											1,159,000
Santa Fe [Member] | Ownership [Member]
Equity investment interest														83.70%
Portsmouth [Member]
Shares received in liquidation									422,998
Hotel Management Agreement [Member]
Key money incentive fee											2,000,000
Second SBA Loan [Member] | CIBC Bank USA [Member]
Proceeds from loans					$ 2,000,000
Maturity date					Feb. 03, 2026
Interest rate					1.00%
Gain on debt extinguishment			$ 2,000,000
Loan Modification Agreement [Member] | Maximum [Member]
Notes payable													11,350,000
Loan Modification Agreement [Member] | Justice Investors Limited Partnership and InterGroup [Member]
Maturity date						Jul. 31, 2021
Debt instrument, maturity date, description	maturity date was extended to July 31, 2025					maturity date was extended to July 31, 2022
Debt instrument, face amount						$ 10,000,000							16,000,000
Notes payable								14,200,000			$ 15,700,000	14,200,000	$ 11,350,000
Hilton [Member]
Debt instrument, payment terms											through 2030
Note Payable Aimbridge [Member]
Other notes payable								$ 1,146,000			$ 896,000	$ 1,146,000
Interest Free Development Incentive Note [Member]
Notes reduced											$ 317,000
Prior Mortgage [Member] | Related Party [Member]
Accounts payable to related party																		$ 42,940,000
Mortgage Loan [Member] | Related Party [Member]
Accounts payable to related party																$ 97,000,000		97,000,000
Mezzanine Loan [Member] | Related Party [Member]
Accounts payable to related party																$ 20,000,000		$ 20,000,000
New Mezzanine Loan [Member]
Interest rate															7.25%
New Mezzanine Loan [Member] | Cred Reit Holdco LLC [Member]
Interest rate															9.75%
Debt instrument, face amount															$ 20,000,000

v3.23.3

SCHEDULE OF MORTGAGE NOTE PAYABLE (Details)	12 Months Ended
	Jun. 30, 2023 USD ($) Number	Jun. 30, 2022 USD ($) Number	May 31, 2023	Oct. 14, 2021	Jan. 31, 2017
Debt Instrument [Line Items]
Interest Rate		4.40%	3.10%	2.95%	5.275%
Total mortgage notes payable - Hotel	$ 107,117,000	$ 108,747,000
Total mortgage notes payable - real estate	84,757,000	85,437,000
Mortgage Notes Payable Hotel [Member]
Debt Instrument [Line Items]
Mortgage notes payable - Hotel	107,240,000	109,114,000
Debt issuance costs	(123,000)	(367,000)
Total mortgage notes payable - Hotel	107,117,000	108,747,000
Mortgage Notes Payable Real Estate [Member]
Debt Instrument [Line Items]
Debt issuance costs	(872,000)	(850,000)
Mortgage notes payable - real estate	85,629,000	86,287,000
Total mortgage notes payable - real estate	$ 84,757,000	$ 85,437,000
5.28% SF Hotel [Member]
Debt Instrument [Line Items]
Number of Units | Number	544	544
Origination Date	December 2013	December 2013
Maturity Date	January 2024	January 2024
Mortgage notes payable - Hotel	$ 87,240,000	$ 89,114,000
Interest Rate	5.28%	5.28%
7.25% SF Hotel [Member]
Debt Instrument [Line Items]
Number of Units | Number	544	544
Origination Date	July 2019
Maturity Date	January 2024
Mortgage notes payable - Hotel	$ 20,000,000	$ 20,000,000
Interest Rate	7.25%	7.25%
3.87% Florence [Member]
Debt Instrument [Line Items]
Number of Units | Number	157	157
Origination Date	March 2015	March 2015
Maturity Date	April 2025	April 2025
Interest Rate	3.87%	3.87%
Mortgage notes payable - real estate	$ 2,917,000	$ 2,998,000
2.95% Las Colinas [Member]
Debt Instrument [Line Items]
Number of Units | Number	358	358
Origination Date	October 2021	October 2021
Maturity Date	November 2031	November 2031
Interest Rate	2.95%	2.95%
Mortgage notes payable - real estate	$ 28,800,000	$ 28,801,000
3.17% Morris County [Member]
Debt Instrument [Line Items]
Number of Units | Number	151	151
Origination Date	April 2020	April 2020
Maturity Date	May 2030	May 2030
Interest Rate	3.17%	3.17%
Mortgage notes payable - real estate	$ 17,208,000	$ 17,598,000
8.60% St. Louis [Member]
Debt Instrument [Line Items]
Number of Units | Number	264
Origination Date	May 2023
Maturity Date	May 2025
Interest Rate	8.60%
Mortgage notes payable - real estate	$ 5,360,000
3.50% Los Angeles One [Member]
Debt Instrument [Line Items]
Number of Units | Number	4	4
Origination Date	July 2021	July 2021
Maturity Date	July 2051	July 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 1,112,000	$ 1,135,000
3.50% Los Angeles Two [Member]
Debt Instrument [Line Items]
Number of Units | Number	2	2
Origination Date	July 2021	July 2021
Maturity Date	July 2051	July 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 674,000	$ 688,000
3.50% Los Angeles Three [Member]
Debt Instrument [Line Items]
Number of Units | Number	1	1
Origination Date	June 2021	June 2021
Maturity Date	August 2051	August 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 886,000	$ 904,000
2.52% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	31	31
Origination Date	October 2020	October 2020
Maturity Date	November 2030	November 2030
Interest Rate	2.52%	2.52%
Mortgage notes payable - real estate	$ 8,291,000	$ 8,400,000
4.40% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	30	30
Origination Date	June 2022	June 2022
Maturity Date	July 2052	July 2052
Interest Rate	4.40%	4.40%
Mortgage notes payable - real estate	$ 5,762,000	$ 5,850,000
3.05% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	14	14
Origination Date	January 2021	January 2021
Maturity Date	February 2031	February 2031
Interest Rate	3.05%	3.05%
Mortgage notes payable - real estate	$ 2,645,000	$ 2,704,000
3.59% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	12	12
Origination Date	June 2016	June 2016
Maturity Date	June 2026	June 2026
Interest Rate	3.59%	3.59%
Mortgage notes payable - real estate	$ 1,974,000	$ 2,026,000
3.09% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	9	9
Origination Date	June 2020	June 2020
Maturity Date	July 2030	July 2030
Interest Rate	3.09%	3.09%
Mortgage notes payable - real estate	$ 2,443,000	$ 2,498,000
3.05 Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	9	9
Origination Date	November 2020	November 2020
Maturity Date	December 2030	December 2030
Interest Rate	3.05%	3.05%
Mortgage notes payable - real estate	$ 1,891,000	$ 1,934,000
3.50 Los Angeles Four [Member]
Debt Instrument [Line Items]
Number of Units | Number	8	8
Origination Date	July 2021	July 2021
Maturity Date	July 2051	July 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 1,535,000	$ 1,567,000
3.75% Los Angeles [Member]
Debt Instrument [Line Items]
Number of Units | Number	7	7
Origination Date	August 2012	August 2012
Maturity Date	September 2042	September 2042
Interest Rate	3.75%	3.75%
Mortgage notes payable - real estate	$ 751,000	$ 774,000
3.50% Los Angeles Five [Member]
Debt Instrument [Line Items]
Number of Units | Number	4	4
Origination Date	June 2021	June 2021
Maturity Date	August 2051	August 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 1,112,000	$ 1,135,000
3.50% Los Angeles Six [Member]
Debt Instrument [Line Items]
Number of Units | Number	1	1
Origination Date	June 2021	June 2021
Maturity Date	August 2051	August 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 534,000	$ 545,000
3.50% Los Angeles Seven [Member]
Debt Instrument [Line Items]
Number of Units | Number	4	4
Origination Date	July 2021	July 2021
Maturity Date	August 2051	August 2051
Interest Rate	3.50%	3.50%
Mortgage notes payable - real estate	$ 800,000	$ 816,000
3.50 Los Angeles Eight [Member]
Debt Instrument [Line Items]
Number of Units | Number	1
Origination Date	September 2018
Maturity Date	October 2048
Interest Rate	3.50%
Mortgage notes payable - real estate	$ 934,000
7.25% SF Hostel [Member]
Debt Instrument [Line Items]
Origination Date		July 2019
Maturity Date		January 2024
4.05% St Louis [Member]
Debt Instrument [Line Items]
Number of Units | Number		264
Origination Date		May 2013
Maturity Date		May 2023
Interest Rate		4.05%
Mortgage notes payable - real estate		$ 4,958,000
Four Point Seven Five Los Angeles Eight [Member]
Debt Instrument [Line Items]
Number of Units | Number		1
Origination Date		September 2018
Maturity Date		October 2048
Interest Rate		4.75%
Mortgage notes payable - real estate		$ 956,000

v3.23.3

SCHEDULE OF FUTURE MINIMUM PAYMENT FOR MORTGAGE NOTES PAYABLE (Details)	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
2024	$ 112,836,000
2025	12,783,000
2026	4,125,000
2027	6,046,000
2028	4,374,000
Thereafter	81,239,000
Total Mortgage Notes payable	221,403,000
Mortgage Notes [Member]
Debt Instrument [Line Items]
2024	108,420,000
2025	9,318,000
2026	1,168,000
2027	3,299,000
2028	1,771,000
Thereafter	68,894,000
Total Mortgage Notes payable	$ 192,870,000

v3.23.3

MORTGAGE NOTES PAYABLE (Details Narrative) - USD ($)					1 Months Ended		12 Months Ended
	May 31, 2023	Oct. 14, 2021	Jul. 31, 2019	Feb. 03, 2017	Jun. 30, 2022	Jul. 31, 2021	Jun. 30, 2023	Jun. 30, 2021	May 12, 2017	Jan. 31, 2017
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Debt instrument, maturity date, description	June 2024	November 2031			July 2052		The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024
Debt Instrument coverage ratio description							The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations for at least the next twelve months and beyond. Additionally, Operating’s DSCR for the fourth quarter of fiscal year 2023 was 0.23 for the Mortgage Loan and 0.19 for the Mezzanine Loan.
Mortgages notes payable value	$ 4,823,000	$ 15,900,000			$ 5,283,000
Proceeds from refinancing						$ 2,325,000
Debt instrument interest rate, percentage	3.10%	2.95%			4.40%					5.275%
Debt instrument term		10 years		10 years	5 years
Mortgages on notes payable	$ 5,360,000	$ 28,800,000			$ 5,850,000
Proceeds from bank debt	$ 5,500	$ 12,938,000			$ 522,000
Annual interest rate on mortgage, thereafter					5.44%
Existing Mortgages [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgages notes payable value						$ 1,065,000
New Mortgages [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Debt instrument, maturity date, description						August 2051
Mortgages notes payable value						$ 3,450,000
Debt instrument interest rate, percentage						3.50%
Debt instrument term						5 years
California Properties [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgages notes payable value						$ 830,000
Proceeds from mortgage notes payable						$ 826,000
Mortgage Loans [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage and mezzanine amount							$ 97,000,000		$ 97,000,000
Bears interest percentage							5.275%
Debt instrument, maturity date, description							January 2024
Mortgage loans, description							The term of the loan is 10 years with interest only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization schedule.
Mezzanine Loan [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage and mezzanine amount			$ 20,000,000				$ 20,000,000		$ 20,000,000
Bears interest percentage			7.25%					9.75%
Debt instrument, maturity date, description			January 1, 2024					January 1, 2024

v3.23.3

MANAGEMENT AGREEMENTS (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Management Agreements
Hotel management fees	$ 711,000	$ 530,000
Incentive fees	505,000	525,000
Adjustment for amortization	$ 250,000	$ 250,000

v3.23.3

CONCENTRATION OF CREDIT RISK (Details Narrative) - USD ($)	Jun. 30, 2023	Jul. 01, 2022	Jun. 30, 2022
Accounts Receivable, Net	$ 631,000	$ 634,000	$ 634,000
Hotel Customers [Member] | Hotel [Member]
Accounts Receivable, Net	419,000		377,000
Hotel Customers [Member] | Rental Properties [Member]
Accounts Receivable, Net	698,000		366,000
Allowance for doubtful accounts	$ 486,000		$ 110,000

v3.23.3

SCHEDULE OF INCOME TAX (EXPENSE) BENEFIT (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Current tax	$ (116,000)	$ (113,000)
Deferred tax	6,419,000	884,000
Federal income tax (expense) benefit, total	6,303,000	771,000
Current tax	9,000	(330,000)
Deferred tax	2,121,000	589,000
State income tax (expense) benefit, total	2,130,000	259,000
Income Tax (expense) benefit	$ (8,433,000)	$ 1,030,000

v3.23.3

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Statutory federal tax rate	$ (315,000)	$ 2,446,000
State income taxes, net of federal tax benefit	(375,000)	204,000
Dividend received deduction	(18,000)	103,000
PPP Loan forgiveness		1,391,000
Provision to return adjustment	(334,000)	634,000
Deferral true up – Justice difference in basis of fixed assets		11,621,000
Net operating loss true up	(275,000)	32,000
Valuation allowance	10,232,000	(15,201,000)
Payable true up	(249,000)	(311,000)
State rate change impact	(352,000)
Other	119,000	111,000
Income Tax (expense) benefit	$ (8,433,000)	$ 1,030,000

v3.23.3

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 13,187,000	$ 11,075,000
Deferred gains on real estate sale and depreciation	15,054,000	10,418,000
Capital loss carryforwards	1,919,000	1,322,000
Accruals and reserves	843,000	831,000
Interest expense	3,185,000	2,231,000
Tax credits	566,000	566,000
State taxes	139,000
Other	204,000	247,000
Deferred Tax Asset before Valuation Allowance	35,097,000	26,690,000
Valuation Allowance	(33,784,000)	(22,775,000)
Deferred Tax Asset after Valuation Allowance	1,313,000	3,915,000
Deferred gains on real estate sale and depreciation	(4,796,000)
Unrealized gain on marketable securities	(746,000)	(9,000)
Gain on insurance claim	(696,000)
Other
State taxes		(294,000)
Deferred Tax Liability	(6,238,000)	(303,000)
Net deferred tax (liability) asset	$ (4,925,000)	$ 3,612,000

v3.23.3

SCHEDULE OF ESTIMATED NET OPERATING LOSSES (NOLS) (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Defined Benefit Plan Disclosure [Line Items]
Net operating loss carryforwards, Federal	$ 41,835,000	$ 35,483,000
Net operating loss carryforwards, State	51,289,000
Intergroup [Member]
Defined Benefit Plan Disclosure [Line Items]
Net operating loss carryforwards, Federal
Net operating loss carryforwards, State	2,789,000
Portsmouth [Member]
Defined Benefit Plan Disclosure [Line Items]
Net operating loss carryforwards, Federal	41,835,000
Net operating loss carryforwards, State	$ 48,500,000

v3.23.3

SCHEDULE OF UNCERTAIN TAX POSITIONS (Details)	12 Months Ended
	Jun. 30, 2023 USD ($)
Income Tax Disclosure [Abstract]
Unrecognized Tax Benefits at June 30, 2022
Increase in tax positions taken	1,665,000
Decrease in tax positions taken
Unrecognized Tax Benefits at June 30, 2023	$ 1,665,000

v3.23.3

INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating Loss Carryforwards [Line Items]
Valuation allowance	$ 33,784,000	$ 22,775,000
Increased valuation allowance		11,009,000
Net operating loss carryforwards, federal	41,835,000	35,483,000
Net operating loss carryforwards, state	51,289,000	41,238,000
Net operating loss carryforwards indefinitely	$ 13,187,000	$ 11,075,000
Future taxable income, percentage	80.00%	80.00%
Capital loss carryforwards state	$ 6,936,000	$ 5,547,000
Capital loss tax credits carryforwards	524,000	524,000
Capital loss carryforwards federal		3,985,000
Unrecognized tax benefits	1,665,000
Interest and penalties	0	0
2037 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards indefinitely	14,707,000	14,697,000
2017 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards indefinitely	$ 27,128,000	$ 20,786,000

v3.23.3

SCHEDULE OF SEGMENT REPORTING INFORMATION (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Revenues	$ 57,607,000	$ 47,219,000
Segment operating expenses	(53,271,000)	(43,548,000)
Segment income (loss) from operations	4,336,000	3,671,000
Interest expense - mortgage	(8,585,000)	(8,881,000)
Depreciation and amortization expense	(5,464,000)	(4,754,000)
Income tax benefit	8,433,000	(1,030,000)
Net income (loss)	(9,932,000)	(10,616,000)
Total assets	122,358,000	126,046,000
Gain on debt forgiveness		(335,000)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	57,607,000	47,219,000
Segment operating expenses	(47,807,000)	(38,796,000)
Segment income (loss) from operations	9,800,000	8,423,000
Interest expense - mortgage	(8,585,000)	(8,881,000)
Gain on insurance recovery	2,692,000
Depreciation and amortization expense	(5,464,000)	(4,754,000)
Loss from investments	58,000	(8,101,000)
Income tax benefit	(8,433,000)	1,030,000
Net income (loss)	(9,932,000)	(10,618,000)
Total assets	122,358,000	126,046,000
Gain on debt forgiveness		1,665,000
Hotel Operations [Member]
Segment Reporting Information [Line Items]
Revenues	42,027,000	31,534,000
Segment operating expenses	(34,457,000)	(27,451,000)
Segment income (loss) from operations	7,570,000	4,083,000
Interest expense - mortgage	(6,467,000)	(6,549,000)
Gain on insurance recovery
Depreciation and amortization expense	(2,815,000)	(2,310,000)
Loss from investments
Income tax benefit
Net income (loss)	(1,712,000)	(2,776,000)
Total assets	46,393,000	46,847,000
Gain on debt forgiveness		2,000,000
Real Estate Operations [Member]
Segment Reporting Information [Line Items]
Revenues	15,580,000	15,685,000
Segment operating expenses	(10,017,000)	(8,694,000)
Segment income (loss) from operations	5,563,000	6,991,000
Interest expense - mortgage	(2,118,000)	(2,332,000)
Gain on insurance recovery	2,692,000
Depreciation and amortization expense	(2,649,000)	(2,444,000)
Loss from investments
Income tax benefit
Net income (loss)	3,488,000	1,880,000
Total assets	48,057,000	48,025,000
Gain on debt forgiveness		(335,000)
Investment Transactions [Member]
Segment Reporting Information [Line Items]
Revenues
Segment operating expenses
Segment income (loss) from operations
Interest expense - mortgage
Gain on insurance recovery
Depreciation and amortization expense
Loss from investments	58,000	(8,101,000)
Income tax benefit
Net income (loss)	58,000	(8,101,000)
Total assets	18,345,000	11,049,000
Gain on debt forgiveness
Other [Member]
Segment Reporting Information [Line Items]
Revenues
Segment operating expenses	(3,333,000)	(2,651,000)
Segment income (loss) from operations	(3,333,000)	(2,651,000)
Interest expense - mortgage
Gain on insurance recovery
Depreciation and amortization expense
Loss from investments
Income tax benefit	(8,433,000)	1,030,000
Net income (loss)	(11,766,000)	(1,621,000)
Total assets	$ 9,563,000	21,125,000
Gain on debt forgiveness

v3.23.3

SEGMENT INFORMATION (Details Narrative)	12 Months Ended
	Jun. 30, 2023 Segments
Segment Reporting [Abstract]
Number of reportable segments	3
Number of operating segments	3

v3.23.3

SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement [Abstract]
Number of shares, outstanding, beginning balance	251,195	341,195
Weighted average exercise price, outstanding, beginning balance	$ 15.95	$ 16.95
Weighted average remaining life, outstanding, ending balance	1 year 7 months 6 days	2 years 7 months 6 days	2 years 9 months 29 days
Aggregate intrinsic value, outstanding, beginning balance	$ 6,628,000	$ 8,890,000
Number of shares, granted
Weighted average exercise price, granted
Number of shares, exercised		(90,000)
Weighted average exercise price, exercised		$ 19.77
Number of shares, forfeited
Weighted average exercise price, forfeited
Number of shares, exchanged
Weighted average exercise price, exchanged
Number of shares, outstanding, ending balance	251,195	251,195	341,195
Weighted average exercise price, outstanding, ending balance	$ 15.95	$ 15.95	$ 16.95
Aggregate intrinsic value, outstanding, ending balance	$ 4,957,000	$ 6,628,000	$ 8,890,000
Number of shares, exercisable, ending balance	251,195	251,195
Weighted average pxercise price, exercisable, ending balance	$ 15.95	$ 15.95
Weighted average remaining life, exercisable, ending balance	1 year 7 months 6 days	2 years 7 months 6 days
Aggregate intrinsic value, exercisable, ending balance	$ 4,957,000	$ 6,628,000
Number of shares, vested and expected to vest, ending balance	251,195	251,195
Weighted average exercise price, vested and expected to vest, ending balance	$ 15.95	$ 15.95
Weighted average remaining life, vested and expected to vest, ending balance	1 year 7 months 6 days	2 years 7 months 6 days
Aggregate intrinsic value, vested and expected to vest, ending balance	$ 4,957,000	$ 6,628,000

v3.23.3

STOCK-BASED COMPENSATION PLANS (Details Narrative) - USD ($)							1 Months Ended		12 Months Ended
	Jun. 30, 2022	Jan. 21, 2022	Dec. 28, 2019	Dec. 26, 2013	Mar. 16, 2010	Feb. 24, 2010	Dec. 31, 2018	Feb. 29, 2012	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2017
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized												18,000
Exercise price	$ 15.95								$ 15.95	$ 15.95	$ 16.95
Number of shares vested										90,000
Cashless exercise of stock options, shares	251,195								251,195	251,195
Intrinsic value of cashless exercise of stock options	$ 6,628,000								$ 4,957,000	$ 6,628,000
Closing stock price per share	$ 15.95								$ 15.95	$ 15.95
Compensation expense										$ 4,000
John V. Winfield [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option desceiption		Mr. Winfield exercised 90,000 of his vested stock options by surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 54,906 shares. No additional compensation expense was recorded related to the issuance. This intrinsic value of the cashless exercise of 54,906 stock options was approximately $2,784,000 at January 21, 2022 when the Company’s stock closing stock price was $50.70.
Number of shares vested		90,000
Number of shares surrendered		35,094
Number of shares issued		54,906
Cashless exercise of stock options, shares		54,906
Intrinsic value of cashless exercise of stock options		$ 2,784,000
Closing stock price per share		$ 50.70
John V. Winfield [Member] | Non Qualified Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized				133,195
Exercise price				$ 18.65
Expiration period				10 years
Stock expiration date				Dec. 26, 2023
John V. Winfield [Member] | Incentive Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized				26,805
Exercise price				$ 20.52
Expiration period				5 years
Stock vesting description				The stock options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date.
Number of shares vested							26,805
Number of shares surrendered							17,439
Number of shares issued							9,366
Stock expiration date				Dec. 26, 2018
DavidC Gonzalez [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized												18,000
Exercise price												$ 27.30
Number of shares vested	18,000
Share based compensation option vested												3,600
2010 Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price								$ 90,000
2010 Incentive Plan [Member] | Omnibus [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock based compensation vesting period						5 years
Number of shares authorized						400,000
2010 Incentive Plan [Member] | John V. Winfield [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock based compensation vesting period					5 years			5 years
Number of shares authorized				160,000	100,000			90,000
Number of shares purchased					100,000
Exercise price					$ 10.30			$ 19.77
Expiration period					10 years			10 years
Stock vesting description					Pursuant to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30) of the options			Pursuant to the time vesting requirements, the options vest over a period of five years, with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter.
2010 Incentive Plan [Member] | Board Of Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized			100,000
Expiration period description			Incentive Plan to twenty years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.
2010 Incentive Plan [Member] | Board Of Directors [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period			10 years
2010 Incentive Plan [Member] | Board Of Directors [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expiration period			16 years

v3.23.3

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Jul. 31, 2023	Jun. 30, 2023	May 31, 2023	Jun. 30, 2022	Dec. 31, 2021	Jul. 15, 2021	Feb. 19, 2021	Dec. 16, 2020
Notes payable		$ 15,700,000	$ 4,823,000	$ 14,200,000
Debt instrument, face amount			$ 5,500
Portsmouth Square, Inc [Member]
Minority interest ownership percentage		75.70%					68.80%
Minority interest ownership percentage						0.70%
Portsmouth Square, Inc [Member] | John V. Winfield [Member]
Minority interest ownership percentage		2.50%
Justice Investors Limited Partnership and InterGroup [Member] | Loan Modification Agreement [Member]
Notes payable		$ 15,700,000		$ 14,200,000	$ 11,350,000
Debt instrument, face amount					$ 16,000,000			$ 10,000,000
Loan extension and modification fee payable		0.50%
Justice Investors Limited Partnership and InterGroup [Member] | Loan Modification Agreement [Member] | Subsequent Event [Member]
Maximum borrowing capacity	$ 20,000,000

v3.23.3

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Service fees	$ 3,029,000	$ 2,107,000
License Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Agreement term	15 years

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