UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

[ ]	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
of Incorporation or organization)		Identification No.)

~~12121 Wilshire Boulevard,~~1516 S. Bundy Dr., Suite ~~610,~~200, Los Angeles, California 90025

(Address of principal executive offices) (Zip Code)

(310) 889-2500

(Registrant’s telephone number, including area code)

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.

[X] 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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company.

	Large accelerated filer [ ]		Accelerated filer [ ]

	Non-accelerated filer ~~[ ]~~[X]		Smaller reporting company [X]

			Emerging growth company [ ]

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

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

[ ] Yes [X] No

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock		INTG		NASDAQ CAPITAL MARKET

The number of shares outstanding of registrant’s Common Stock, as of ~~June 18, 2020~~May 21, 2021 was ~~2,289,157.~~2,236,714.

TABLE OF CONTENTS

		~~Page~~

	PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial ~~Statements~~Statements.

	Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and June 30, ~~2019~~2020 (Unaudited)		3
	Condensed Consolidated Statements of Operations for the Three Months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited)		4
	Condensed Consolidated Statements of Operations for the Nine Months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited)		5
	Condensed Consolidated Statements of Shareholders’ Deficit for the Nine Months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited)		6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	8	7
	Notes to the Condensed Consolidated Financial Statements	~~9-22~~	8-22

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.	~~23-30~~	23-31

Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.	30	31

Item 4.	Controls and ~~Procedures~~Procedures.	30	31

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	31	32

Item 1A.	Risk ~~Factors~~Factors.	31	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		32

Item 3.	Defaults Upon Senior Securities.		32

Item 4.	Mine Safety Disclosures.		32

Item 5.	Other Information.		32

Item 6.	Exhibits.		32

Signatures			33

~~-2-~~

- 2 -

PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of	March 31, 2020			June 30, 2019			March 31, 2021			June 30, 2020
ASSETS
Investment in Hotel, net	$	39,272,000		$	39,836,000		$	37,599,000		$	38,769,000
Investment in real estate, net		50,761,000			51,773,000			46,225,000			50,338,000
Investment in marketable securities		2,853,000			9,696,000			36,996,000			6,178,000
Other investments, net		394,000			612,000			41,000			278,000
Cash and cash equivalents		7,994,000			11,837,000			8,880,000			14,163,000
Restricted cash		13,493,000			13,295,000			7,643,000			14,123,000
Other assets, net		2,129,000			2,362,000			3,184,000			1,985,000
Deferred tax asset		2,156,000			1,468,000			2,725,000			4,383,000
Total assets	$	119,052,000		$	130,879,000		$	143,293,000		$	130,217,000

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities - Justice	$	8,116,000		$	11,298,000		$	5,967,000		$	7,414,000
Accounts payable and other liabilities		3,862,000			3,766,000			3,171,000			4,213,000
Due to securities broker		23,000			1,629,000			9,021,000			1,576,000
Obligations for securities sold		-			1,225,000			5,261,000			294,000
Related party and other notes payable		4,798,000			5,261,000			4,229,000			4,654,000
Finance leases		1,206,000			1,486,000			783,000			1,098,000
Other notes payable - SBA Loans								6,719,000			5,172,000
Line of credit payable		2,985,000			2,985,000			-			2,985,000
Mortgage notes payable - Hotel, net		111,729,000			113,087,000			110,465,000			111,446,000
Mortgage notes payable - real estate, net		57,399,000			58,571,000			69,280,000			65,612,000
Total liabilities		190,118,000			199,308,000			214,896,000			204,464,000

Shareholders’ deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued		-			-			-			-
Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,291,554 and 2,309,962 outstanding, respectively		33,000			33,000
Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,250,765 and 2,288,809 outstanding, respectively								33,000			33,000
Additional paid-in capital		6,797,000			10,342,000			6,638,000			6,626,000
Accumulated deficit		(41,756,000	)		(39,760,000	)		(37,574,000	)		(43,541,000	)
Treasury stock, at cost, 1,113,428 and 1,095,020 shares, respectively		(14,915,000	)		(14,347,000	)
Treasury stock, at cost, 1,154,217 and 1,116,173 shares, respectively								(16,333,000	)		(14,995,000	)
Total InterGroup shareholders’ deficit		(49,841,000	)		(43,732,000	)		(47,236,000	)		(51,877,000	)
Noncontrolling interest		(21,225,000	)		(24,697,000	)		(24,367,000	)		(22,370,000	)
Total shareholders’ deficit		(71,066,000	)		(68,429,000	)		(71,603,000	)		(74,247,000	)

Total liabilities and shareholders’ deficit	$	119,052,000		$	130,879,000		$	143,293,000		$	130,217,000

The accompanying notes are an integral part of these (unaudited) condensed consolidated financial statements.

~~-3-~~

- 3 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended March 31, 2020 2019
Revenues:
Hotel $ 11,259,000 $ 15,469,000
Real estate 3,757,000 3,744,000
Total revenues 15,016,000 19,213,000
Costs and operating expenses:
Hotel operating expenses (10,060,000 ) (11,378,000 )
Real estate operating expenses (2,071,000 ) (2,051,000 )
Depreciation and amortization expenses (1,216,000 ) (1,218,000 )
General and administrative expenses (890,000 ) (667,000 )

Total costs and operating expenses (14,237,000 ) (15,314,000 )

Income from operations 779,000 3,899,000

Other income (expense):
Interest expense - mortgages (2,251,000 ) (2,410,000 )
Loss on disposal of assets - (398,000 )
Net (loss) gain on marketable securities (2,367,000 ) 681,000
Net (loss) gain on marketable securities - Comstock (26,000 ) 280,000
Impairment loss on other investments (103,000 ) (98,000 )
Dividend and interest income 105,000 194,000
Trading and margin interest expense (256,000 ) (312,000 )
Total other expense, net (4,898,000 ) (2,063,000 )

(Loss) income before income taxes (4,119,000 ) 1,836,000
Income tax benefit (expense) 1,060,000 (501,000 )
Net (loss) income (3,059,000 ) 1,335,000
Less: Net loss (income) attributable to the noncontrolling interest 479,000 (284,000 )
Net (loss) income attributable to InterGroup Corporation $ (2,580,000 ) $ 1,051,000

Net (loss) income per share
Basic $ (1.33 ) $ 0.57
Diluted N/A $ 0.50

Net (loss) income per share attributable to InterGroup Corporation
Basic $ (1.12 ) $ 0.45
Diluted N/A $ 0.40

Weighted average number of basic common shares outstanding 2,298,064 2,329,207
Weighted average number of diluted common shares outstanding N/A 2,659,602

For the three months ended March 31,	2021			2020
Revenues:
Hotel	$	2,902,000		$	11,259,000
Real estate		3,465,000			3,757,000
Total revenues		6,367,000			15,016,000
Costs and operating expenses:
Hotel operating expenses		(3,990,000	)		(10,060,000	)
Real estate operating expenses		(2,043,000	)		(2,071,000	)
Depreciation and amortization expenses		(1,127,000	)		(1,216,000	)
General and administrative expenses		(605,000	)		(890,000	)

Total costs and operating expenses		(7,765,000	)		(14,237,000	)

(Loss) income from operations		(1,398,000	)		779,000

Other income (expense):
Interest expense - mortgages		(2,180,000	)		(2,251,000	)
Net gain (loss) on marketable securities		768,000			(2,367,000	)
Net gain (loss) on marketable securities - Comstock		4,870,000			(26,000	)
Gain on extinguishment of debt		453,000			-
Impairment loss on other investments		(30,000	)		(103,000	)
Dividend and interest income		158,000			105,000
Trading and margin interest expense		(362,000	)		(256,000	)
Total other income (expense), net		3,677,000			(4,898,000	)

Income (loss) before income taxes		2,279,000			(4,119,000	)
Income tax (expense) benefit		(880,000	)		1,060,000
Net income (loss)		1,399,000			(3,059,000	)
Less: Net (income) loss attributable to the noncontrolling interest		(289,000	)		479,000
Net income (loss) attributable to InterGroup Corporation	$	1,110,000		$	(2,580,000	)

Net income (loss) per share
Basic	$	0.62		$	(1.33	)
Diluted	$	0.54			N/A

Net income per share attributable to InterGroup Corporation
Basic	$	0.49		$	(1.12	)
Diluted	$	0.43			N/A

Weighted average number of basic common shares outstanding		2,267,115			2,298,064
Weighted average number of diluted common shares outstanding		2,604,710			N/A

The accompanying notes are an integral part of these (unaudited) condensed consolidated financial statements.

~~-4-~~

- 4 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the nine months ended March 31,	2020			2019			2021			2020
Revenues:
Hotel	$	41,589,000		$	45,276,000		$	9,436,000		$	41,589,000
Real estate		11,313,000			11,175,000			10,503,000			11,313,000
Total revenues		52,902,000			56,451,000			19,939,000			52,902,000
Costs and operating expenses:
Hotel operating expenses		(33,138,000	)		(33,424,000	)		(14,156,000	)		(33,138,000	)
Real estate operating expenses		(6,110,000	)		(5,929,000	)		(6,031,000	)		(6,110,000	)
Depreciation and amortization expenses		(3,661,000	)		(3,710,000	)		(3,499,000	)		(3,661,000	)
General and administrative expenses		(2,231,000	)		(1,789,000	)		(2,531,000	)		(2,231,000	)

Total costs and operating expenses		(45,140,000	)		(44,852,000	)		(26,217,000	)		(45,140,000	)

Income from operations		7,762,000			11,599,000
(Loss) income from operations								(6,278,000	)		7,762,000

Other income (expense):
Interest expense - mortgages		(6,978,000	)		(7,380,000	)		(6,736,000	)		(6,978,000	)
Loss on disposal of assets		-			(398,000	)
Net loss on marketable securities		(2,565,000	)		(999,000	)
Net loss on marketable securities - Comstock		(396,000	)		(182,000	)
Gain from sale of real estate								12,043,000			-
Net gain (loss) on marketable securities								4,016,000			(2,565,000	)
Net gain (loss) on marketable securities - Comstock								4,921,000			(396,000	)
Gain on extinguishment of debt								453,000			-
Impairment loss on other investments		(103,000	)		(98,000	)		(119,000	)		(103,000	)
Dividend and interest income		346,000			379,000			363,000			346,000
Trading and margin interest expense		(790,000	)		(809,000	)		(918,000	)		(790,000	)
Total other expense, net		(10,486,000	)		(9,487,000	)
Total other income (expense), net								14,023,000			(10,486,000	)

(Loss) income before income taxes		(2,724,000	)		2,112,000
Income tax benefit (expense)		689,000			(771,000	)
Net (loss) income		(2,035,000	)		1,341,000
Less: Net loss (income) attributable to the noncontrolling interest		39,000			(687,000	)
Net (loss) income attributable to InterGroup Corporation	$	(1,996,000	)	$	654,000
Income before income taxes								7,745,000			(2,724,000	)
Income tax (expense) benefit								(2,590,000	)		689,000
Net income (loss)								5,155,000			(2,035,000	)
Less: Net loss attributable to the noncontrolling interest								440,000			39,000
Net income (loss) attributable to InterGroup Corporation							$	5,595,000		$	(1,996,000	)

Net (loss) income per share
Net income per share
Basic	$	(0.88	)	$	0.58		$	2.26		$	(0.88	)
Diluted		N/A		$	0.50		$	1.97			N/A

Net (loss) income per share attributable to InterGroup Corporation
Net income per share attributable to InterGroup Corporation
Basic	$	(0.87	)	$	0.28		$	2.46		$	(0.87	)
Diluted		N/A		$	0.25		$	2.14			N/A

Weighted average number of basic common shares outstanding		2,303,421			2,329,883			2,276,220			2,303,421
Weighted average number of diluted common shares outstanding		N/A			2,660,278			2,613,815			N/A

The accompanying notes are an integral part of these (unaudited) condensed consolidated financial statements.

~~-5-~~

- 5 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

Additional InterGroup Total
Common Stock Paid-in Accumulated Treasury Shareholders’ Noncontrolling Shareholders’
Shares Amount Capital Deficit Stock Deficit Interest Deficit

Balance at July 1, 2019 3,404,982 $ 33,000 $ 10,342,000 $ (39,760,000 ) $ (14,347,000 ) $    (43,732,000 ) $ (24,697,000 ) $     (68,429,000 )

Net Income - - - 336,000 - 336,000 308,000 644,000

Stock options expense - - 8,000 - - 8,000 - 8,000

Investment in Santa Fe - - (147,000 ) - - (147,000 ) 74,000 (73,000 )

Purchase of treasury stock - - - - (156,000 ) (156,000 ) - (156,000 )

Balance at September 30, 2019 3,404,982 33,000 10,203,000 (39,424,000 ) (14,503,000 ) (43,691,000 ) (24,315,000 ) (68,006,000 )

Net income - - - 248,000 - 248,000 132,000 380,000

Stock options expense - - 9,000 - - 9,000 - 9,000

Investment in Santa Fe - - (46,000 ) - - (46,000 ) 22,000 (24,000 )

Purchase of treasury stock - - - - (190,000 ) (190,000 ) - (190,000 )

Balance at December 31, 2019 3,404,982 33,000 10,166,000 (39,176,000 ) (14,693,000 ) (43,670,000 ) (24,161,000 ) (67,831,000 )

Net loss - - - (2,580,000 ) - (2,580,000 ) (479,000 ) (3,059,000 )

Stock options expense - - 121,000 - - 121,000 - 121,000

Investment in Santa Fe - - (4,279,000 ) - - (4,279,000 ) 3,353,000 (926,000 )

Investment in Portsmouth - - (124,000 ) - - (124,000 ) 62,000 (62,000 )

Investment in Woodland - - 913,000 - - 913,000 913,000

Purchase of treasury stock - - - - (222,000 ) (222,000 ) - (222,000 )

Balance at March 31, 2020 3,404,982 $ 33,000 $ 6,797,000 $ (41,756,000 ) $ (14,915,000 ) $ (49,841,000 ) $ (21,225,000 ) $ (71,066,000 )
Additional InterGroup Total
Common Stock Paid-in Accumulated Treasury Shareholders’ Noncontrolling Shareholders’
Shares Amount Capital Deficit Stock Deficit Interest Deficit
Balance at July 1, 2020 3,404,982 $ 33,000 $ 6,626,000 $ (43,541,000 ) $ (14,995,000 ) $ (51,877,000 ) $ (22,370,000 ) $ (74,247,000 )
Net income - - - 4,550,000 - 4,550,000 269,000 4,819,000
Stock options expense - - 5,000 - - 5,000 - 5,000
Purchase of treasury stock - - - - (140,000 ) (140,000 ) - (140,000 )
Balance at September 30, 2020 3,404,982 33,000 6,631,000 (38,991,000 ) (15,135,000 ) (47,462,000 ) (22,101,000 ) (69,563,000 )
Net income (loss) - - - (65,000 ) - (65,000 ) (998,000 ) (1,063,000 )
Stock options expense - - 5,000 - - 5,000 - 5,000
Purchase of treasury stock - - - - (116,000 ) (116,000 ) - (116,000 )
Balance at December 31, 2020 3,404,982 33,000 6,636,000 (39,056,000 ) (15,251,000 ) (47,638,000 ) (23,099,000 ) (70,737,000 )
Net income - - - 1,110,000 - 1,110,000 289,000 1,399,000
Stock options expense - - 2,000 - - 2,000 - 2,000
Reclassify NCI to INTG - - - 372,000 - 372,000 (372,000 ) -
Investment in Justice - - - - - - (206,000 ) (206,000 )
Distribution to NCI - - - - - - (979,000 ) (979,000 )
Purchase of treasury stock - - - - (1,082,000 ) (1,082,000 ) - (1,082,000 )
Balance at March 31, 2021 3,404,982 $ 33,000 $ 6,638,000 $ (37,574,000 ) $ (16,333,000 ) $ (47,236,000 ) $ (24,367,000 ) $ (71,603,000 )

~~-6-~~
Additional InterGroup Total Additional InterGroup Total
Common Stock Paid-in Accumulated Treasury Shareholders’ Noncontrolling Shareholders’ Common Stock Paid-in Accumulated Treasury Shareholders’ Noncontrolling Shareholders’
Shares Amount Capital Deficit Stock Deficit Interest Deficit Shares Amount Capital Deficit Stock Deficit Interest Deficit

Balance at July 1, 2018 3,395,616 $ 33,000 $ 10,522,000 $ (41,217,000 ) $ (13,268,000 ) $    (43,930,000 ) $ (26,037,000 ) $    (69,967,000 )

Net Income - - - 630,000 - 630,000 498,000 1,128,000

Balance at July 1, 2019 3,404,982 $ 33,000 $ 10,342,000 $ (39,760,000 ) $ (14,347,000 ) $ (43,732,000 ) $ (24,697,000 ) $ (68,429,000 )
Net income - - - 336,000 - 336,000 308,000 644,000
Stock options expense - - 30,000 - - 30,000 - 30,000 - - 8,000 - - 8,000 - 8,000

Investment in Santa Fe - - (147,000 ) - - (147,000 ) 74,000 (73,000 )
Purchase of treasury stock - - - - (198,000 ) (198,000 ) - (198,000 ) - - - - (156,000 ) (156,000 ) - (156,000 )

Balance at September 30, 2018 3,395,616 33,000 10,552,000 (40,587,000 ) (13,466,000 ) (43,468,000 ) (25,539,000 ) (69,007,000 )

Issuance of stock 9,366 - - - - - - -

Balance at September 30, 2019 3,404,982 33,000 10,203,000 (39,424,000 ) (14,503,000 ) (43,691,000 ) (24,315,000 ) (68,006,000 )
Net income - - - 248,000 - 248,000 132,000 380,000
Stock options expense - - 9,000 - - 9,000 - 9,000
Investment in Santa Fe - - (46,000 ) - - (46,000 ) 22,000 (24,000 )
Purchase of treasury stock - - - - (190,000 ) (190,000 ) - (190,000 )
Balance at December 31, 2019 3,404,982 33,000 10,166,000 (39,176,000 ) (14,693,000 ) (43,670,000 ) (24,161,000 ) (67,831,000 )
Net loss - - - (1,027,000 ) - (1,027,000 ) (95,000 ) (1,122,000 ) - - - (2,580,000 ) - (2,580,000 ) (479,000 ) (3,059,000 )

Stock options expense - - 29,000 - - 29,000 - 29,000 - - 121,000 - - 121,000 - 121,000

Investment in Santa Fe - - (31,000 ) - - (31,000 ) 16,000 (15,000 ) - - (4,279,000 ) - - (4,279,000 ) 3,353,000 (926,000 )

Investment in Portsmouth - - (124,000 ) - - (124,000 ) 62,000 (62,000 )
Investment in Woodland - - 913,000 - - 913,000 - 913,000
Purchase of treasury stock - - - - (266,000 ) (266,000 ) - (266,000 ) - - - - (222,000 ) (222,000 ) - (222,000 )

Balance at December 31, 2018 3,404,982 33,000 10,550,000 (41,614,000 ) (13,732,000 ) (44,763,000 ) (25,618,000 ) (70,381,000 )

Net income - - - 1,051,000 - 1,051,000 284,000 1,335,000

Stock options expense - - 9,000 - - 9,000 - 9,000

Purchase of treasury stock - - - - (74,000 ) (74,000 ) - (74,000 )

Balance at March 31, 2019 3,404,982 $ 33,000 $ 10,559,000 $ (40,563,000 ) $ (13,806,000 ) $ (43,777,000 ) $ (25,334,000 ) $ (69,111,000 )
Balance at March 31, 2020 3,404,982 $ 33,000 $ 6,797,000 $ (41,756,000 ) $ (14,915,000 ) $ (49,841,000 ) $ (21,225,000 ) $ (71,066,000 )

The accompanying notes are an integral part of these (unaudited) condensed consolidated financial statements.

~~-7-~~ - 6 -

THE INTERGROUP CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the nine months ended March 31, 2020 2019 2021 2020
Cash flows from operating activities:
Net (loss) income $ (2,035,000 ) $ 1,341,000
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net income (loss) $ 5,155,000 $ (2,035,000 )
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization 3,594,000 3,626,000 3,332,000 3,594,000
Loss on disposal of assets - 398,000
Gain from sale of real estate (12,043,000 ) -
Gain on Extinguishment of Debt (453,000 ) -
Deferred taxes (688,000 ) 771,000 1,658,000 (688,000 )
Net unrealized loss on marketable securities 1,771,000 1,534,000
Net unrealized (gain) loss on marketable securities (9,604,000 ) 1,771,000
Impairment loss on other investments 103,000 98,000 119,000 103,000
Stock compensation expense 138,000 68,000 12,000 138,000
Changes in operating assets and liabilities:
Investment in marketable securities 5,072,000 1,473,000 (21,214,000 ) 5,072,000
Other assets 233,000 2,555,000 (1,199,000 ) 233,000
Accounts payable and other liabilities - Justice (3,182,000 ) (2,740,000 ) (1,447,000 ) (3,182,000 )
Accounts payable and other liabilities 96,000 - (1,042,000 ) 96,000
Due to securities broker (1,606,000 ) 137,000 7,445,000 (1,606,000 )
Obligations for securities sold (1,225,000 ) (1,231,000 ) 4,967,000 (1,225,000 )
Net cash provided by operating activities 2,271,000 8,030,000
Net cash (used in) provided by operating activities (24,314,000 ) 2,271,000

Cash flows from investing activities:
Proceeds from sale of real estate 15,178,000 -
Proceeds from other investments 118,000 115,000
Investment in Justice (206,000 ) -
Payments for hotel investments (1,207,000 ) (982,000 ) (491,000 ) (1,207,000 )
Payments for real estate investments (848,000 ) (566,000 ) (830,000 ) (848,000 )
Distribution to NCI (979,000 ) -
Payments for investment in Santa Fe (1,023,000 ) (15,000 ) - (1,023,000 )
Payments for investment in Portsmouth (62,000 ) - - (62,000 )
Proceeds from other investments 115,000 103,000
Investment in Woodland 913,000 - - 913,000
Net cash used in investing activities (2,112,000 ) (1,460,000 )
Net cash provided by (used in) investing activities 12,790,000 (2,112,000 )

Cash flows from financing activities:
Net payments of mortgage and other notes payable (3,236,000 ) (5,174,000 )
Proceeds from line of credit - 2,985,000
Proceeds from refinance of mortgage notes paybles 5,384,000 -
Proceeds from SBA loan 2,000,000 -
Payments of mortgage and other notes payable (3,040,000 ) (3,236,000 )
Payment of LOC (2,985,000 ) -
Purchase of treasury stock (568,000 ) (538,000 ) (1,338,000 ) (568,000 )
Issuance cost from refinance of mortgage notes payable - real estate (255,000 ) -
Issuance cost from renewing line of credit (5,000 ) -
Net cash used in financing activities (3,804,000 ) (2,727,000 ) (239,000 ) (3,804,000 )

Net (decrease) increase in cash, cash equivalents and restricted cash (3,645,000 ) 3,843,000
Net decrease in cash, cash equivalents and restricted cash (11,763,000 ) (3,645,000 )
Cash, cash equivalents and restricted cash at the beginning of the period 25,132,000 17,511,000 28,286,000 25,132,000
Cash, cash equivalents and restricted cash at the end of the period $ 21,487,000 $ 21,354,000 $ 16,523,000 $ 21,487,000

Supplemental information:
Interest paid $ 7,083,000 $ 7,542,000 $ 6,914,000 $ 7,083,000
Taxes paid (refund received) $ 41,000 $ (1,349,000 )
Taxes paid $ 2,745,000 $ 41,000

Non-cash transaction:
Additions to Hotel equipment through capital lease $ 30,000 $ 71,000 $ 30,000 $ 30,000

The accompanying notes are an integral part of these (unaudited) condensed consolidated financial statements.

~~-8-~~ - 7 -

THE INTERGROUP CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements included herein have been prepared by The InterGroup Corporation (“InterGroup” or the “Company”), without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair statement of the financial position, cash flows and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements of InterGroup and the notes therein included in the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2019.~~2020. The March 31, ~~2020~~2021 Condensed Consolidated Balance Sheet was derived from the Consolidated Balance Sheet as included in the Company’s Form 10-K for the year ended June 30, ~~2019.~~2020.

The results of operations for the nine months ended March 31, ~~2020~~2021 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, ~~2020.~~2021.

Basic and diluted 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 income per share is similar to the computation of basic earnings 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 Company’s only potentially dilutive common shares are stock options.

OnEffective February ~~5, 2020,~~19, 2021, the ~~Company entered into a Contribution Agreement (the “Contribution Agreement”) with~~Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF) pursuant to which the Company received 97,500 shares of common stock, par value $0.10 per share, of Santa Fe, in exchange for its contribution to Santa Fe of 4,460 shares of common stock (the “Common Stock”) of Intergroup Woodland Village, Inc., an Ohio corporation (“Transaction”). As a result of the contribution, Woodland Village has become a wholly owned subsidiary of Santa Fe. Before the issuance of the stock referenced in the preceding sentence, the Company had the power to vote 86.3% of the voting shares of Santa Fe, which includes the power to vote an approximately 4% interest in the common stock in Santa Fe owned by the Company’s Chairmanwas liquidated and CEO, John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. Subsequent to this issuance, the Company has the power to vote 87.3% of the issued and outstanding common stock of Santa Fe, which includes the power to vote an approximately 3.7% interest in the common stock in Santa Fe under the aforementioned voting trust agreement. Mr. Winfield, Chairman of the Board of both the Company and Santa Fe, is a control person of both entities.
~~On February 5, 2020, after review by independent directors of the Company, and by the unanimous vote of~~ all directors of the Company (with Mr. Winfield abstaining), the Board approved the entry into the Contribution Agreement and the consummation of the Transaction. The Company’s Board approved the Transaction after the receipt of a fairness opinion from a third-party independent firm. The Board was first made aware of the Transaction in early January 2020, received information to review on or about January 17, 2020 and was given multiple opportunities to discuss the materials with management before the February 5, 2020 Board meeting. The Contribution Agreement also contains a provision for a potential subsequent earn out to InterGroup pursuant to terms set forth therein.
~~Santa Fe’s primary business is conducted through the management~~ of its assets including its 68.8% ~~owned subsidiary,~~interest in Portsmouth Square Inc. (“Portsmouth”), a public company (OTCBB: PRSI). was distributed to its shareholders in exchange for their Santa Fe common stock. InterGroup 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. The liquidation and distribution of Santa Fe did not have an impact on the condensed consolidated statement of operations but rather on the condensed consolidated balance sheets as a reclass between noncontrolling interests and accumulated deficit. As of March 31, 2021, InterGroup owns approximately 71.3% of the outstanding common shares of Portsmouth. As of March 31, 2021, 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 President, Chairman of the Board and Chief Executive Officer of Portsmouth.
Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors Limited ~~Partnership;~~Partnership, a California limited partnership (“Justice” or the “Partnership”). ~~InterGroup also directly owns approximately 13.5%~~As of March 31, 2021, Portsmouth has a 97.5% limited partnership interest in Justice and is the sole general partner. The financial statements of Justice are consolidated with those of the ~~common stock of Portsmouth.~~Company.
~~-9-~~

Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”) owns and operates 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. Mezzanine is a wholly-owned subsidiary of the Partnership; Operating is a wholly-owned subsidiary 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 operated by the partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (Hilton) through January 31, 2030.
- 8 -

Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover 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 payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America’s largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.

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~~fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. As of March 31, ~~2020,~~2021, all of the Company’s residential and commercial rental properties are managed in-house.

Due to Securities Broker

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.

Obligations 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 condensed consolidated statements of operations.

Income Tax

The Company consolidates Justice (“Hotel”) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax ~~benefit (expense)~~expense during the nine months ended March 31, ~~2020~~2021 and ~~2019~~2020 represent the income tax effect on the Company’s pretax income which includes its share in the net (loss) income of the Hotel.

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of March 31, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no material effect on the March 31, 2020 tax provision. We will continue to evaluate the income tax provisions of the CARES Act and monitor the tax law changes that could have income tax accounting and disclosure implications.
~~Financial Condition and Liquidity~~
Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, management expects that the ongoing length and severity of the economic downturn, resulting from the continuing and uncertain impact of the COVID-19 pandemic, will have a material adverse impact on our business, financial condition, liquidity and financial results. As a result of our Hotel’s material decrease in occupancy and average daily rate, we expect our cash flow from operations to continue to be significantly lower than historical rates for the foreseeable future, until the pandemic resolves, and hotel occupancies return to historical rates.
~~-10-~~
We have taken several steps to preserve capital and increase liquidity, including the implementation of various cost saving initiatives at our Hotel. For further discussion, see “Item 2 - Negative Effects of COVID-19 on our Business” included in this Quarterly Report. We may also receive cash generated from the investment of our cash and marketable securities as well as other investments. In order to increase our liquidity positions and take advantage of the favorable interest rate environment, we refinanced our $8,481,000 and $2,473,000 mortgage note payables on our 151-unit apartment complex in New Jersey in April 2020 and obtained a new mortgage in the amount of $18,370,000. The new mortgage has a fixed interest rate of 3.17% and matures in April 2030. We received net proceeds of approximately $6,814,000 from the refinancing. We are also refinancing two of our California properties which are scheduled to close in June and July 2020, and we could refinance additional multifamily properties should the need arise; however, management does not deem it necessary at this time. We have an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) of which $5,000,000 is available to be drawn down as of June 18, 2020, should additional liquidity be necessary.
As of March 31, 2020, we had cash, cash equivalents, and restricted cash of $21,487,000 which included $11,550,000 of restricted cash held by our Hotel senior lender Wells Fargo Bank, N.A. (“Lender”). Of the total restricted cash held by the Lender, $7,977,000 was for furniture, fixtures and equipment (“FF&E”) reserves and $2,432,000 was for a possible future property improvement plan (“PIP”) request by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. Therefore, Justice is currently in discussions with the Lender to release the PIP deposits to the Hotel and to allow the Hotel to utilize some or all of its FF&E reserves to fund operating expenses as well as debt service. Additionally, Justice has requested to temporarily pay interest only on the senior mortgage and the suspension of the monthly FF&E reserve installment, for a combined monthly savings in cash flow of approximately $321,000. Justice anticipates a resolution with the Lender in regard to the aforementioned requests before June 30, 2020.
On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. Both the SBA Loan – Justice and SBA Loan – InterGroup (collectively the “SBA Loans”), may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. New guidance on the criteria for forgiveness continues to be released. In accordance with the requirements of the CARES Act, Justice and InterGroup will use proceeds from the SBA Loans primarily for payroll costs.
We cannot presently estimate the full financial impact of the unprecedented COVID-19 pandemic on our business or predict the related federal, state and local civil authority actions, which are highly dependent on the severity and duration of the pandemic, but we expect that the COVID-19 closures and other imposed restrictions will continue to have a significant adverse impact on our results of operations. Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect the hospitality industry, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.
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. The Company has invested in short-term, income-producing instruments and in equity and debt securities when deemed appropriate. The Company’s marketable securities are classified as trading with unrealized gains and losses recorded through the consolidated statements of operations.
~~-11-~~
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. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy 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. We believe that our cash on hand, cash provided by the SBA loans and real estate refinancing, along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.
~~The following table provides a summary as of March 31, 2020, the Company’s material financial obligations which also including interest payments.~~
3 Months Year Year Year Year
Total 2020 2021 2022 2023 2024 Thereafter
Mortgage and subordinated notes payable $ 170,306,000 $ 766,000 $ 12,483,000 $ 3,095,000 $ 37,816,000 $ 107,655,000 $ 8,491,000
Other notes payable 8,989,000 252,000 4,001,000 1,033,000 750,000 567,000 2,386,000
Interest 31,722,000 2,646,000 8,596,000 8,149,000 7,013,000 3,403,000 1,915,000
Total $ 211,017,000 $ 3,664,000 $ 25,080,000 $ 12,277,000 $ 45,579,000 $ 111,625,000 $ 12,792,000
Recently Issued and Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02,Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11,Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which allowed us to not recognize leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are immaterial relative to our total assets and liabilities as of June 30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 34 and Note 1012 for balances of finance lease ROU assets and liabilities, respectively.

- 9 -
~~On June 16, 2016,~~In August 2018, the FASB issued ~~ASU 2016-13, “~~Accounting Standard Update No. 2018-13, ~~Financial Instruments - Credit Losses~~Changes to Disclosure Requirements for Fair Value Measurements (Topic ~~326): Measurement~~820) (ASU 2018-13), which improved the effectiveness of ~~Credit Losses~~disclosure requirements for recurring and nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on ~~Financial Instruments.” This ASU modifies~~changes in unrealized gains and losses, the ~~impairment model~~range and weighted average of significant unobservable inputs used to ~~utilize an expected loss methodology~~develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in ~~place~~the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the ~~currently used incurred loss methodology, which will result in the timelier recognition of losses. ASU No. 2016-13 will be~~additional disclosures until their effective ~~for us as of January 1, 2023.~~date. The Company ~~is currently reviewing~~has adopted the ~~effect~~new standard effective July 1, 2020 and the adoption of ~~ASU No. 2016-13.~~this guidance does not have a material impact on its condensed consolidated financial statements.

NOTE 2 - LIQUIDITY
Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the nine months ended March 31, 2021, our net cash flow used in operations was $24,314,000. For the nine months ended March 31, 2020, our net cash flow provided by operations was $2,271,000. 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, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.
The Company had cash and cash equivalents of $8,880,000 and $14,163,000 as of March 31, 2021 and June 30, 2020, respectively. The Company had net funds available from its investments in marketable securities of $22,714,000 as of March 31, 2021 after $9,021,000 due to securities broker and $5,261,000 obligations for securities sold. As of June 30, 2020, the Company had net funds available from investments in marketable securities of $4,308,000 after $1,576,000 due to securities broker and $294,000 obligations for securities sold. In addition, the Hotel had $5,785,000 and $10,666,000 of restricted cash held by its senior lender Wells Fargo Bank, N.A. (“Lender”) as of March 31, 2021 and June 30, 2020, respectively. Of the $10,666,000 restricted cash held as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) requested by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. On August 19, 2020, Lender released PIP deposits in the amount of $2,379,000 to the Hotel. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.
On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of March 31, 2021, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup was scheduled to mature on April 27, 2022 and had a 1.00% interest rate. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. All unforgiven portion of the principal and accrued interest will be due at maturity. During the quarter ended December 31, 2020, Justice and the Company submitted applications for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan – Justice. As of March 31, 2021, the SBA has forgiven the full $453,000 of the SBA Loan – InterGroup.
- 10 -
On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.
In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. During the nine months ended March 31, 2021, InterGroup completed refinancing on three of its California properties and generated net proceeds of $5,384,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of March 31, 2021 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.
As the sole general partner of Justice that controls approximately 97.5% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup to meet any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup passed resolution to provide funding to Portsmouth if necessary. 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. Since December 2020, InterGroup has advanced $2,950,000 to Justice per the aforementioned loan modification agreement. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital. As of March 31, 2021, Justice has an outstanding loan balance of $5,950,000 due to InterGroup.
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 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. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low revenue per available room (“RevPAR”) 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. We believe that our cash on hand, along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.
- 11 -
The following table provides a summary as of March 31, 2021, the Company’s material financial obligations which also includes interest payments.
3 Months Year Year Year Year
Total 2021 2022 2023 2024 2025 Thereafter
Mortgage and subordinated notes payable $ 181,041,000 $ 764,000 $ 3,199,000 $ 28,470,000 $ 108,407,000 $ 3,797,000 $ 36,404,000
SBA loans and other notes payable 7,502,000 119,000 5,200,000 183,000 - - 2,000,000
Related party notes payable 4,228,000 379,000 567,000 567,000 567,000 567,000 1,581,000
Interest 30,600,000 1,816,000 8,778,000 7,981,000 4,761,000 1,243,000 6,021,000
Total $ 223,371,000 $ 3,078,000 $ 17,744,000 $ 37,201,000 $ 113,735,000 $ 5,607,000 $ 46,006,000
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 following table present our Hotel revenue disaggregated by revenue streams.

For the three months ended March 31, 2020 2019 2021 2020
Hotel revenues:
Hotel rooms $ 9,642,000 $ 13,521,000 $ 2,368,000 $ 9,642,000
Food and beverage 874,000 1,218,000 17,000 874,000
Garage 650,000 652,000 479,000 650,000
Other operating departments 93,000 78,000 38,000 93,000
Total hotel revenue $ 11,259,000 $ 15,469,000 $ 2,902,000 $ 11,259,000

~~-12-~~
For the nine months ended March 31, 2020 2019 2021 2020
Hotel revenues:
Hotel rooms $ 35,453,000 $ 38,608,000 $ 7,842,000 $ 35,453,000
Food and beverage 3,521,000 4,232,000 130,000 3,521,000
Garage 2,162,000 2,160,000 1,373,000 2,162,000
Other operating departments 453,000 276,000 91,000 453,000
Total hotel revenue $ 41,589,000 $ 45,276,000 $ 9,436,000 $ 41,589,000

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.

● Noncancelable 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.

- 12 -
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.

Contract assets and liabilities

We do not have any material contract assets as of March 31, ~~2020~~2021 and June 30, ~~2019~~2020 other than trade and other receivables, net on our condensed 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 condensed consolidated balance sheets. Contract liabilities decreased to ~~$404,000~~$173,000 as of March 31, ~~2020,~~2021, from ~~$1,215,000~~$375,000 as of June 30, ~~2019.~~2020. The decrease for the nine months ended March 31, ~~2020~~2021 was primarily driven by ~~$811,000~~$202,000 of revenue recognized ~~that was included in~~and refunds issued to guests as a result of the ~~advanced deposits balance as of June 30, 2019.~~COVID-19 outbreak.
~~-13-~~
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 and lease agreements do not extend beyond one year.

NOTE 34 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

Accumulated Net Book Accumulated Net Book
March 31, 2020 Cost Depreciation Value
March 31, 2021 Cost Depreciation Value

Land $ 2,738,000 $ - $ 2,738,000 $ 2,738,000 $ - $ 2,738,000
Finance lease ROU assets 1,746,000 (213,000 ) 1,533,000 1,805,000 (527,000 ) 1,278,000
Furniture and equipment 30,472,000 (27,358,000 ) 3,114,000 30,438,000 (27,857,000 ) 2,581,000
Building and improvements 64,005,000 (32,118,000 ) 31,887,000 64,585,000 (33,583,000 ) 31,002,000
Investment in Hotel, net $ 98,961,000 $ (59,689,000 ) $ 39,272,000 $ 99,566,000 $ (61,967,000 ) $ 37,599,000

Accumulated Net Book Accumulated Net Book
June 30, 2019 Cost Depreciation Value
June 30, 2020 Cost Depreciation Value

Land $ 2,738,000 $ - $ 2,738,000 $ 2,738,000 $ - $ 2,738,000
Finance lease ROU assets 521,000 (35,000 ) 486,000 1,775,000 (291,000 ) 1,484,000
Furniture and equipment 30,585,000 (26,842,000 ) 3,743,000 30,528,000 (27,498,000 ) 3,030,000
Building and improvements 63,879,000 (31,010,000 ) 32,869,000 64,005,000 (32,488,000 ) 31,517,000
Investment in Hotel, net $ 97,723,000 $ (57,887,000 ) $ 39,836,000 $ 99,046,000 $ (60,277,000 ) $ 38,769,000
- 13 -

NOTE 45 – INVESTMENT IN REAL ESTATE, NET

The Company’s investment in real estate includes ~~sixteen~~fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. Investment in real estate consisted of the following:

As of March 31, 2020 June 30, 2019 March 31, 2021 June 30, 2020
Land $ 23,566,000 $ 23,566,000 $ 21,568,000 $ 23,565,000
Buildings, improvements and equipment 69,216,000 68,369,000 67,517,000 69,417,000
Accumulated depreciation (43,489,000 ) (41,629,000 ) (44,328,000 ) (44,112,000 )
49,293,000 50,306,000 44,757,000 48,870,000
Land held for development 1,468,000 1,467,000 1,468,000 1,468,000
Investment in real estate, net $ 50,761,000 $ 51,773,000 $ 46,225,000 $ 50,338,000
On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of the RLOC of $2,985,000 as the Company had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property.
On November 23, 2020, Santa Fe sold its 2-unit apartment complex in West Los Angeles, California to InterGroup for $1,530,000 in exchange for a reduction of $1,196,000 of its obligation to InterGroup. Santa Fe acquired the property on February 1, 2002 for $785,000. 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 its 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 March 2021, in an effort to make both companies more efficient, InterGroup purchased back the 50% interest of InterGroup Uluniu Inc. from Portsmouth for $980,000, which represents Portsmouth’s carrying cost of the investment. No gains or losses were realized as a result of the transaction since it was a related-party transaction. As a related-party transaction, the fairness of the financial terms of the transactions were reviewed and approved by the independent director of the Company.

NOTE 56 – 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 transfer to its shareholders through income and/or capital gain.

~~-14-~~
At March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments, along with the changes in amounts due to broker are included in earnings. Trading securities are summarized as follows:

Gross Gross Net Fair Gross Gross Net
Investment Cost Unrealized Gain Unrealized Loss Unrealized Loss Value Cost Unrealized Gain Unrealized Loss Unrealized Gain (Loss) Fair Value

As of March 31, 2020
As of
March 31, 2021
Corporate Equities $ 8,675,000 $ 562,000 $ (6,384,000 ) $ (5,822,000 ) $ 2,853,000 $ 32,500,000 $ 7,857,000 $ (3,361,000 ) $ 4,496,000 $ 36,996,000

As of June 30, 2019
Corporate Equities $ 19,204,000 $ 1,753,000 $ (11,261,000 ) $ (9,508,000 ) $ 9,696,000
As of
June 30, 2020
Corporate
Equities $ 11,459,000 $ 902,000 $ (6,183,000 ) $ (5,281,000 ) $ 6,178,000

As of March 31, ~~2020,~~2021 and June 30, ~~2019,~~2020, approximately ~~10%~~6% and 7%11%, respectively, of the investment in marketable securities balance above is comprised of the common stock of Comstock Mining Inc (“Comstock”). As of March 31, ~~2020,~~2021 and June 30, ~~2019,~~2020, the Company had ~~$6,095,000~~$2,210,000 and ~~$11,088,000,~~$5,734,000, respectively, of unrealized losses related to securities held for over one year; of which ~~$5,823,000~~$1,794,000 and ~~$10,900,000~~$5,427,000 are related to its investment in Comstock, respectively. For the nine months ended March 31, 2020, the decrease in unrealized losses is a result of reclassing $5,473,000 of net unrealized gain related to Comstock that was included in the cost basis as of June 30, 2019.
- 14 -

Net gains (losses) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of net ~~loss~~gains (losses) on marketable securities for the three and nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

For the three months ended March 31, 2021 2020
Realized gain (loss) on marketable securities, net $ 1,845,000 $ (1,113,000 )
Realized loss on marketable securities related to Comstock (1,578,000 ) -
Unrealized gain (loss) on marketable securities, net 501,000 (1,254,000 )
Unrealized gain (loss) on marketable securities related to Comstock 4,870,000 (26,000 )
Net gain (loss) on marketable securities $ 5,638,000 $ (2,393,000 )

For the three months ended March 31, 2020 2019
Realized loss on marketable securities, net $ (1,113,000 ) $ (169,000 )
Unrealized (loss) gain on marketable securities, net (1,254,000 ) 850,000
Unrealized (loss) gain on marketable securities related to Comstock (26,000 ) 280,000
Net loss on marketable securities $ (2,393,000 ) $ 961,000
For the nine months ended March 31, 2019 2018
Realized (loss) gain on marketable securities, net $ (1,190,000 ) $ 353,000
Unrealized loss on marketable securities, net (1,375,000 ) (1,352,000 )
Unrealized loss on marketable securities related to Comstock (396,000 ) (182,000 )
Net loss on marketable securities $ (2,961,000 ) $ (1,181,000 )
For the nine months ended March 31, 2021 2020
Realized gain (loss) on marketable securities, net $ 911,000 $ (1,190,000 )
Realized loss on marketable securities related to Comstock (1,578,000 ) -
Unrealized gain (loss) on marketable securities, net 4,683,000 (1,375,000 )
Unrealized gain (loss) on marketable securities related to Comstock 4,921,000 (396,000 )
Net gain (loss) on marketable securities $ 8,937,000 $ (2,961,000 )

NOTE 67 – OTHER INVESTMENTS, NET

The Company may also invest, with the approval of the ~~securities investment committee~~Executive Strategic Real Estate and Securities Investment Committee and other Company guidelines, in private investment equity funds and other unlisted securities, such as convertible notes through private placements. Those investments in non-marketable securities are carried at cost on the Company’s consolidated balance sheet as part of other investments, net of other than temporary impairment losses. ~~Other investments also include non-marketable warrants carried at fair value.~~

Other investments, net consist of the following:

Type March 31, 2020 June 30, 2019
Private equity hedge fund, at cost $ 273,000 $ 376,000
Other preferred stock, at cost 121,000 236,000
$ 394,000 $ 612,000
~~-15-~~
Type March 31, 2021 June 30, 2020
Private equity hedge fund, at cost $ 41,000 $ 157,000
Other preferred stock, at cost - 121,000
$ 41,000 $ 278,000

NOTE 78 - 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 and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

- 15 -
The assets and liabilities measured at fair value on a recurring basis are as follows:

As of 3/31/2020 6/30/2019 March 31, 2021 June 30, 2020
Assets: Total - Level 1 Total - Level 1 Total - Level 1 Total - Level 1
Investment in marketable securities:
REITs and real estate companies $ 1,671,000 $ 3,069,000 $ 11,190,000 $ 2,365,000
Financial services 7,033,000 282,000
Energy 5,977,000 767,000
Industrials 3,294,000 484,000
Basic material 427,000 829,000 3,055,000 1,209,000
Corporate bonds 360,000 1,420,000
Consumer cyclical 105,000 1,448,000 2,350,000 295,000
Energy 101,000 950,000
Financial services 86,000 951,000
Technology 43,000 651,000 1,397,000 121,000
Healthcare 39,000 185,000 1,285,000 43,000
Industrials 21,000 193,000
Other 736,000 38,000
Communication services 679,000 157,000
Corporate bonds - 417,000
Liabilities:
Due to securities broker: (9,021,000 ) (1,576,000 )
Obligations for securities sold: (5,261,000 ) (294,000 )
$ 2,853,000 $ 9,696,000 $ 22,714,000 $ 4,308,000

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 include “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. The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

Net loss for the nine months Net loss for the nine months ended
Assets Level 3 March 31, 2020 ended March 31, 2020 Level 3 March 31, 2021 March 31, 2021

Other non-marketable investments $ 394,000 $ 394,000 $ (103,000 ) $ 41,000 $ 41,000 $ (119,000 )

Net loss for the nine months Net loss for the nine months ended
Assets Level 3 June 30, 2019 ended March 31, 2019 Level 3 June 30, 2020 March 31, 2020

Other non-marketable investments $ 612,000 $ 612,000 $ (98,000 ) $ 278,000 $ 278,000 $ (103,000 )

For the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, we received distribution from other non-marketable investments of ~~$115,000~~$118,000 and ~~$103,000,~~$115,000, 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 and holds less than 20% ownership in each of the 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.

~~-16-~~ - 16 -

NOTE 89 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.
As of 3/31/2020 6/30/2019 March 31, 2021 June 30, 2020

Cash and cash equivalents $ 7,994,000 $ 11,837,000 $ 8,880,000 $ 14,163,000
Restricted cash 13,493,000 13,295,000 7,643,000 14,123,000
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 21,487,000 $ 25,132,000 $ 16,523,000 $ 28,286,000

Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition ~~reserves. It~~reserves for the Hotel. As of June 30, 2020, restricted cash also includes key money received from Interstate that is restricted for capital improvements for the Hotel. As of March 31, 2021, the key money balance was zero as Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021.

NOTE 910 – STOCK BASED COMPENSATION PLANS

The Company follows Accounting Standard Codification (ASC) Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units.

Please refer to Note 16 – Stock Based Compensation Plans in the Company’s Form 10-K for the year ended June 30, ~~2019~~2020 for more detailed information on the Company’s stock-based compensation plans.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company recorded stock option compensation cost of ~~$121,000~~$2,000 and ~~$9,000,~~$121,000, respectively, related to stock options that were previously issued. During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company recorded stock option compensation cost of ~~$138,000~~$12,000 and ~~$68,000,~~$138,000, respectively, related to stock options that were previously issued.
As of March 31, ~~2020,~~2021, there was a total of ~~$23,000~~$6,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of ~~1.92~~0.92 years.
In December 2018, the Company’s President and Chief Executive Officer, John V. Winfield exercised 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.

On February 25, 2020, shareholders of the Company voted in favor of amendments to the Company’s 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”) which would amend Section 1.3 of the 2010 Incentive Plan to extend the term from ten (10) years to sixteen (16) years, and Section 6.4 of the 2010 Incentive Plan to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to 20 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 equity 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. Upon approval of these amendments by the shareholders, our Board of Directors extended the term of Mr. Winfield’s options as described in this paragraph. As a result of extending Mr. Winfield’s options, the Company recorded stock option compensation cost of $116,000 in March 2020.

Option-pricing models require the input of various subjective assumptions, including the option’s expected life 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.

~~-17-~~ - 17 -

The following table summarizes the stock options activity from July 1, ~~2018~~2019 through March 31, ~~2020:~~2021:

Number of Weighted Average Weighted Average Aggregate Number of Weighted Average Weighted Average Aggregate
Shares Exercise Price Remaining Life Intrinsic Value Shares Exercise Price Remaining Life Intrinsic Value

Outstanding at July 1, 2018 368,000 $ 17.21 4.17 $ 3,505,000
Oustanding at July 1, 2019 341,195 $ 16.95 3.07 years $ 4,680,000
Granted - - - -
Exercised (26,805 ) 20.52 - -
Forfeited - - - -
Exchanged - - - -
Outstanding at June 30, 2019 341,195 $ 16.95 3.07 years $ 4,680,000 June 30, 2020 341,195 $ 16.95 3.83 years $ 3,271,000
Exercisable at June 30, 2019 330,395 $ 16.62 2.92 years $ 4,643,000 June 30, 2020 323,195 $ 16.38 3.67 years $ 3,271,000
Vested and Expected to vest at June 30, 2019 341,195 $ 16.95 3.07 years $ 4,680,000 June 30, 2020 341,195 $ 16.95 3.83 years $ 3,271,000

Outstanding at July 1, 2019 341,195 $ 16.95 3.07 years $ 4,680,000
Oustanding at July 1, 2020 341,195 $ 16.95 3.83 years $ 3,271,000
Granted - - - -
Exercised - - - -
Forfeited - - - -
Exchanged - - - -
Outstanding at March 31, 2020 341,195 $ 16.95 4.08 years $ 4,110,000 March 31, 2021 341,195 $ 16.95 3.08 years $ 6,689,000
Exercisable at March 31, 2020 333,995 $ 16.73 4.02 years $ 4,098,000 March 31, 2021 337,595 $ 16.84 3.05 years $ 6,656,000
Vested and Expected to vest at March 31, 2020 341,195 $ 16.95 4.08 years $ 4,110,000 March 31, 2021 341,195 $ 16.95 3.08 years $ 6,689,000

NOTE 1011 – 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 three and nine months ended March 31, ~~2020~~2021 and ~~2019.~~2020. Operating income (loss) from hotel operations consists of the operation of the hotel and the garage. Operating income from real estate operations consists of the operation of rental properties. Operating ~~loss~~gains (losses) from investment transactions consists of net investment gains (losses), impairment loss on other investments, net unrealized gain (loss) on other investments, dividend and interest income and trading and margin interest expense. The other segment consists of corporate general and administrative expenses and the income tax (expense) benefit for the entire Company.

As of and for the three months Hotel Real Estate Investment
ended March 31, 2021 Operations Operations Transactions Corporate Total
Revenues $ 2,902,000 $ 3,465,000 $ - $ - $ 6,367,000
Segment operating expenses (3,990,000 ) (1,944,000 ) - (704,000 ) (6,638,000 )
Segment income (loss) from operations (1,088,000 ) 1,521,000 - (704,000 ) (271,000 )
Interest expense - mortgage (1,642,000 ) (538,000 ) - - (2,180,000 )
Gain from debt extinguishment - - - 453,000 453,000
Depreciation and amortization expense (529,000 ) (598,000 ) - - (1,127,000 )
Gain from investments - - 5,404,000 - 5,404,000
Income tax expense - - - (880,000 ) (880,000 )
Net income (loss) $ (3,259,000 ) $ 385,000 $ 5,404,000 $ (1,131,000 ) $ 1,399,000
Total assets $ 46,316,000 $ 46,225,000 $ 37,037,000 $ 13,715,000 $ 143,293,000
For the three months Hotel Real Estate Investment
ended March 31, 2020 Operations Operations Transactions Corporate Total
Revenues $ 11,259,000 $ 3,757,000 $ - $ - $ 15,016,000
Segment operating expenses (10,060,000 ) (2,071,000 ) - (890,000 ) (13,021,000 )
Segment income (loss) from operations 1,199,000 1,686,000 - (890,000 ) 1,995,000
Interest expense - mortgage (1,663,000 ) (588,000 ) - - (2,251,000 )
Depreciation and amortization expense (597,000 ) (619,000 ) - - (1,216,000 )
Loss from investments - - (2,647,000 ) - (2,647,000 )
Income tax benefit - - - 1,060,000 1,060,000
Net income (loss) $ (1,061,000 ) $ 479,000 $ (2,647,000 ) $ 170,000 $ (3,059,000 )
~~-18-~~ - 18 -

As of and for the three months Hotel Real Estate Investment
ended March 31, 2020 Operations Operations Transactions Corporate Total
As of and for the nine months Hotel Real Estate Investment
ended March 31, 2021 Operations Operations Transactions Corporate Total
Revenues $ 11,259,000 $ 3,757,000 $ - $ - $ 15,016,000 $ 9,436,000 $ 10,503,000 $ - $ - $ 19,939,000
Segment operating expenses (10,060,000 ) (2,071,000 ) - (890,000 ) (13,021,000 ) (14,156,000 ) (5,932,000 ) - (2,630,000 ) (22,718,000 )
Segment income (loss) from operations 1,199,000 1,686,000 - (890,000 ) 1,995,000 (4,720,000 ) 4,571,000 - (2,630,000 ) (2,779,000 )
Interest expense - mortgage and related party (1,663,000 ) (588,000 ) - - (2,251,000 )
Interest expense - mortgage (5,010,000 ) (1,726,000 ) - - (6,736,000 )
Gain on extinguishment of debt - - - 453,000 453,000
Gain on sale of real estate 12,043,000 12,043,000
Depreciation and amortization expense (597,000 ) (619,000 ) - - (1,216,000 ) (1,690,000 ) (1,809,000 ) - - (3,499,000 )
Loss from investments - - (2,647,000 ) - (2,647,000 )
Income tax benefit - - - 1,060,000 1,060,000
Gain from investments - - 8,263,000 - 8,263,000
Income tax expense - - - (2,590,000 ) (2,590,000 )
Net income (loss) $ (1,061,000 ) $ 479,000 $ (2,647,000 ) $ 170,000 $ (3,059,000 ) $ (11,420,000 ) $ 13,079,000 $ 8,263,000 $ (4,767,000 ) $ 5,155,000
Total assets $ 57,709,000 $ 50,761,000 $ 3,247,000 $ 7,335,000 $ 119,052,000 $ 46,316,000 $ 46,225,000 $ 37,037,000 $ 13,715,000 $ 143,293,000

For the three months Hotel Real Estate Investment
ended March 31, 2019 Operations Operations Transactions Corporate Total
Revenues $ 15,469,000 $ 3,744,000 $ - $ - $ 19,213,000
Segment operating expenses (11,378,000 ) (2,051,000 ) - (667,000 ) (14,096,000 )
Segment income (loss) from operations 4,091,000 1,693,000 - (667,000 ) 5,117,000
Interest expense - mortgage and related party (1,812,000 ) (598,000 ) - - (2,410,000 )
Loss on disposal of assets (398,000 ) - - - (398,000 )
Depreciation and amortization expense (611,000 ) (607,000 ) - - (1,218,000 )
Gain from investments - - 745,000 - 745,000
Income tax expense - - - (501,000 ) (501,000 )
Net income (loss) $ 1,270,000 $ 488,000 $ 745,000 $ (1,168,000 ) $ 1,335,000
As of and for the nine months Hotel Real Estate Investment
ended March 31, 2020 Operations Operations Transactions Corporate Total
Revenues $ 41,589,000 $ 11,313,000 $ - $ - $ 52,902,000
Segment operating expenses (33,138,000 ) (6,110,000 ) - (2,231,000 ) (41,479,000 )
Segment income (loss) from operations 8,451,000 5,203,000 - (2,231,000 ) 11,423,000
Interest expense - mortgage and related party (5,190,000 ) (1,788,000 ) - - (6,978,000 )
Depreciation and amortization expense (1,801,000 ) (1,860,000 ) - - (3,661,000 )
Loss from investments - - (3,508,000 ) - (3,508,000 )
Income tax benefit - - - 689,000 689,000
Net income (loss) $ 1,460,000 $ 1,555,000 $ (3,508,000 ) $ (1,542,000 ) $ (2,035,000 )
Total assets $ 57,709,000 $ 50,761,000 $ 3,247,000 $ 7,335,000 $ 119,052,000
For the nine months Hotel Real Estate Investment Hotel Real Estate Investment
ended March 31, 2019 Operations Operations Transactions Corporate Total
ended March 31, 2020 Operations Operations Transactions Corporate Total
Revenues $ 45,276,000 $ 11,175,000 $ - $ - $ 56,451,000 $ 41,589,000 $ 11,313,000 $ - $ - $ 52,902,000
Segment operating expenses (33,424,000 ) (5,929,000 ) - (1,789,000 ) (41,142,000 ) (33,138,000 ) (6,110,000 ) - (2,231,000 ) (41,479,000 )
Segment income (loss) from operations 11,852,000 5,246,000 - (1,789,000 ) 15,309,000 8,451,000 5,203,000 - (2,231,000 ) 11,423,000
Interest expense - mortgage and related party (5,423,000 ) (1,957,000 ) - - (7,380,000 )
Loss on disposal of assets (398,000 ) - - - (398,000 )
Interest expense - mortgage (5,190,000 ) (1,788,000 ) - - (6,978,000 )
Depreciation and amortization expense (1,896,000 ) (1,814,000 ) - - (3,710,000 ) (1,801,000 ) (1,860,000 ) - - (3,661,000 )
Loss from investments - - (1,709,000 ) - (1,709,000 ) - - (3,508,000 ) - (3,508,000 )
Income tax expense - - - (771,000 ) (771,000 )
Income tax benefit - - - 689,000 689,000
Net income (loss) $ 4,135,000 $ 1,475,000 $ (1,709,000 ) $ (2,560,000 ) $ 1,341,000 $ 1,460,000 $ 1,555,000 $ (3,508,000 ) $ (1,542,000 ) $ (2,035,000 )

NOTE 1112 – RELATED PARTY AND OTHER FINANCING TRANSACTIONS

The following summarizes the balances of related party and other notes payable as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

As of 3/31/2020 6/30/2019

Note payable - Hilton $ 3,088,000 $ 3,325,000
Note payable - Interstate 1,708,000 1,896,000
Other notes payable 2,000 40,000
Total related party and other notes payable $ 4,798,000 $ 5,261,000
~~-19-~~
As of March 31, 2021 June 30, 2020
Note payable - Hilton 2,771,000 3,008,000
Note payable - Interstate 1,458,000 1,646,000
SBA Loans 6,719,000 5,172,000
Total related party and other notes payable $ 10,948,000 $ 9,826,000

Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.

On February 1, 2017, Justice entered into an HMA with Interstate 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 Interstate 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 (2^nd) anniversary of the takeover date. As of March 31, ~~2020, and~~2021, the key money balance was zero as Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021. As of June 30, ~~2019,~~2020, balance of the key money plus accrued interest is ~~$1,008,000 and $2,049,000, respectively,~~$1,009,000 and is included in restricted cash in the condensed consolidated balance ~~sheets.~~sheet. Unamortized portion of the key money is included in the related party notes payable in the condensed consolidated balance sheets.
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On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of March 31, 2021, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup was scheduled to mature on April 27, 2022 and had a 1.00% interest rate. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. All unforgiven portion of the principal and accrued interest will be due at maturity. During the quarter ended December 31, 2020, Justice and InterGroup submitted applications for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan – Justice. As of March 31, 2021, the SBA has forgiven the full $453,000 of the SBA Loan – InterGroup.
On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.

As of March 31, ~~2020,~~2021, the Company had finance lease obligations outstanding of ~~$1,206,000.~~$783,000. These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum. Minimum future lease payments for assets under finance leases as of March 31, ~~2020~~2021 are as follows:

For the year ending June 30,
2020 $ 126,000

2021 503,000 $ 130,000
2022 492,000 508,000
2023 188,000 188,000
Total minimum lease payments 1,309,000 826,000
Less interest on finance lease (103,000 ) (43,000 )
Present value of future minimum lease payments $ 1,206,000 $ 783,000

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

For the year ending June 30,
2020 $ 252,000
2021 4,001,000 $ 498,000
2022 1,033,000 5,767,000
2023 750,000 750,000
2024 567,000 567,000
2025 567,000
Thereafter 2,386,000 3,581,000
$ 8,989,000 $ 11,730,000
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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 ~~$92,656,000~~$91,130,000 and ~~$93,746,000~~$92,292,000 as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, 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. ~~As a result of the refinance, Justice has generated $500,000 in annual interest expense savings.~~
~~-20-~~

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 March 31, ~~2020,~~2021, InterGroup is in compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the Hotel’s cash flow, Justice Operating Company, LLC may not meet certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lock-box 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. ~~Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations even during these uncertain times for at least the next twelve months and beyond.~~

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 1, 2021. 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 from its current loan balance of $3,000,000 due to InterGroup. The balance of this loan was $5,950,00 and $3,000,000 as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively, and is eliminated in the condensed consolidated balance sheets.

In July 2018, InterGroup obtained a revolving $5,000,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”). On July 31, 2018, $2,969,000 was drawn from the RLOC to pay off the mortgage note payable at Intergroup Woodland Village, Inc. (“Woodland Village”) and a new mortgage note payable was established at Woodland Village due to InterGroup for the amount drawn. Woodland Village holds a three-story apartment complex in Santa Monica, California and is a subsidiary of Santa Fe and the Company. The RLOC carries a variable interest rate of 30-day LIBOR plus 3%. Interest is paid on a monthly basis. The RLOC and all accrued and unpaid interest were due in July 2019. In July 2019, the Company obtained a modification from CIBC which increased the RLOC by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup carries same terms as InterGroup’s RLOC. In July 2020, InterGroup entered into a second modification agreement with CIBC which extended the maturity date of its RLOC to July 21, 2021. The $2,969,000 mortgage due to InterGroup was also extended to July 1, 2021. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.

On ~~August 31, 2018, $1,005,000 was drawn from the RLOC to pay off a mortgage note payable on a single-family house located~~November 23, 2020, Santa Fe sold its 2-unit apartment complex in West Los Angeles, ~~California. On September 28, 2018,~~California to InterGroup for $1,530,000 in exchange for a reduction of $1,196,000 of its obligation to InterGroup. Santa Fe acquired the property on February 1, 2002 for $785,000. 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 its 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.
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 ~~obtained a new mortgage~~received cash of $5,013,000 and 422,998 shares of Portsmouth common stock in the amount of $1,000,000 on the same property. The interest rate on the new loan is fixed at 4.75% per annum for the first five years and variable for the remaining of the term. The note matures in October 2048. Net proceeds of $995,000 receivedMarch 2021 as a result of the ~~refinance was used to pay down the RLOC.~~
~~On February 5, 2020,~~liquidation of Santa Fe. As a former 3.7% shareholder of Santa Fe, ~~acquired additional 44.6% interest in Woodland Village from InterGroup by issuing 97,500~~the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, received cash of $221,000 and 18,641 shares of ~~its~~Portsmouth common stock ~~to InterGroup. As~~in March 2021 as a result of the ~~transaction, Woodland Village has become a wholly owned subsidiary~~liquidation of Santa Fe. ~~The transaction is being made pursuant to a Contribution Agreement (the “Contribution Agreement”) between~~On April 12, 2021, Santa Fe received a filed stamped copy of its Articles of Dissolution from the State of Nevada, and ~~InterGroup, dated February 5, 2020. The Contribution Agreement also contains a provision for a potential subsequent earn out to InterGroup pursuant to terms set forth therein.~~Santa Fe is effectively fully dissolved and no longer in legal existence.
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Four of the Portsmouth directors serve as directors of InterGroup. ~~Two of those directors also serve as directors of Santa Fe. The two Santa Fe directors also serve as directors of InterGroup.~~

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 Santa Fe~~ and oversees the investment activity of ~~those companies.~~Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice. Depending on certain market conditions and various risk factors, the Chief Executive Officer ~~Portsmouth~~ and ~~Santa Fe~~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 ~~the~~ Portsmouth, ~~and Santa Fe,~~ at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.
~~-21-~~

NOTE 1213 – ACCOUNTS PAYABLE AND OTHER LIABILITIES - JUSTICE

The following summarizes the balances of accounts payable and other liabilities – Justice as of March 31, ~~2020~~2021 and June 30, ~~2019.~~2020.

As of 3/31/2020 6/30/2019 March 31, 2021 June 30, 2020

Trade payable $ 3,041,000 $ 1,792,000 $ 1,924,000 $ 3,000,000
Advance deposits 404,000 1,215,000 173,000 375,000
Property tax payable 31,000 1,046,000 14,000 523,000
Payroll and related accruals 1,768,000 2,584,000 2,484,000 1,969,000
Interest payable 421,000 412,000
Mortgage interest payable 414,000 527,000
Withholding and other taxes payable 1,144,000 1,831,000 515,000 370,000
Security deposit 52,000 52,000 52,000 52,000
Other payables 1,255,000 2,366,000 900,000 598,000
Total accounts payable and other liabilities - Justice $ 8,116,000 $ 11,298,000 $ 6,476,000 $ 7,414,000

NOTE 1314 – ACCOUNTS PAYABLE AND OTHER LIABILITIES

The following summarizes the balances of accounts payable and other liabilities as of March 31, ~~2020~~2021 and June 30, ~~2019.~~2020.

As of 3/31/2020 6/30/2019 March 31, 2021 June 30, 2020

Trade payable $ 822,000 $ 521,000 $ 573,000 $ 709,000
Advance deposits 392,000 378,000 290,000 422,000
Property tax payable 421,000 595,000 222,000 554,000
Payroll and related accruals 48,000 47,000 131,000 42,000
Interest payable 220,000 221,000 215,000 218,000
Withholding and other taxes payable 1,069,000 1,108,000 768,000 1,189,000
Security deposit 738,000 736,000 761,000 745,000
Other payables 152,000 160,000 213,000 334,000
Total accounts payable and other liabilities $ 3,862,000 $ 3,766,000 $ 3,173,000 $ 4,213,000

NOTE 1415 – SUBSEQUENT EVENTS

On ~~April 9, 2020, Justice entered into~~May 14, 2021, the Company purchased a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. The SBA Loan - Justicestrategic 4-unit apartment complex located in Los Angeles, California for $2,600,000 in an all-cash transaction and is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the ~~amount~~process of ~~$453,000. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has~~obtaining a 1.00% interest rate. Both the SBA Loan – Justice and SBA Loan – InterGroup (collectively the “SBA Loans”), may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. New guidance on the criteria for forgiveness continues to be released. In accordance with the requirements of the CARES Act, Justice and InterGroup will use proceeds from the SBA Loans primarily for payroll costs.
In April 2020, the Company refinanced its $8,481,000 and $2,473,000 mortgage note payables on its apartment complex in New Jersey and obtained a new mortgage in the amount of $18,370,000. The new mortgage has a fixed interest rate of 3.17% and matures in April 2030. The Company received net proceeds of approximately $6,814,000 from the refinancing.permanent mortgage.

~~-22-~~ - 22 -
Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~
FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “could,” “might” and similar expressions, are intended to identify forward-looking statements.

Such statements are subject to certain risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: national and worldwide economic conditions, including the impact of recessionary conditions on tourism, travel and the lodging industry; the impact of terrorism and war on the national and international economies, including tourism, securities markets, energy and fuel costs; natural disasters; general economic conditions and competition in the hotel industry in the San Francisco area; seasonality, labor relations and labor disruptions; actual and threatened pandemics such as swine flu or the outbreak of COVID-19 or similar outbreaks; partnership distributions; the ability to obtain financing at favorable interest rates and terms; securities markets, regulatory factors, litigation and other factors discussed below in this Report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020. These risks and uncertainties could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

On March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 194, the Securities and Exchange Commission issued Order Release No. 34-88465 (the “Order”) granting exemptions to registrants subject to the reporting requirements of the Exchange Act Section 13(a) or 15(d) due to circumstances related to the coronavirus disease 2019 (“COVID-19”). Due to the circumstances related to COVID-19, the Company has relied on the Order with respect to this Quarterly Report on Form 10-Q (“Form 10-Q”) for the period ended March 31, 2020. Absent the Order, the Form 10-Q was due on May 15, 2020. The Company was unable to file the Form 10-Q on a timely basis due to delays in the preparation and final review of the Form 10-Q by the relevant parties within the Company, due in part by the attention and resources the Company has focused on addressing the severe impacts of the COVID-19 pandemic on our business and operations.
~~Negative Effects of COVID-19 on our Business~~NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS

On February 25, 2020, the City of San Francisco issued the proclamation by the Mayor declaring the existence of a local emergency. The negative effects of the civil authority actions related to the novel strain of coronavirus (“COVID-19”) on our business have been significant. In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies and financial markets globally. It has also disrupted the normal operations of many businesses, including ours. To mitigate the harm from the pandemic, on March 16, 2020, the City and County of San Francisco, along with a group of five other Bay Area counties and the City of Berkeley, issued parallel health officer orders imposing shelter in place limitations across the Bay Area, requiring everyone to stay safe at home except for certain essential needs. Since February 2020, several unfavorable events and civil authority actions have unfolded causing demand for our hotel rooms to suffer including cancellations of all citywide conventions, reduction of flights in and out of the Bay Area and decline in both leisure and business travel.

In December 2020, due to the surge in COVID-19 cases and hospitalizations, the Health Officer of the City and County of San Francisco has suspended or restricted certain activities. Health Order C19-07q (the “Order”) incorporates suspensions, reductions in capacity limits, and other restrictions contained in the Regional Stay At Home Order issued by the California Department of Public Health on December 3, 2020. Effective December 17, 2020, the Bay Area Region, including San Francisco, is required to comply with the State’s December 3, 2020 Regional Stay-at-Home Order. The Order strongly discourages anyone in the County from travelling for leisure, recreation, business or other purposes that can be postponed until after the current surge. With limited exceptions, this Order imposed a mandatory quarantine on anyone traveling, moving, or returning to the County from anywhere outside the Bay Area. Effective January 20, 2021, Health Order C19-07r revised and replaced the previous Order; it continues to temporarily prohibit certain businesses and activities from resuming but allows certain other businesses, activities, travel and governmental functions to occur subject to specified health and safety restrictions, limitations, and conditions to limit the transmission of COVID-19. Quarantine and isolation requirements and recommendations upon moving to, traveling to, or returning to the County have not changed from the previous Order.
On March 24, 2021, the City and County of San Francisco announced it moved into the orange tier which removed the suggested Shelter in Place for guests travelling to San Francisco. This was a very positive step for the hotel community. This tier opens up activities in the city including expanded restaurant capacities, museums and attractions. For the hotel it allows for guests to gather in public spaces and for outlets and amenities to open up at limited capacities including fitness centers. It does not change the very stringent cleaning and sanitation requirements set forth by the Health Officer of the City and County of San Francisco which proves to be a costly measure to maintain. Effective May 6, 2021, the City and County of San Francisco moved into the yellow tier guidelines.
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In response to the decrease in demand, we have since furloughed all managers at the Hotel except for members of the executive team and continue to limit hourly staff to a minimum. AsBy the end of ~~the date of this Quarterly Report,~~March 2020, we ~~have~~had temporarily closed all of our food and beverage ~~outlets.~~outlets, valet parking, concierge and bell services, fitness center, as well as the executive lounge facility. We continue to implement social distancing standards and cleaning processes designed by Interstate and Hilton to keep employees and guests safe. The full impact and duration of the COVID-19 outbreak continues to evolve as of the date of this ~~Quarterly Report.~~report. The pandemic effectively eliminated our ability to generate any profits, due to the drastic decline in both leisure and business travel. As a result, management believes the ongoing length and severity of the economic downturn caused by the pandemic will have a material adverse impact on our future business, financial condition, liquidity and financial ~~results for the fiscal year ending June 30, 2020.~~results. We are also assessing the potential impact on the impairment analysis of our long-lived assets and the realization of our deferred tax assets. As of the date of this report, the effects of the pandemic continue to affect our economy, business and leisure travel, and our needs to continue to curtail certain revenue generating activities at the Hotel. We expect that the effects will have a material adverse effect on our business until the pandemic ends.

As a result of the ~~Coronavirus Aid, Relief, and Economic Security~~CARES 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. ~~We are currently evaluating the impact of the provisions of the CARES Act.~~ 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. ~~As described in Note 12 – Subsequent Events, on~~On April 9, 2020, Justice entered into a loan agreement (“SBA ~~Loan”~~Loan - Justice”) with CIBC Bank USA under the CARES Act. The ~~Company~~Partnership received proceeds of $4,719,000 from the SBA ~~Loan.~~Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the ~~Company~~loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of March 31, 2021, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup was scheduled to mature on April 27, 2022 and had a 1.00% interest rate. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. All unforgiven portion of the principal and accrued interest will be due at maturity. During the quarter ended December 31, 2020, Justice and InterGroup submitted applications for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan – Justice. As of March 31, 2021, the SBA has forgiven the full $453,000 of the SBA Loan – InterGroup.
On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on ~~April 9, 2022~~February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of ~~principle~~principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the ~~first six (6)~~last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months ~~and~~after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.
~~-23-~~

RESULTS OF OPERATIONS

As of March 31, ~~2020,~~2021, the Company ~~owned~~owns approximately ~~87.3% of the common shares of its subsidiary, Santa Fe and Santa Fe owned approximately 68.8%~~71.3% of the common shares of Portsmouth Square, Inc. ~~InterGroup also directly owns approximately 13.5% of the common shares of Portsmouth.~~ Historically, the Company’s principal source of revenue is derived from the investment of its subsidiary, Portsmouth, in the Justice Investors Limited Partnership (“Justice” or the “Partnership”) inclusive of hotel room revenue, food and beverage revenue, garage revenue, and revenue from other operating departments. Justice owns the Hotel and related facilities, including a five-level underground parking garage. The financial statements of Justice have been consolidated with those of the Company. However, the impact of the COVID-19 pandemic is highly uncertain and management expects that the ongoing length and severity of the economic downturn will have a material adverse impact on our business, financial condition, liquidity and financial results.

The Hotel is operated by the Partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement (the “License Agreement”) with Hilton. The Partnership entered into the License Agreement on December 10, 2004. The term of the License Agreement was for an initial period of 15 years commencing on the opening date, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, the Partnership and Hilton entered into an amended franchise agreement which extended the License Agreement through 2030, modified the monthly royalty rate, extended geographic protection to the Partnership and also provided the Partnership certain key money cash incentives to be earned through 2030. The key money cash incentives were received on July 1, 2015.

On February 1, 2017, Justice entered into an HMA with Interstate to manage the Hotel and related facilities with an effective takeover date of February 3, 2017. The term of HMA is for an initial period of ten 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 Interstate 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.

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In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, ~~management~~when appropriate, sale of real estate. Properties include ~~sixteen~~fifteen 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. All of the Company’s residential and commercial rental operating 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. 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.

Three Months Ended March 31, ~~2020~~2021 Compared to Three Months Ended March 31, ~~2019~~2020

The Company had net income of $1,399,000 for the three months ended March 31, 2021 compared to net loss of $3,059,000 for the three months ended March 31, ~~2020 compared~~2020. The change is primarily due to ~~net income of $1,335,000 for~~gains from marketable securities in the three months ended March 31, ~~2019. The change is primarily attributable to~~2021, offset by the decrease in ~~Hotel revenue and increasd loss on marketable securities.~~operating income from the Hotel.

Hotel Operations

The Company had net loss from Hotel operations of $3,259,000 for the three months ended March 31, 2021 compared to net loss of $1,061,000 for the three months ended March 31, ~~2020 compared to net income of $1,270,000 for the three months ended March 31, 2019.~~2020. The change is primarily attributable to the decrease in Hotel revenue.
~~-24-~~

The following table sets forth a more detailed presentation of Hotel operations for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

For the three months ended March 31, 2020 2019
Hotel revenues:
Hotel rooms $ 9,642,000 $ 13,521,000
Food and beverage 874,000 1,218,000
Garage 650,000 652,000
Other operating departments 93,000 78,000
Total hotel revenues 11,259,000 15,469,000
Operating expenses excluding depreciation and amortization (10,060,000 ) (11,378,000 )
Operating income before interest, depreciation and amortization 1,199,000 4,091,000
Loss on disposal of assets - (398,000 )
Interest expense - mortgage (1,663,000 ) (1,812,000 )
Depreciation and amortization expense (597,000 ) (611,000 )
Net (loss) income from Hotel operations $ (1,061,000 ) $ 1,270,000
For the three months ended March 31, 2021 2020
Hotel revenues:
Hotel rooms $ 2,368,000 $ 9,642,000
Food and beverage 17,000 874,000
Garage 479,000 650,000
Other operating departments 38,000 93,000
Total hotel revenues 2,902,000 11,259,000
Operating expenses excluding depreciation and amortization (3,990,000 ) (10,060,000 )
Operating (loss) income before interest, depreciation and amortization (1,088,000 ) 1,199,000
Interest expense - mortgage (1,642,000 ) (1,663,000 )
Depreciation and amortization expense (529,000 ) (597,000 )
Net loss from Hotel operations $ (3,259,000 ) $ (1,061,000 )

For the three months ended March 31, ~~2020,~~2021, the Hotel had operating loss of $1,088,000 before interest expense, depreciation and amortization on total operating revenues of $2,902,000 compared to operating income of $1,199,000 before interest expense, depreciation and amortization on total operating revenues of $11,259,000 ~~compared to operating income of $4,091,000 before interest expense, depreciation and amortization on total operating revenues of $15,469,000~~ for the three months ended March 31, ~~2019.~~2020. For the three months ended March 31, ~~2020,~~2021, room revenues decreased by ~~$3,879,000, and~~$7,274,000, food and beverage revenue decreased by ~~$344,000,~~$857,000, and garage revenue decreased by $171,000, compared to the three months ended March 31, ~~2019.~~2020. The year over year decline in ~~both~~all areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak insince March 2020. ~~Revenue from garage and other operating departments increased mainly due to increase in cancellation revenue.~~
Total operating expenses decreased by ~~$1,318,000~~$6,070,000 due to decrease in salaries and wages, rooms commission, credit card fees, management fees, and franchise ~~fees, and legal~~ fees.
- 25 -

The following table sets forth the average daily room rate, average occupancy percentage and RevPAR of the Hotel for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

Three Months Ended March 31,
Average
Daily Rate
Average
Occupancy %
RevPAR

2020 $ 242 76 % $ 184
2019 $ 290 95 % $ 276
Three Months
Ended March 31,
Average Daily Rate
Average
Occupancy %
RevPAR

2021 $ 103 47 % $ 48
2020 $ 242 76 % $ 184

The Hotel’s revenues decreased by ~~27%~~74% this quarter as compared to the previous comparable quarter. Average daily rate decreased by ~~$48,~~$139, average occupancy dropped ~~19%~~29%, and RevPAR decreased by ~~$92~~$136 for the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019.~~2020.

Real Estate Operations

Net income from real estate operations for the three months ended March 31, ~~2020~~2021 decreased by ~~$9,000~~$94,000 compared to the three months ended March 31, ~~2019~~2020 as a result of decrease in revenue. The decrease in revenue year over year is due to ~~increase in legal fees~~increased vacancy loss and ~~repairs and maintenance expense.~~bad debt expense as the pandemic has affected some tenants’ ability to pay rent on time. All of the Company’s properties are managed in-house. 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 gain on marketable securities of $5,638,000 for the three months ended March 31, 2021 compared to a net loss on marketable securities of $2,393,000 for the three months ended March 31, ~~2020 compared to a net gain on marketable securities of $961,000 for~~2020. For the three months ended March 31, ~~2019.~~2021, the Company had a net realized gain of $267,000 and a net unrealized gain of $5,371,000. For the three months ended March 31, 2020, the Company had a net realized loss of $1,113,000 and a net unrealized loss of $1,280,000. ~~For the three months ended March 31, 2019, the Company had a net realized loss of $169,000 and a net unrealized gain of $1,130,000.~~
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.
~~-25-~~
The Company and its subsidiaries, Portsmouth and Santa Fe, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax expense (benefit) during the three months ended March 31, 2020 and 2019 represent primarily the income tax effect of the pretax income (loss) at InterGroup, Santa Fe, and Portsmouth, which includes its share in net income (loss) of the Hotel.
~~Nine Months Ended March 31, 2020 Compared to Nine Months Ended March 31, 2019~~
The Company had net loss of $2,035,000 for the nine months ended March 31, 2020 compared to net income of $1,341,000 for the nine months ended March 31, 2019. The change is primarily attributable to the decrease in Hotel revenue and increased loss on marketable securities.
~~Hotel Operations~~
The Company had net income from Hotel operations of $1,460,000 for the nine months ended March 31, 2020 compared to net income of $4,135,000 for the nine months ended March 31, 2019. The change is primarily attributable to the decrease in Hotel revenue.
~~The following table sets forth a more detailed presentation of Hotel operations for the nine months ended March 31, 2020 and 2019.~~
For the nine months ended March 31, 2020 2019
Hotel revenues:
Hotel rooms $ 35,453,000 $ 38,608,000
Food and beverage 3,521,000 4,232,000
Garage 2,162,000 2,160,000
Other operating departments 453,000 276,000
Total hotel revenues 41,589,000 45,276,000
Operating expenses excluding depreciation and amortization (33,138,000 ) (33,424,000 )
Operating income before interest, depreciation and amortization 8,451,000 11,852,000
Loss on disposal of assets - (398,000 )
Interest expense - mortgage (5,190,000 ) (5,423,000 )
Depreciation and amortization expense (1,801,000 ) (1,896,000 )
Net income from Hotel operations $ 1,460,000 $ 4,135,000
For the nine months ended March 31, 2020, the Hotel had operating income of $8,451,000 before interest, depreciation and amortization on total operating revenues of $41,589,000 compared to operating income of $11,852,000 before interest, depreciation and amortization on total operating revenues of $45,276,000 for the nine months ended March 31, 2019.
For the nine months ended March 31, 2020, room revenues decreased by $3,155,000 and food and beverage revenue decreased by $711,000. The year over year decline in both areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak in March 2020. Garage revenue remained consistent year over year. Revenue from other operating departments increased by $177,000 as a result of increase in cancellation revenue.
~~Total operating expenses decreased by $286,000 due to decrease in management fees, rooms commission, 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 nine months ended March 31, 2020 and 2019.
Nine MonthsEnded March 31,

Average
Daily Rate

Average
Occupancy %

RevPAR

2020 $ 256 91 % $ 233
2019 $ 269 96 % $ 259
~~-26-~~
The Hotel’s total revenues decreased by 8% for the nine months ended March 31, 2020 as compared to the nine months ended March 31, 2019. Average daily rate decreased by $13 and RevPAR decreased by $26 for the nine months ended March 31, 2020 compared to the nine months ended March 31, 2019. Average occupancy dropped by 5% during the nine months ended March 31, 2020 versus the comparable period.
~~Real Estate Operations~~
Net income from real estate operations for the nine months ended March 31, 2020 increased by $80,000 compare to the nine months ended March 31, 2019 due to reduction in mortgage interest and increased revenue. All of Company’s properties are managed in-house. 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 loss on marketable securities of $2,961,000 for the nine months ended March 31, 2020 compared to a net loss on marketable securities of $1,181,000 for the nine months ended March 31, 2019. For the nine months ended March 31, 2020, the Company had a net realized loss of $1,190,000 and a net unrealized loss of $1,771,000. For the nine months ended March 31, 2019, the Company had a net realized gain of $353,000 and a net unrealized loss of $1,534,000.
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.

The Company and its subsidiaries, Portsmouth and Santa Fe, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax ~~benefit (expense)~~expense during the ~~nine~~three months ended March 31, 2021 and 2020 ~~and 2019 represents~~represent primarily the income tax effect of the pretax income (loss) at InterGroup, Santa Fe, and Portsmouth, which includes its share in net income (loss) of Justice.
Nine months Ended March 31, 2021 Compared to Nine months Ended March 31, 2020
The Company had net income of $5,155,000 for the nine months ended March 31, 2021 compared to net loss of $2,035,000 for the nine months ended March 31, 2020. The change is primarily attributable to gains from marketable securities and sale of real estates.
Hotel Operations
The Company had net loss from Hotel operations of $11,420,000 for the nine months ended March 31, 2021 compared to net income of $1,460,000 for the nine months ended March 31, 2020. The change is primarily attributable to the decrease in Hotel revenue.
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The following table sets forth a more detailed presentation of Hotel operations for the nine months ended March 31, 2021 and 2020.
For the nine months ended March 31, 2021 2020
Hotel revenues:
Hotel rooms $ 7,842,000 $ 35,453,000
Food and beverage 130,000 3,521,000
Garage 1,373,000 2,162,000
Other operating departments 91,000 453,000
Total hotel revenues 9,436,000 41,589,000
Operating expenses excluding depreciation and amortization (14,156,000 ) (33,138,000 )
Operating (loss) income before interest, depreciation and amortization (4,720,000 ) 8,451,000
Interest expense - mortgage (5,010,000 ) (5,190,000 )
Depreciation and amortization expense (1,690,000 ) (1,801,000 )
Net (loss) income from Hotel operations $ (11,420,000 ) $ 1,460,000
For the nine months ended March 31, 2021, the Hotel had operating loss of $4,720,000 before interest expense, depreciation and amortization on total operating revenues of $9,436,000 compared to operating income of $8,451,000 before interest expense, depreciation and amortization on total operating revenues of $41,589,000 for the nine months ended March 31, 2020. For the nine months ended March 31, 2021, room revenues decreased by $27,611,000, food and beverage revenue decreased by $3,391,000, and garage revenue decreased by $789,000, compared to the nine months ended March 31, 2020. The year over year decline in all areas are result of the ~~Hotel.~~business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak since March 2020. Total operating expenses decreased by $18,982,000 due to decrease in salaries and wages, rooms commission, credit card fees, management fees, and franchise fees.
The following table sets forth the average daily room rate, average occupancy percentage and RevPAR of the Hotel for the nine months ended March 31, 2021 and 2020.
Nine Months
Ended March 31, Average
Daily Rate Average
Occupancy % RevPAR

2021 $ 106 49 % $ 52
2020 $ 256 91 % $ 233
The Hotel’s revenues decreased by 77% for the nine months ended March 31, 2021, as compared to the nine months ended March 31, 2020. Average daily rate decreased by $150, average occupancy decreased by 42%, and RevPAR decreased by $181 for the nine months ended March 31, 2021, compared to the nine months ended March 31, 2020.
Real Estate Operations
Net income from real estate operations for the nine months ended March 31, 2021 increased by $11,524,000 compared to the nine months ended March 31, 2020. The change year over year is due to the sale of the Santa Fe’s 27-unit apartment complex located in Santa Monica, California for $15,650,000. All of the Company’s properties are managed in-house. 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 gain on marketable securities of $8,937,000 for the nine months ended March 31, 2021 compared to a net loss on marketable securities of $2,961,000 for the nine months ended March 31, 2020. For the nine months ended March 31, 2021, the Company had a net realized loss of $667,000 and a net unrealized gain of $9,604,000. For the nine months ended March 31, 2020, the Company had a net realized loss of $1,190,000 and a net unrealized loss of $1,771,000. 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.
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The Company and its subsidiaries, Portsmouth and Santa Fe, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax expense during the nine months ended March 31, 2021 and 2020 represent primarily the income tax effect of the pretax income (loss) at InterGroup, Santa Fe, and Portsmouth, which includes its share in net income (loss) of Justice.

MARKETABLE SECURITIES

The following table shows the composition of the Company’s marketable securities portfolio as of March 31, ~~2020~~2021 and June 30, ~~2019~~2020 by selected industry groups.
As of % of Total
March 31, 2021 Investment
Industry Group Fair Value Securities

REITs and real estate companies $ 11,190,000 30.1 %
Financial services 7,033,000 19.0 %
Energy 5,977,000 16.2 %
Industrials 3,294,000 8.9 %
Basic material 3,055,000 8.3 %
Consumer cyclical 2,350,000 6.4 %
Technology 1,397,000 3.8 %
Healthcare 1,285,000 3.5 %
Other 736,000 2.0 %
Communication services 679,000 1.8 %
$ 36,996,000 100.0 %

% of Total
As of March 31, 2020 Investment
Industry Group Fair Value Securities

REIT’s and real estate companies $ 1,671,000 58.6 %
Basic material 427,000 15.0 %
Corporate bonds 360,000 12.6 %
Consumer cyclical 105,000 3.7 %
Energy 101,000 3.5 %
Financial services 86,000 3.0 %
Technology 43,000 1.5 %
Healthcare 39,000 1.4 %
Industrials 21,000 0.7 %
$ 2,853,000 100.0 %
As of % of Total
June 30, 2020 Investment
Industry Group Fair Value Securities

REITs and real estate companies $ 2,365,000 38.3 %
Basic material 1,209,000 19.6 %
Energy 767,000 12.4 %
Industrials 484,000 7.8 %
Corporate bonds 417,000 6.7 %
Consumer cyclical 295,000 4.8 %
Financial services 282,000 4.6 %
Communication services 157,000 2.5 %
Technology 121,000 2.0 %
Other 81,000 1.3 %
$ 6,178,000 100.0 %

% of Total
As of June 30, 2019 Investment
Industry Group �� Fair Value Securities

REITs and real estate companies $ 3,069,000 31.8 %
Consumer cyclical 1,448,000 14.9 %
Corporate bonds 1,420,000 14.6 %
Financial 951,000 9.8 %
Energy 950,000 9.8 %
Basic material 829,000 8.5 %
Technology 651,000 6.7 %
Industrials 193,000 2.0 %
Healthcare 185,000 1.9 %
$ 9,696,000 100.0 %
~~-27-~~
As of March 31, 2021, the Company’s investment portfolio is diversified with 136 different equity positions. The Company does not hold any equity security that is more than 10% of the equity value of the portfolio. The largest security position represents 9% of the portfolio and consists of the common stock of Colony Financial Inc. (NYSE: CLNY) which is included in the REITs and real estate companies’ industry group.
As of June 30, 2020, the Company’s investment portfolio ~~includes approximately 23~~is diversified with 59 different equity positions. The Company holds ~~four~~two equity securities that comprised more than 10% of the equity value of the portfolio. The largest security position represents ~~42%~~19% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NYSE: ARL), which is included in the REITs and real estate companies’ industry group.

- 28 -
As of June 30, 2019, the Company’s investment portfolio includes approximately 29 equity positions. The Company holds three equity securities that comprised more than 10% of the equity value of the portfolio. The largest security position represents 18% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NYSE: ARL), which is included in the REITs and real estate companies’ industry group.

The following table shows the net ~~gain or loss~~income (loss) on the Company’s marketable securities and the associated margin interest and trading expenses for the respective periods:

For the three months ended March 31, 2020 2019 2021 2020
Net (loss) gain on marketable securities $ (2,393,000 ) $ 961,000
Net gain (loss) on marketable securities $ 5,638,000 $ (2,393,000 )
Impairment loss on other investments (103,000 ) (98,000 ) (30,000 ) (103,000 )
Dividend and interest income 105,000 194,000 158,000 105,000
Margin interest expense (114,000 ) (139,000 ) (238,000 ) (114,000 )
Trading and management expenses (142,000 ) (173,000 ) (124,000 ) (142,000 )
Net (loss) gain from investment transactions $ (2,647,000 ) $ 745,000
Net income (loss) from investment transactions $ 5,404,000 $ (2,647,000 )

For the nine months ended March 31, 2020 2019 2021 2020
Net loss on marketable securities $ (2,961,000 ) $ (1,181,000 )
Net gain (loss) on marketable securities $ 8,937,000 $ (2,961,000 )
Impairment loss on other investments (103,000 ) (98,000 ) (119,000 ) (103,000 )
Dividend and interest income 346,000 379,000 363,000 346,000
Margin interest expense (366,000 ) (427,000 ) (519,000 ) (366,000 )
Trading and management expenses (424,000 ) (382,000 ) (399,000 ) (424,000 )
Net loss from investment transactions $ (3,508,000 ) $ (1,709,000 )
Net income (loss) from investment transactions $ 8,263,000 $ (3,508,000 )

FINANCIAL CONDITION AND LIQUIDITY

Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, management expects that the ongoing length and severity of the economic downturn, resulting from the continuing and uncertain impact of the COVID-19 pandemic, will have a material adverse impact on our business, financial condition, liquidity and financial results. As a result of our Hotel’s material decrease in occupancy and average daily rate, we expect our cash flow from operations to continue to be significantly lower than historical rates for the foreseeable future, until the pandemic resolves, and hotel occupancies return to historical rates.
We have taken several steps to preserve capital and increase liquidity, including the implementation of various cost saving initiatives at our Hotel. For further discussion, see “Item 2 - Negative Effects of COVID-19 on our Business” included in this Quarterly Report. We may also receive cash generated from the investment of ourThe Company had cash and ~~marketable securities~~cash equivalents of $8,880,000 and $14,163,000 as well as other investments. In order to increase our liquidity positions and take advantage of the favorable interest rate environment, we refinanced our $8,481,000 and $2,473,000 mortgage note payables on our 151-unit apartment complex in New Jersey in April 2020 and obtained a new mortgage in the amount of $18,370,000. The new mortgage has a fixed interest rate of 3.17% and matures in April 2030. We received net proceeds of approximately $6,814,000 from the refinancing. We are also refinancing two of our California properties which are scheduled to close in June and July 2020, and we could refinance additional multifamily properties should the need arise; however, management does not deem it necessary at this time. We have an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) of which $5,000,000 is available to be drawn down as of June 18, 2020, should additional liquidity be necessary.
~~-28-~~
As of March 31, 2021 and June 30, 2020, werespectively. The Company had ~~cash, cash equivalents,~~net funds available from its investments in marketable securities of $22,714,000 as of March 31, 2021 after $9,021,000 due to securities broker and ~~restricted cash~~$5,261,000 obligations for securities sold. As of ~~$21,487,000 which included $11,550,000~~June 30, 2020, the Company had net funds available from investments in marketable securities of $4,308,000 after $1,576,000 due to securities broker and $294,000 obligations for securities sold. In addition, the Hotel had $5,785,000 and $10,666,000 of restricted cash held by ~~our Hotel~~its senior lender Wells Fargo Bank, N.A. (“Lender”). as of March 31, 2021 and June 30, 2020, respectively. Of the ~~total~~$10,666,000 restricted cash held ~~by the Lender, $7,977,000 was for furniture, fixtures and equipment (“FF&E”) reserves and~~as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) ~~request~~requested by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. ~~Therefore, Justice is currently in discussions with the~~On August 19, 2020, Lender ~~to release the~~released PIP deposits in the amount of $2,379,000 to the ~~Hotel and to allow the Hotel to utilize some or all of its FF&E reserves~~Hotel. The funds were utilized to fund operating expenses, ~~as well as debt service. Additionally, Justice has requested to temporarily pay interest only on the senior mortgage~~including franchise and the suspension of the monthly FF&E reserve installment, for a combined monthly savings in cash flow of approximately $321,000. Justice anticipates a resolution with the Lender in regard to the aforementioned requests before June 30, 2020.management fees and other expenses.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of March 31, 2021, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup iswas scheduled to mature on April 27, 2022 and ~~has~~had a 1.00% interest rate. ~~Both the SBA Loan – Justice and SBA Loan – InterGroup (collectively the “SBA Loans”), may be forgiven if the funds are used for payroll and other qualified expenses.~~ The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. ~~New guidance on~~If the ~~criteria for~~SBA approves the forgiveness ~~continues~~amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to ~~be released. In accordance with~~CIBC. If the ~~requirements~~SBA does not forgive any amount of the ~~CARES Act,~~loan, payments would start within 30 days. All unforgiven portion of the principal and accrued interest will be due at maturity. During the quarter ended December 31, 2020, Justice and InterGroup submitted applications for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan – Justice. As of March 31, 2021, the SBA has forgiven the full $453,000 of the SBA Loan – InterGroup.
- 29 -
On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA ~~Loans~~Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.

~~We cannot presently estimate the full financial impact~~In order to increase its liquidity position and to take advantage of the ~~unprecedented COVID-19 pandemic~~favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on ~~our business~~April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. During the nine months ended March 31, 2021, InterGroup completed refinancing on three of its California properties and generated net proceeds of $5,384,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or ~~predict~~should management consider the ~~related federal, state~~interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and ~~local civil authority actions, which are highly dependent~~the entire $8,000,000 is available to be drawn down as of March 31, 2021 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the ~~severity~~sale of approximately $12,043,000. Santa Fe will manage its federal and ~~duration~~state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.
As the sole general partner of Justice that controls approximately 97.5% of the ~~pandemic, but we expect that~~voting interest in the ~~COVID-19 closures and other imposed restrictions will continue~~Partnership, Portsmouth has the ability to ~~have a significant adverse impact on our results of operations. Due~~amend the partnership agreement to allow for capital calls to the ~~uncertainties associated with~~limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the ~~COVID-19 pandemic and~~authorization of the ~~indeterminate length~~respective board of ~~time it will affect the hospitality industry, we have taken proactive measures~~directors, to ~~secure our liquidity position to be able~~borrow from InterGroup to meet ~~our~~any capital calls and its other obligations ~~for~~during the ~~foreseeable future, including implementing strict cost management measures~~next twelve months and beyond. On August 28, 2020, the Board of InterGroup passed resolution to ~~eliminate non-essential expenses, postponing capital expenditures, renegotiating~~provide funding to Portsmouth if necessary. 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. Since December 2020, InterGroup has advanced $2,950,000 to Justice per the aforementioned loan modification agreement. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain ~~reoccurring expenses, and temporarily closing certain hotel services and outlets.~~conditions in order to raise additional capital.

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. The Company has invested in short-term, income-producing instruments and in equity and debt securities when deemed appropriate. The Company’s marketable securities are classified as trading with unrealized gains and losses recorded through the consolidated statements of operations.

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. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low revenue per available room (“RevPAR”) 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. We believe that our cash on hand, ~~cash provided by the SBA loans and real estate refinancing,~~ along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.
- 30 -

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off balance sheet arrangements.
~~-29-~~

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of March 31, ~~2020,~~2021, the Company’s material financial obligations which also ~~including~~includes interest payments.

3 Months Year Year Year Year 3 Months Year Year Year Year
Total 2020 2021 2022 2023 2024 Thereafter Total 2021 2022 2023 2024 2025 Thereafter
Mortgage and subordinated notes payable $ 170,306,000 $ 766,000 $ 12,483,000 $ 3,095,000 $ 37,816,000 $ 107,655,000 $ 8,491,000 $ 181,041,000 $ 764,000 $ 3,199,000 $ 28,470,000 $ 108,407,000 $ 3,797,000 $ 36,404,000
Other notes payable 8,989,000 252,000 4,001,000 1,033,000 750,000 567,000 2,386,000
SBA loans and other notes payable 7,502,000 119,000 5,200,000 183,000 - - 2,000,000
Related party notes payable 4,228,000 379,000 567,000 567,000 567,000 567,000 1,581,000
Interest 31,722,000 2,646,000 8,596,000 8,149,000 7,013,000 3,403,000 1,915,000 30,600,000 1,816,000 8,778,000 7,981,000 4,761,000 1,243,000 6,021,000
Total $ 211,017,000 $ 3,664,000 $ 25,080,000 $ 12,277,000 $ 45,579,000 $ 111,625,000 $ 12,792,000 $ 223,371,000 $ 3,078,000 $ 17,744,000 $ 37,201,000 $ 113,735,000 $ 5,607,000 $ 46,006,000

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 Interstate has the power and ability to adjust hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. Partnership revenues are also subject to interest rate risks, which may be influenced by 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 USE OF ESTIMATES

Critical accounting policies are those that are most significant to the presentation 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 condensed 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. There have been no material changes to the Company’s critical accounting policies during the nine months ended March 31, ~~2020 except for the adoption of ASU 2016-02.~~2021. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2019~~2020 for a summary of the critical accounting policies.
~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~
Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.
~~Item 4. Controls and Procedures.~~
Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

~~-30-~~
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company’s internal control over financial reporting during the last quarterly period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 31 -
PART II.
OTHER INFORMATION
~~Item 1. LEGAL PROCEEDINGS~~
Item 1. LEGAL PROCEEDINGS

During the period ending March 31, ~~2020,~~2021, there were no pending or threatened legal actions.
Item 1A. ~~Item 1A.~~ RISK FACTORS
Except as set forth below, during the period ended March 31, 2020, there were no material changes to the Risk Factors disclosed in Item 1A - “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.
The responses by federal, state, and local civil authority to the COVID-19 pandemic has had a material detrimental impact on our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.
The global spread of the COVID-19 pandemic is complex and rapidly-evolving, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs. The shelter-in-place, physical distancing, city closures and their consequences have dramatically reduced travel, conventions and demand for hotel rooms, which has and will continue to impact our business, operations, and financial results. The extent to which the closures impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the closures; the negative impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; our ability to successfully navigate the impacts of the closures; governments actions, businesses and individuals take in response to the closures, including limiting or banning travel; and how quickly economies, travel activity, and demand for lodging recovers after the closures subsides.
~~-31-~~
~~The COVID-19 closures have subjected our business, operations and financial condition to a number of risks, including, but not limited to, those discussed below:~~
● ~~Risks Related to Revenue:~~ The COVID-19 closures and other imposed restrictions have negatively impacted and will in the future negatively impact to an extent we are unable to predict, our revenue from the Hotel. Currently, the Hotel is not generating revenue sufficient to meet its operating expenses, which is adversely affecting our net income.
● ~~Risks Related to Operations:~~ Because of the significant decline in the demand for hotel rooms, Interstate have taken steps to reduce operating costs and improve efficiency, including furloughing a substantial number of its personnel and implementing reduced work weeks for other personnel. Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty, or our ability to attract and retain associates, and our reputation and market share may suffer as a result. For example, if our furloughed personnel do not return to work with us when the COVID-19 closures and imposed restrictions are lifted, including because they find new jobs during the furlough, we may experience operational challenges that impact guest loyalty and our market share, which could limit our ability to grow revenue and could reduce our profits. Further, reputational damage from, and the financial impact of, reduced work weeks could lead associates to depart the company and could make it harder for us to recruit new associates in the future. We may also face demands or requests from labor unions that represent our associates, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.
As a smaller reporting company, we are not required to provide the information required by this Item.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors that we identify in our 2019 Form 10-K, which in turn could materially adversely affect our business, financial condition, liquidity, and results of operations (including revenues and profitability). Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider presenting significant risks to our operations.
~~Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no events that are required to be reported under this Item.
Item 3. DEFAULTS UPON SENIOR SECURITIES

~~Item 3. DEFAULTS UPON SENIOR SECURITIES~~
There have been no events that are required to be reported under this Item.
Item 4. MINE SAFETY DISCLOSURES

~~Item 4. MINE SAFETY DISCLOSURES~~
There have been no events that are required to be reported under this Item.
Item 5. OTHER INFORMATION
As disclosed in its Definitive Information Statement on Schedule 14C, filed with the SEC on January 25, 2021, personnel of the former Santa Fe Financial Corporation (“Santa Fe”) received shareholder approval to distribute its assets, as described and subsequently dissolve, all as set forth in the Information Statement. 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 now fully dissolved and no longer in legal existence.

~~Item 5. OTHER INFORMATION~~
~~There have been no events that are required to be reported under this Item.~~
Item 6. EXHIBITS

~~Item 6. EXHIBITS~~
~~31.1 Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).~~
~~31.2 Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).~~
~~32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.~~
~~32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.~~
31.1 Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
31.2 Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema

101.CAL XBRL Taxonomy Extension Calculation Linkbase

101.DEF XBRL Taxonomy Extension Definition Linkbase

101.LAB XBRL Taxonomy Extension Label Linkbase

101.PRE XBRL Taxonomy Extension Presentation Linkbase

~~-32-~~ - 32 -

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)
~~(Registrant)~~

Date: ~~June 18,~~May 21, 2021 ~~2020~~ by /s/ John V. Winfield
John V. Winfield
President, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

Date: ~~June 18, 2020~~ May 21, 2021 by /s/ Danfeng Xu
Danfeng Xu
Treasurer and Controller
(Principal Financial Officer)

~~-33-~~ - 33 -

					Additional									InterGroup						Total
	Common Stock				Paid-in			Accumulated			Treasury			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit

Balance at July 1, 2019		3,404,982	$	33,000	$	10,342,000		$	(39,760,000	)	$	(14,347,000	)	$	(43,732,000	)	$	(24,697,000	)	$	(68,429,000	)

Net Income		-		-		-			336,000			-			336,000			308,000			644,000

Stock options expense		-		-		8,000			-			-			8,000			-			8,000

Investment in Santa Fe		-		-		(147,000	)		-			-			(147,000	)		74,000			(73,000	)

Purchase of treasury stock		-		-		-			-			(156,000	)		(156,000	)		-			(156,000	)

Balance at September 30, 2019		3,404,982		33,000		10,203,000			(39,424,000	)		(14,503,000	)		(43,691,000	)		(24,315,000	)		(68,006,000	)

Net income		-		-		-			248,000			-			248,000			132,000			380,000

Stock options expense		-		-		9,000			-			-			9,000			-			9,000

Investment in Santa Fe		-		-		(46,000	)		-			-			(46,000	)		22,000			(24,000	)

Purchase of treasury stock		-		-		-			-			(190,000	)		(190,000	)		-			(190,000	)

Balance at December 31, 2019		3,404,982		33,000		10,166,000			(39,176,000	)		(14,693,000	)		(43,670,000	)		(24,161,000	)		(67,831,000	)

Net loss		-		-		-			(2,580,000	)		-			(2,580,000	)		(479,000	)		(3,059,000	)

Stock options expense		-		-		121,000			-			-			121,000			-			121,000

Investment in Santa Fe		-		-		(4,279,000	)		-			-			(4,279,000	)		3,353,000			(926,000	)

Investment in Portsmouth		-		-		(124,000	)		-			-			(124,000	)		62,000			(62,000	)

Investment in Woodland		-		-		913,000			-			-			913,000						913,000

Purchase of treasury stock		-		-		-			-			(222,000	)		(222,000	)		-			(222,000	)

Balance at March 31, 2020		3,404,982	$	33,000	$	6,797,000		$	(41,756,000	)	$	(14,915,000	)	$	(49,841,000	)	$	(21,225,000	)	$	(71,066,000	)

			3 Months		Year		Year		Year		Year
	Total		2020		2021		2022		2023		2024		Thereafter
Mortgage and subordinated notes payable	$	170,306,000	$	766,000	$	12,483,000	$	3,095,000	$	37,816,000	$	107,655,000	$	8,491,000
Other notes payable		8,989,000		252,000		4,001,000		1,033,000		750,000		567,000		2,386,000
Interest		31,722,000		2,646,000		8,596,000		8,149,000		7,013,000		3,403,000		1,915,000
Total	$	211,017,000	$	3,664,000	$	25,080,000	$	12,277,000	$	45,579,000	$	111,625,000	$	12,792,000

	●	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.

	●	Noncancelable 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.

			Accumulated			Net Book				Accumulated			Net Book
March 31, 2020	Cost		Depreciation			Value
March 31, 2021								Cost		Depreciation			Value

Land	$	2,738,000	$	-		$	2,738,000	$	2,738,000	$	-		$	2,738,000
Finance lease ROU assets		1,746,000		(213,000	)		1,533,000		1,805,000		(527,000	)		1,278,000
Furniture and equipment		30,472,000		(27,358,000	)		3,114,000		30,438,000		(27,857,000	)		2,581,000
Building and improvements		64,005,000		(32,118,000	)		31,887,000		64,585,000		(33,583,000	)		31,002,000
Investment in Hotel, net	$	98,961,000	$	(59,689,000	)	$	39,272,000	$	99,566,000	$	(61,967,000	)	$	37,599,000

			Gross		Gross			Net			Fair				Gross		Gross			Net
Investment	Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Value			Cost		Unrealized Gain		Unrealized Loss			Unrealized Gain (Loss)			Fair Value

As of March 31, 2020
As of
March 31, 2021
Corporate Equities	$	8,675,000	$	562,000	$	(6,384,000	)	$	(5,822,000	)	$	2,853,000	$	32,500,000	$	7,857,000	$	(3,361,000	)	$	4,496,000		$	36,996,000

As of June 30, 2019
Corporate Equities	$	19,204,000	$	1,753,000	$	(11,261,000	)	$	(9,508,000	)	$	9,696,000
As of
June 30, 2020
Corporate
Equities													$	11,459,000	$	902,000	$	(6,183,000	)	$	(5,281,000	)	$	6,178,000

For the nine months ended March 31,	2019			2018
Realized (loss) gain on marketable securities, net	$	(1,190,000	)	$	353,000
Unrealized loss on marketable securities, net		(1,375,000	)		(1,352,000	)
Unrealized loss on marketable securities related to Comstock		(396,000	)		(182,000	)
Net loss on marketable securities	$	(2,961,000	)	$	(1,181,000	)

Type	March 31, 2020		June 30, 2019
Private equity hedge fund, at cost	$	273,000	$	376,000
Other preferred stock, at cost		121,000		236,000
	$	394,000	$	612,000

As of	3/31/2020		6/30/2019		March 31, 2021			June 30, 2020
Assets:	Total - Level 1		Total - Level 1		Total - Level 1			Total - Level 1
Investment in marketable securities:
REITs and real estate companies	$	1,671,000	$	3,069,000	$	11,190,000		$	2,365,000
Financial services						7,033,000			282,000
Energy						5,977,000			767,000
Industrials						3,294,000			484,000
Basic material		427,000		829,000		3,055,000			1,209,000
Corporate bonds		360,000		1,420,000
Consumer cyclical		105,000		1,448,000		2,350,000			295,000
Energy		101,000		950,000
Financial services		86,000		951,000
Technology		43,000		651,000		1,397,000			121,000
Healthcare		39,000		185,000		1,285,000			43,000
Industrials		21,000		193,000
Other						736,000			38,000
Communication services						679,000			157,000
Corporate bonds						-			417,000
Liabilities:
Due to securities broker:						(9,021,000	)		(1,576,000	)
Obligations for securities sold:						(5,261,000	)		(294,000	)
	$	2,853,000	$	9,696,000	$	22,714,000		$	4,308,000

					Net loss for the nine months							Net loss for the nine months ended
Assets	Level 3		March 31, 2020		ended March 31, 2020			Level 3		March 31, 2021		March 31, 2021

Other non-marketable investments	$	394,000	$	394,000	$	(103,000	)	$	41,000	$	41,000	$	(119,000	)

		Number of			Weighted Average		Weighted Average		Aggregate			Number of		Weighted Average		Weighted Average	Aggregate
		Shares			Exercise Price		Remaining Life		Intrinsic Value			Shares		Exercise Price		Remaining Life	Intrinsic Value

Outstanding at	July 1, 2018		368,000		$	17.21		4.17	$	3,505,000
Oustanding at											July 1, 2019		341,195	$	16.95	3.07 years	$	4,680,000
Granted			-			-							-		-
Exercised			(26,805	)		20.52							-		-
Forfeited			-			-							-		-
Exchanged			-			-							-		-
Outstanding at	June 30, 2019		341,195		$	16.95		3.07 years	$	4,680,000	June 30, 2020		341,195	$	16.95	3.83 years	$	3,271,000
Exercisable at	June 30, 2019		330,395		$	16.62		2.92 years	$	4,643,000	June 30, 2020		323,195	$	16.38	3.67 years	$	3,271,000
Vested and Expected to vest at	June 30, 2019		341,195		$	16.95		3.07 years	$	4,680,000	June 30, 2020		341,195	$	16.95	3.83 years	$	3,271,000

Outstanding at	July 1, 2019		341,195		$	16.95		3.07 years	$	4,680,000
Oustanding at											July 1, 2020		341,195	$	16.95	3.83 years	$	3,271,000
Granted			-			-							-		-
Exercised			-			-							-		-
Forfeited			-			-							-		-
Exchanged			-			-							-		-
Outstanding at	March 31, 2020		341,195		$	16.95		4.08 years	$	4,110,000	March 31, 2021		341,195	$	16.95	3.08 years	$	6,689,000
Exercisable at	March 31, 2020		333,995		$	16.73		4.02 years	$	4,098,000	March 31, 2021		337,595	$	16.84	3.05 years	$	6,656,000
Vested and Expected to vest at	March 31, 2020		341,195		$	16.95		4.08 years	$	4,110,000	March 31, 2021		341,195	$	16.95	3.08 years	$	6,689,000

As of and for the three months	Hotel			Real Estate			Investment
ended March 31, 2021	Operations			Operations			Transactions		Corporate			Total
Revenues	$	2,902,000		$	3,465,000		$	-	$	-		$	6,367,000
Segment operating expenses		(3,990,000	)		(1,944,000	)		-		(704,000	)		(6,638,000	)
Segment income (loss) from operations		(1,088,000	)		1,521,000			-		(704,000	)		(271,000	)
Interest expense - mortgage		(1,642,000	)		(538,000	)		-		-			(2,180,000	)
Gain from debt extinguishment		-			-			-		453,000			453,000
Depreciation and amortization expense		(529,000	)		(598,000	)		-		-			(1,127,000	)
Gain from investments		-			-			5,404,000		-			5,404,000
Income tax expense		-			-			-		(880,000	)		(880,000	)
Net income (loss)	$	(3,259,000	)	$	385,000		$	5,404,000	$	(1,131,000	)	$	1,399,000
Total assets	$	46,316,000		$	46,225,000		$	37,037,000	$	13,715,000		$	143,293,000

For the three months	Hotel			Real Estate			Investment
ended March 31, 2020	Operations			Operations			Transactions			Corporate			Total
Revenues	$	11,259,000		$	3,757,000		$	-		$	-		$	15,016,000
Segment operating expenses		(10,060,000	)		(2,071,000	)		-			(890,000	)		(13,021,000	)
Segment income (loss) from operations		1,199,000			1,686,000			-			(890,000	)		1,995,000
Interest expense - mortgage		(1,663,000	)		(588,000	)		-			-			(2,251,000	)
Depreciation and amortization expense		(597,000	)		(619,000	)		-			-			(1,216,000	)
Loss from investments		-			-			(2,647,000	)		-			(2,647,000	)
Income tax benefit		-			-			-			1,060,000			1,060,000
Net income (loss)	$	(1,061,000	)	$	479,000		$	(2,647,000	)	$	170,000		$	(3,059,000	)

As of and for the nine months	Hotel			Real Estate			Investment
ended March 31, 2020	Operations			Operations			Transactions			Corporate			Total
Revenues	$	41,589,000		$	11,313,000		$	-		$	-		$	52,902,000
Segment operating expenses		(33,138,000	)		(6,110,000	)		-			(2,231,000	)		(41,479,000	)
Segment income (loss) from operations		8,451,000			5,203,000			-			(2,231,000	)		11,423,000
Interest expense - mortgage and related party		(5,190,000	)		(1,788,000	)		-			-			(6,978,000	)
Depreciation and amortization expense		(1,801,000	)		(1,860,000	)		-			-			(3,661,000	)
Loss from investments		-			-			(3,508,000	)		-			(3,508,000	)
Income tax benefit		-			-			-			689,000			689,000
Net income (loss)	$	1,460,000		$	1,555,000		$	(3,508,000	)	$	(1,542,000	)	$	(2,035,000	)
Total assets	$	57,709,000		$	50,761,000		$	3,247,000		$	7,335,000		$	119,052,000

For the nine months	Hotel			Real Estate			Investment									Hotel			Real Estate			Investment
ended March 31, 2019	Operations			Operations			Transactions			Corporate			Total
ended March 31, 2020																Operations			Operations			Transactions			Corporate			Total
Revenues	$	45,276,000		$	11,175,000		$	-		$	-		$	56,451,000		$	41,589,000		$	11,313,000		$	-		$	-		$	52,902,000
Segment operating expenses		(33,424,000	)		(5,929,000	)		-			(1,789,000	)		(41,142,000	)		(33,138,000	)		(6,110,000	)		-			(2,231,000	)		(41,479,000	)
Segment income (loss) from operations		11,852,000			5,246,000			-			(1,789,000	)		15,309,000			8,451,000			5,203,000			-			(2,231,000	)		11,423,000
Interest expense - mortgage and related party		(5,423,000	)		(1,957,000	)		-			-			(7,380,000	)
Loss on disposal of assets		(398,000	)		-			-			-			(398,000	)
Interest expense - mortgage																	(5,190,000	)		(1,788,000	)		-			-			(6,978,000	)
Depreciation and amortization expense		(1,896,000	)		(1,814,000	)		-			-			(3,710,000	)		(1,801,000	)		(1,860,000	)		-			-			(3,661,000	)
Loss from investments		-			-			(1,709,000	)		-			(1,709,000	)		-			-			(3,508,000	)		-			(3,508,000	)
Income tax expense		-			-			-			(771,000	)		(771,000	)
Income tax benefit																	-			-			-			689,000			689,000
Net income (loss)	$	4,135,000		$	1,475,000		$	(1,709,000	)	$	(2,560,000	)	$	1,341,000		$	1,460,000		$	1,555,000		$	(3,508,000	)	$	(1,542,000	)	$	(2,035,000	)

For the year ending June 30,
2020	$	126,000

2021		503,000		$	130,000
2022		492,000			508,000
2023		188,000			188,000
Total minimum lease payments		1,309,000			826,000
Less interest on finance lease		(103,000	)		(43,000	)
Present value of future minimum lease payments	$	1,206,000		$	783,000

Three Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPAR

2020	$	242		76	%	$	184
2019	$	290		95	%	$	276

Three Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPAR

2021	$	103		47	%	$	48
2020	$	242		76	%	$	184

Nine MonthsEnded March 31,	Average Daily Rate		Average Occupancy %			RevPAR

2020	$	256		91	%	$	233
2019	$	269		96	%	$	259

Nine Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPAR

2021	$	106		49	%	$	52
2020	$	256		91	%	$	233

As of			% of Total
March 31, 2021			Investment
Industry Group	Fair Value		Securities

REITs and real estate companies	$	11,190,000		30.1	%
Financial services		7,033,000		19.0	%
Energy		5,977,000		16.2	%
Industrials		3,294,000		8.9	%
Basic material		3,055,000		8.3	%
Consumer cyclical		2,350,000		6.4	%
Technology		1,397,000		3.8	%
Healthcare		1,285,000		3.5	%
Other		736,000		2.0	%
Communication services		679,000		1.8	%
	$	36,996,000		100.0	%