Core Viewpoint - The InterGroup Corporation has successfully refinanced its subsidiary's flagship asset, the Hilton San Francisco Financial District Hotel, enhancing financial flexibility and stability for its hospitality assets [1][4]. Group 1: Refinancing Details - Justice Operating Company, a wholly owned subsidiary of Portsmouth Square, secured a $67 million mortgage loan with an interest rate of SOFR plus 4.80%, with an interest rate cap limiting SOFR exposure to 4.50% [2]. - Justice Mezzanine Company modified its existing mezzanine loan, obtaining $36.3 million at a fixed interest rate of 7.25% per annum, with both loans maturing in two years and options to extend for three additional one-year periods [3]. Group 2: Strategic Implications - The refinancing reflects InterGroup's commitment to strategic financial management, enhancing operational flexibility and financial stability across its companies, positioning them for growth and long-term value creation [4].

```markdown PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements.) The company reported increased net losses for the three and six months ended December 31, 2024, facing a significant 'Going Concern' issue due to over **$100 million** in matured loans, which are actively being refinanced [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$110.6 million** as of December 31, 2024, while total liabilities grew to **$221.9 million**, leading to an expanded shareholders' deficit of **$111.3 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Dec 31, 2024 ($ thousands) | Jun 30, 2024 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 10,420 | 4,333 | | Investment in Hotel, net | 39,684 | 40,901 | | Investment in real estate, net | 46,957 | 47,542 | | Investment in marketable securities | 5,657 | 7,454 | | **Total assets** | **110,594** | **107,811** | | **Liabilities** | | | | Mortgage notes payable - Hotel, net | 100,289 | 100,783 | | Mortgage notes payable - real estate, net | 94,426 | 88,173 | | **Total liabilities** | **221,929** | **214,278** | | **Total shareholders' deficit** | **(111,335)** | **(106,467)** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended December 31, 2024, the company reported a **$3.7 million** net loss, widening to **$4.5 million** for the six-month period, primarily due to higher mortgage interest expense Three-Month Operating Results (Unaudited) | Metric | Q2 2025 (ended Dec 31, 2024) | Q2 2024 (ended Dec 31, 2023) | | :--- | :--- | :--- | | Total Revenues | $14,441,000 | $14,321,000 | | Income (loss) from operations | $853,000 | $(1,346,000) | | Interest expense - mortgages | $(3,530,000) | $(2,210,000) | | Net loss | $(3,697,000) | $(2,151,000) | | Net loss per share (Basic & Diluted) | $(1.26) | $(0.69) | Six-Month Operating Results (Unaudited) | Metric | Six Months ended Dec 31, 2024 | Six Months ended Dec 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $31,347,000 | $29,831,000 | | Income from operations | $3,982,000 | $250,000 | | Interest expense - mortgages | $(7,044,000) | $(4,461,000) | | Net loss | $(4,549,000) | $(3,773,000) | | Net loss per share (Basic & Diluted) | $(1.44) | $(1.26) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$2.6 million** for the six months ended December 31, 2024, with a **$5.7 million** net increase in cash driven by financing activities Six-Month Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months ended Dec 31, 2024 | Six Months ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,579,000 | $(80,000) | | Net cash used in investing activities | $(1,515,000) | $(3,440,000) | | Net cash provided by financing activities | $4,628,000 | $2,953,000 | | Net increase (decrease) in cash | $5,692,000 | $(567,000) | | Cash, cash equivalents and restricted cash at end of period | $14,386,000 | $12,307,000 | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes highlight a substantial 'Going Concern' risk due to **$100.3 million** in defaulted Hotel loans, for which the company is actively pursuing refinancing, with a non-binding term sheet executed post-quarter end - The company's primary business segments are **Hotel Operations**, **Real Estate Operations**, and **Investment Transactions**[76](index=76&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern due to the maturity and default of senior mortgage and mezzanine loans totaling **$100.3 million** on its Hotel property as of December 31, 2024[35](index=35&type=chunk)[36](index=36&type=chunk) - Following the expiration of forbearance agreements, the company received a **Notice of Termination** from its senior lender and a **Notice of Default** from its mezzanine lender in January 2025[37](index=37&type=chunk) - Subsequent to the quarter end, on January 21, 2025, the company executed a **non-binding term sheet** to refinance the defaulted senior and mezzanine loans, with an expected closing by **March 2025**[38](index=38&type=chunk)[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes increased net losses to higher mortgage interest, with flat Hotel RevPAR and improved real estate operations, while reiterating confidence in refinancing the defaulted Hotel debt despite 'Going Concern' uncertainty [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Increased net losses for both periods were primarily due to higher mortgage interest, with Hotel RevPAR flat for the quarter and real estate operations showing improved revenue - The increased net loss for both the three and six-month periods is primarily attributed to a significant rise in mortgage interest expense, which includes a **4% default additional interest rate**[98](index=98&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) Hotel Performance Metrics (Three Months ended Dec 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Average Daily Rate (ADR) | $190 | $207 | -8.2% | | Average Occupancy % | 88% | 81% | +7 p.p. | | RevPAR | $168 | $168 | 0.0% | Hotel Performance Metrics (Six Months ended Dec 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Average Daily Rate (ADR) | $200 | $212 | -5.7% | | Average Occupancy % | 92% | 84% | +8 p.p. | | RevPAR | $184 | $180 | +2.2% | - Real estate operations revenue increased for both the three and six-month periods due to **decreased vacancy** at its Missouri property, which is undergoing renovation and rebranding[102](index=102&type=chunk)[111](index=111&type=chunk) [Marketable Securities](index=27&type=section&id=Marketable%20Securities) The marketable securities portfolio decreased to **$5.7 million**, with a significant shift in composition towards REITs and real estate companies and a net loss from investment transactions Marketable Securities Portfolio Composition | Industry Group | Fair Value (Dec 31, 2024) | % of Total | Fair Value (Jun 30, 2024) | % of Total | | :--- | :--- | :--- | :--- | :--- | | REITs and real estate companies | $2,903,000 | 51% | $3,358,000 | 45% | | Communication services | $97,000 | 2% | $1,994,000 | 27% | | Healthcare | $956,000 | 17% | $179,000 | 2% | | T-Notes | - | 0% | $933,000 | 13% | | **Total** | **$5,657,000** | **100%** | **$7,454,000** | **100%** | - As of December 31, 2024, the largest single security position was American Realty Investors, Inc. (ARL), representing **33% of the portfolio**[114](index=114&type=chunk) [Financial Condition and Liquidity](index=28&type=section&id=Financial%20Condition%20and%20Liquidity) Liquidity improved with cash increasing to **$10.4 million** due to a **$9.8 million** mortgage refinancing, yet significant 'Going Concern' challenges persist from defaulted Hotel loans, which management is actively refinancing - In December 2024, the company refinanced a mortgage on its 157-unit apartment in Florence, Kentucky, for **$9.8 million** with a new 10-year interest-only loan at **5.40%**[45](index=45&type=chunk)[119](index=119&type=chunk) - The company's subsidiary, Portsmouth, has matured senior mortgage and mezzanine loans totaling over **$100 million**. After a forbearance period ended, lenders issued **default notices** in January 2025, creating **substantial doubt** about its ability to continue as a going concern[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Management is in advanced discussions to refinance the defaulted debt and executed a **non-binding term sheet** on January 21, 2025, with the expectation of closing the new financing by **March 2025**[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a **smaller reporting company**, the registrant is not required to provide quantitative and qualitative disclosures about market risk[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were deemed ineffective due to a material weakness in accounting for stock-based compensation, though management believes financial statements are fairly presented - The company's disclosure controls and procedures were deemed **ineffective** as of the end of the quarter[142](index=142&type=chunk) - A **material weakness** was identified in internal control over financial reporting, specifically concerning the accounting for stock-based compensation[142](index=142&type=chunk) - No **material changes** were made to the company's internal control over financial reporting during the quarter[143](index=143&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings.) The company is in a dispute with the City of San Francisco regarding the financial responsibility for removing a pedestrian bridge connected to its Hilton Hotel, disputing the City's directive for self-funded removal - The company is in a dispute with the City of San Francisco over the financial responsibility for removing a pedestrian bridge connected to its Hilton Hotel[146](index=146&type=chunk) - The City has **revoked the bridge's permit** and directed the company to develop and pay for a removal and restoration plan[146](index=146&type=chunk) - The company is cooperating on developing a plan but **disputes its legal and financial obligation** for the removal, with discussions expected to continue through **Q1 2025**[146](index=146&type=chunk) [Item 1A. Risk Factors](index=33&type=page&id=Item%201A.Risk%20Factors.) The company is not required to provide risk factor information as it qualifies as a smaller reporting company - The company is not required to provide risk factor information as it qualifies as a **smaller reporting company**[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company states there have been no events required to be reported under 'Defaults Upon Senior Securities' - The company states there have been **no events** required to be reported under 'Defaults Upon Senior Securities'[151](index=151&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files - The filing includes **certifications** from the Principal Executive Officer and Principal Financial Officer, as well as **Inline XBRL documents**[157](index=157&type=chunk) ```

Company Overview - Integral Metals Corp. is an exploration stage company focused on mineral exploration for critical minerals such as gallium, germanium, and rare earth elements [3] - The company aims to contribute to the development of a domestic supply chain for these minerals [3] - Integral holds properties in mining-friendly jurisdictions in Canada and the USA, including the Northwest Territories and Manitoba, where it has received regulatory support for its exploration efforts [3] Marketing Engagement - Integral Metals Corp. has engaged Rumble Strip Media Inc. for marketing services for an anticipated period of 90 days starting on or about January 6, 2024 [1] - The company will pay a fee of CAD $500,000 for these services, without issuing any securities as compensation [2] - Rumble Strip will be responsible for creating content, advertisements, media planning, social media dissemination, and reporting [2] Forward-Looking Information - The press release contains forward-looking information related to the company's future plans, including efforts to raise investor awareness and focus on mineral properties [4] - The forward-looking statements are based on the company's current beliefs or assumptions regarding future events [4][5] - There is no assurance that the forward-looking information will prove accurate, as it involves known and unknown risks and uncertainties [6][7]

Financial Performance - The company reported a net loss of $3,861,000 for the three months ended March 31, 2024, compared to a net loss of $614,000 for the same period in 2023, primarily due to a net loss in marketable securities of $811,000 and repayment of an SBA loan of $453,000[100]. - For the nine months ended March 31, 2024, the company reported a net loss of $7,634,000, compared to a net income of $752,000 for the same period in 2023, primarily due to decreased room revenues and increased operating expenses[107]. - Hotel revenues for the nine months ended March 31, 2024, totaled $32,076,000, a decrease from $32,632,000 in the same period in 2023, with room revenues decreasing by $1,038,000[108]. Hotel Operations - Hotel operations generated a net loss of $1,958,000 for the three months ended March 31, 2024, compared to a net loss of $260,000 for the same period in 2023, attributed to increased mortgage interest expense and operating expenses[101]. - Total hotel revenues for the three months ended March 31, 2024, were $10,758,000, a 3% increase from $10,430,000 in the same period in 2023, with room revenues increasing by $50,000 and food and beverage revenues increasing by $180,000[102][103]. - The average daily room rate for the hotel decreased by $2 to $232, while the average occupancy remained at 78%, resulting in a RevPAR decrease of $1 to $182 for the three months ended March 31, 2024[104]. Real Estate Operations - Revenue from real estate operations increased to $4,125,000 for the three months ended March 31, 2024, from $3,932,000 in the same period in 2023, primarily due to decreased vacancy at a Missouri property undergoing renovation[105]. - Revenue from real estate operations for the nine months ended March 31, 2024, increased to $12,638,000 from $11,991,000 in the same period in 2023, while operating expenses increased to $7,774,000 from $7,695,000[111]. Marketable Securities - The company experienced a net loss on marketable securities of $811,000 for the three months ended March 31, 2024, compared to a net gain of $866,000 for the same period in 2023[106]. - The company had a net gain on marketable securities of $164,000 for the nine months ended March 31, 2024, compared to a net gain of $1,440,000 for the same period in 2023[112]. - The net loss on marketable securities for the three months ended March 31, 2024, was $811,000, compared to a gain of $866,000 in the same period of 2023[116]. Cash and Financial Obligations - The company had cash and cash equivalents of $7,763,000 as of March 31, 2024, an increase from $5,960,000 as of June 30, 2023[117]. - The total outstanding balance of the senior mortgage and mezzanine loans as of March 31, 2024, was $106,045,000, which was extended to January 1, 2025[123]. - The company’s total material financial obligations as of March 31, 2024, amounted to $225,018,000, including $195,370,000 in mortgage and subordinated notes payable[130]. Renovations and Future Expectations - The company completed renovations on approximately 402 guestrooms as of March 31, 2024, with plans to finish by mid-June 2024, anticipating increased occupancy and average daily rates[126]. - The company anticipates that total revenues will increase following the completion of renovations, despite having approximately 75 guest rooms out of service since November 2022[126]. Tax and Impairment Considerations - The income tax benefit for the three months ended March 31, 2024, and 2023 is primarily due to Portsmouth's pretax loss, which includes net losses from the Hotel and InterGroup[135]. - The company assesses the realizability of deferred tax assets quarterly, recognizing a valuation allowance when it is more likely than not that some or all deferred tax assets are not realizable[136]. - There were no indicators of impairment on hotel investments or intangible assets, resulting in no impairment losses recorded during the nine months ended March 31, 2024, and 2023[137]. Market Risk and Reporting - The company is not required to provide detailed market risk disclosures as it qualifies as a smaller reporting company[138].

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for December 31, 2023, reflect a net loss and a going concern issue [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets increased to $124.2 million, while liabilities and shareholders' deficit also grew Condensed Consolidated Balance Sheets (in millions) | Account | Dec 31, 2023 (unaudited) | June 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$124.2** | **$122.4** | | Investment in Hotel, net | $40.5 | $40.3 | | Investment in real estate, net | $48.2 | $48.1 | | Investment in marketable securities | $19.4 | $18.3 | | Cash and cash equivalents | $9.4 | $6.0 | | **Total Liabilities** | **$221.6** | **$217.0** | | Mortgage notes payable - Hotel, net | $106.5 | $107.1 | | Mortgage notes payable - real estate, net | $88.7 | $84.8 | | **Total Shareholders' Deficit** | **($97.4)** | **($94.6)** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended December 31, 2023, the company reported net losses, reversing prior year's net income Three Months Ended December 31 (in millions) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $14.32 | $13.87 | | (Loss) Income from Operations | ($1.35) | $0.20 | | Net (Loss) Income | ($2.15) | $1.57 | | Net (Loss) Income Attributable to InterGroup | ($1.53) | $1.89 | | Diluted EPS | ($0.69) | $0.77 | Six Months Ended December 31 (in millions) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $29.83 | $30.26 | | Income from Operations | $0.25 | $3.06 | | Net (Loss) Income | ($3.77) | $1.37 | | Net (Loss) Income Attributable to InterGroup | ($2.77) | $1.69 | | Diluted EPS | ($1.26) | $0.68 | [Condensed Consolidated Statements of Shareholders' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Deficit) Total shareholders' deficit increased from $94.6 million to $97.4 million by December 31, 2023, primarily due to a net loss - Total shareholders' deficit grew from **$(94.6 million)** at the beginning of the period to **$(97.4 million)** at December 31, 2023[21](index=21&type=chunk) - Key changes during the six months included a net loss of **$3.77 million** (comprised of a **$1.24 million** loss in Q1 and **$1.53 million** loss in Q2 attributable to InterGroup, plus noncontrolling interest loss), stock options expense of **$1.18 million**, and treasury stock purchases totaling **$0.18 million**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended December 31, 2023, net cash used in operating and investing activities resulted in a $0.57 million decrease in total cash Cash Flow Summary for Six Months Ended Dec 31 (in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($0.08) | ($2.51) | | Net Cash Used in Investing Activities | ($3.44) | ($1.98) | | Net Cash Provided by (Used in) Financing Activities | $2.95 | ($2.96) | | **Net Decrease in Cash** | **($0.57)** | **($7.44)** | | Cash, cash equivalents and restricted cash at end of period | $12.31 | $15.91 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies and business structure, highlighting a 'Going Concern' warning due to the Hotel's matured $106.5 million mortgage loans - The company's subsidiary, Portsmouth, owns the Hilton San Francisco Financial District. As of December 31, 2023, InterGroup owns **approximately 75.7%** of Portsmouth[28](index=28&type=chunk) - A '**Going Concern**' issue is raised due to the Hotel's senior mortgage and mezzanine loans (**$106.5 million** total) maturing on **January 1, 2024**. The uncertainty of refinancing raises substantial doubt about the Hotel's ability to continue as a going concern[36](index=36&type=chunk)[37](index=37&type=chunk) - Subsequent to the quarter end, on **January 4, 2024**, the Hotel's senior loan special servicer issued a notice of default[38](index=38&type=chunk)[86](index=86&type=chunk) Hotel Revenue Breakdown - Six Months Ended Dec 31 (in millions) | Revenue Stream | 2023 | 2022 | | :--- | :--- | :--- | | Hotel rooms | $17.96 | $19.05 | | Food and beverage | $1.60 | $1.16 | | Garage | $1.53 | $1.54 | | Other operating departments | $0.22 | $0.45 | | **Total hotel revenue** | **$21.32** | **$22.20** | Segment Performance - Six Months Ended Dec 31, 2023 (in millions) | Segment | Revenues | Net (Loss) Income | | :--- | :--- | :--- | | Hotel Operations | $21.32 | ($2.28) | | Real Estate Operations | $8.51 | $0.72 | | Investment Transactions | - | $0.54 | | Corporate & Other | - | ($2.75) | | **Total** | **$29.83** | **($3.77)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the net loss to decreased hotel revenues and increased operating expenses, with a 'Going Concern' issue due to matured hotel mortgage debt [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For the six months ended Dec 31, 2023, the company's net loss of $3.77 million was primarily due to a decline in Hotel operations - The shift from net income in 2022 to a net loss in 2023 is primarily attributed to a decrease in Hotel revenue, an increase in hotel operating expenses, and a one-time gain on insurance recovery of **$2.69 million** in the 2022 period that did not recur[95](index=95&type=chunk)[100](index=100&type=chunk) Hotel Performance Metrics (Three Months Ended Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Average Daily Rate | $207 | $199 | | Average Occupancy % | 81% | 82% | | RevPAR | $168 | $164 | Hotel Performance Metrics (Six Months Ended Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Average Daily Rate | $212 | $215 | | Average Occupancy % | 84% | 88% | | RevPAR | $180 | $190 | [Marketable Securities](index=26&type=section&id=Marketable%20Securities) As of December 31, 2023, the marketable securities portfolio was valued at $19.4 million, diversified across 99 equity positions - As of December 31, 2023, the investment portfolio held **99 different equity positions**. The largest position was American Realty Investors, Inc. (ARL), representing **14%** of the portfolio's fair value[109](index=109&type=chunk) Marketable Securities Portfolio by Industry (Dec 31, 2023) (in millions) | Industry Group | Fair Value | % of Total | | :--- | :--- | :--- | | REITs and real estate companies | $5.28 | 27% | | Communication services | $2.59 | 13% | | Financial services | $2.09 | 11% | | Technology | $1.68 | 9% | | Other | $7.13 | 40% | | **Total** | **$19.36** | **100%** | [Financial Condition and Liquidity](index=27&type=section&id=Financial%20Condition%20and%20Liquidity) The company's liquidity is supported by cash and marketable securities, but challenged by matured hotel mortgage debt, leading to a 'Going Concern' qualification - In July 2023, an unsecured loan from InterGroup to its subsidiary Portsmouth was extended to July 2025, and the available borrowing amount was increased from **$16 million** to **$20 million** to fund hotel operations[113](index=113&type=chunk) - In December 2023, the Company obtained a **new $4.57 million** second mortgage on its 358-unit apartment in Texas, with a **7.60% interest rate**, maturing in **November 2031**[114](index=114&type=chunk) - A substantial doubt about the Hotel's ability to continue as a **going concern** exists due to the **January 1, 2024** maturity of its senior mortgage and mezzanine loans and recurring losses. A notice of default was issued on **January 4, 2024**[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The company is continuing a guestroom renovation at the Hotel, with completion anticipated by **May 2024**, to remain competitive and increase average daily rates[120](index=120&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is a smaller reporting company and is therefore not required to provide the information for this item - As a smaller reporting company, the registrant is not required to provide information for this item[132](index=132&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were **not effective** due to a **material weakness** in internal control over financial reporting[133](index=133&type=chunk) - The **material weakness** relates to the control around the interpretation and accounting for the deferred tax asset valuation allowance and stock-based compensation[133](index=133&type=chunk) - To remediate a previously identified **material weakness** related to the deferred tax asset valuation allowance, the company has hired a new tax provision firm to perform detailed analysis[134](index=134&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings.) The company's subsidiary is in a dispute with the City of San Francisco over the required removal of a pedestrian bridge connected to its Hilton Hotel - The company is in a dispute with the City of San Francisco over the required removal of an ornamental pedestrian bridge connected to its Hilton Hotel[136](index=136&type=chunk) - The City has purported to revoke the bridge's permit and directed the company's subsidiary, Justice, to submit and pay for a removal plan. Justice disputes the legality of this action and its financial obligation for the removal[136](index=136&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors.) As a smaller reporting company, the company is not required to provide the information for this item - As a smaller reporting company, the registrant is not required to provide information for this item[138](index=138&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) There were no events required to be reported under this item - There have been no events that are required to be reported under this Item[139](index=139&type=chunk) [Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) There were no events required to be reported under this item - There have been no events that are required to be reported under this Item[140](index=140&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) There were no events required to be reported under this item - There have been no events that are required to be reported under this Item[141](index=141&type=chunk) [Other Information](index=32&type=section&id=Item%205.%20Other%20Information.) There were no events required to be reported under this item - There have been no events that are required to be reported under this Item[143](index=143&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and Inline XBRL data files - Exhibits include CEO and CFO certifications (**31.1, 31.2, 32.1, 32.2**) and Inline XBRL documents (**101 series**)[145](index=145&type=chunk)

Financial Performance - As of September 30, 2023, the Company reported a net loss of $1,622,000 compared to a net loss of $201,000 for the same period in 2022, primarily due to increased revenues at the Hotel offset by higher operating costs[90]. - Hotel revenues decreased by 9.9% to $11,093,000 for the three months ended September 30, 2023, down from $12,310,000 in the same period of 2022[91]. - The average daily room rate decreased by $12 to $218, and average occupancy dropped by 6.0% to 88% for the three months ended September 30, 2023, compared to the same period in 2022[93]. - The Company had a net loss on marketable securities of $785,000 for the three months ended September 30, 2023, compared to a net loss of $810,000 for the same period in 2022[95]. - The income tax benefit for the three months ended September 30, 2023, primarily reflects the combined income tax effect of Portsmouth's pretax loss, which includes the net loss from the Hotel[117]. Revenue Sources - Revenue from real estate operations increased to $4,417,000 for the three months ended September 30, 2023, up from $4,078,000 in the same period of 2022, primarily due to decreased vacancy at a Missouri property undergoing renovation[94]. - The Company’s total hotel revenues for the three months ended September 30, 2023, included $9,561,000 from room revenues, $627,000 from food and beverage, and $825,000 from garage operations[91]. Cash and Investments - As of September 30, 2023, the Company had cash and cash equivalents of $6,686,000, an increase from $5,960,000 as of June 30, 2023[101]. - The Company had marketable securities valued at $13,629,000 as of September 30, 2023, down from $15,328,000 as of June 30, 2023[101]. - The Company’s investment portfolio is diversified with 31 different equity positions as of September 30, 2023, with the largest security position representing 15% of the portfolio[98]. Debt and Financing - The Company has an uncollateralized $5,000,000 revolving line of credit, which was reduced to $2,000,000 in July 2022, and is fully available as of September 30, 2023[103]. - As of September 30, 2023, the Hotel has an outstanding balance of $106,896,000 in senior mortgage and mezzanine loans, maturing on January 1, 2024, with an accumulated deficit of $107,287,000[106]. - The Company is exploring refinancing options for its debt but faces uncertainty in accessing further financing, which raises substantial doubt about its ability to continue as a going concern for one year after the financial statement issuance date[107]. - Total material financial obligations as of September 30, 2023, amount to $220,477,000, including $192,143,000 in mortgage and subordinated notes payable and $25,521,000 in interest payments[112]. Renovation and Future Plans - Approximately 307 guestrooms have been renovated as of September 30, 2023, with plans to complete the full renovation by the end of March 2024, which is expected to lead to increased average daily rates and positive cash flows[108]. - The Company anticipates that rental increases from its residential rental properties will offset expected increases in property operating expenses[114]. Accounting and Compliance - There have been no material changes to the Company's critical accounting policies during the nine months ended September 30, 2023[115]. - The Company assesses the realizability of deferred tax assets quarterly, recognizing a valuation allowance when it is more likely than not that some or all of the deferred tax assets are not realizable[118]. - There were no indicators of impairment on hotel investments or intangible assets, and no impairment losses were recorded during the three months ended September 30, 2023[119]. - The Company has no off-balance sheet arrangements[110].

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business.) The InterGroup Corporation operates primarily through three segments: hotel operations, real estate, and investment activities - The Company's business is structured around three main areas: real estate operations, hotel operations through its subsidiary, and investments in securities[21](index=21&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - InterGroup owns approximately **75.7%** of Portsmouth Square, Inc., which in turn owns the Hilton San Francisco Financial District hotel[22](index=22&type=chunk) - The Hilton hotel is operated under a franchise license agreement with Hilton through January **2030** and managed by Aimbridge Hospitality under a ten-year agreement effective from February **2017**[30](index=30&type=chunk)[31](index=31&type=chunk) Hotel Performance vs. Competitors (Fiscal Year End June 30, 2023) | Metric | The Hotel (Hilton SF Financial District) | Competitive Set (CompSet) | | :--- | :--- | :--- | | **Occupancy (%)** | 83% | 64% | | **Average Daily Rate (ADR) ($)** | $195 | $236 | | **Revenue Per Available Room (RevPAR) ($)** | $161 | $152 | | **RevPAR Index (%)** | 106% | N/A | [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors.) The Company faces significant risks, primarily related to its concentration in the San Francisco hotel market, substantial debt, and capital-intensive operations - The company's business is heavily concentrated in a single property, the Hilton hotel in San Francisco, making it vulnerable to local economic conditions and market changes[65](index=65&type=chunk) - The company has substantial debt obligations, with specific debt agreements due in January **2024**, posing a refinancing risk on potentially unfavorable terms[73](index=73&type=chunk)[74](index=74&type=chunk) - The hotel industry is capital-intensive, and financing necessary renovations could reduce cash flow and adversely affect financial performance[69](index=69&type=chunk) - The President and CEO, John V. Winfield, holds a **68.6%** beneficial ownership, giving him significant control over the company's board and shareholder decisions, which may pose a risk to other shareholders[94](index=94&type=chunk) [Item 1B. Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company reports no unresolved staff comments - There are no unresolved staff comments[95](index=95&type=chunk) [Item 2. Properties](index=16&type=section&id=Item%202.%20Properties.) The Company's property portfolio includes a San Francisco Hilton hotel with significant debt and a collection of rental properties primarily in Texas and California San Francisco Hotel Financing (as of Dec 2013 / July 2019) | Loan Type | Lender | Principal Amount ($) | Interest Rate (%) | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | **Mortgage Loan** | Bank of America | $97 million | 5.275% | January 2024 | | **Mezzanine Loan** | Cred Reit Holdco LLC | $20 million | 7.25% | January 1, 2024 | - The hotel's operating company is not meeting certain loan covenants, such as the Debt Service Coverage Ratio (DSCR), which was below the required **1.10 to 1.00** threshold for the last two quarters of fiscal **2023**; however, the company has not missed any debt service payments[102](index=102&type=chunk) - The real estate portfolio includes **16** apartment complexes, **3** single-family houses, **1** commercial property, and unimproved land in Hawaii, primarily located in Texas and Los Angeles County[107](index=107&type=chunk) Occupancy Rates for Rental Properties (FY 2023) | Property Location | Economic Occupancy (%) | Physical Occupancy (%) | | :--- | :--- | :--- | | **Las Colinas, TX** | 100% | 99% | | **Morris County, NJ** | 92% | 97% | | **St. Louis, MO** | 68% | 66% | | **Florence, KY** | 80% | 92% | | **Los Angeles, CA (Average of 15 properties)** | ~92% | ~92% | [Item 3. Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings.) The Company does not expect current legal proceedings to materially affect its financial condition or operations - Management does not expect current legal proceedings to have a material impact on the company's financial condition[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the Company - Not applicable[136](index=136&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The Company's common stock trades on NASDAQ, has not declared dividends, and repurchased **1,017** shares in Q4 FY2023 - The Company's common stock is traded on the NASDAQ Capital Market under the symbol **INTG**[138](index=138&type=chunk) - No cash dividends have been declared, and none are foreseen in the near future[139](index=139&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2023) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2023 | 190 | $41.94 | | May 2023 | 530 | $36.60 | | June 2023 | 297 | $36.20 | | **Total** | **1,017** | **$37.94** | [Item 6. Selected Financial Data](index=24&type=section&id=Item%206.%20Selected%20Financial%20Data.) This section is not required for smaller reporting companies - Not required for smaller reporting companies[145](index=145&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A).) The Company reported a net loss in FY2023, facing a 'Going Concern' issue due to significant debt maturing in January 2024, while hotel revenues increased [Results of Operations](index=26&type=section&id=Results%20of%20Operations) For fiscal year 2023, the company's net loss was **$9.9 million**, an improvement from **$10.6 million** in 2022, driven by increased hotel revenue Consolidated Financial Performance (in millions) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | **Total Revenues** | $57.61 | $47.22 | | **Income from Operations** | $4.34 | $3.67 | | **Net Loss** | $(9.93) | $(10.62) | | **Net Loss Attributable to InterGroup** | $(6.72) | $(8.72) | Hotel Performance Metrics (YoY) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | **Average Daily Rate (ADR) ($)** | $217 | $168 | +$49 | | **Average Occupancy %** | 83% | 80% | +3% | | **RevPAR ($)** | $180 | $134 | +$46 | - Hotel revenues increased by **33%** year-over-year, from **$31.5 million** to **$42.0 million**, due to recovery from COVID-19 related business interruptions[159](index=159&type=chunk)[163](index=163&type=chunk) - The company recorded a net gain on marketable securities of **$1.1 million** in FY2023, compared to a net loss of **$7.6 million** in FY2022[166](index=166&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=30&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company faces significant liquidity pressure and a 'Going Concern' warning due to **$107.1 million** in hotel debt maturing in January **2024** - The financial statements were prepared on a going concern basis, but there is substantial doubt about the company's ability to continue as a going concern due to major debt maturing in January **2024** and recurring losses[182](index=182&type=chunk)[183](index=183&type=chunk)[258](index=258&type=chunk) Key Liquidity and Capital Resources (as of June 30, in millions) | Item | 2023 | 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $5.96 | $14.37 | | **Restricted cash** | $6.91 | $8.98 | | **Marketable securities, net** | $15.33 | $10.11 | Material Contractual Obligations (Next 12 Months - FY2024, in millions) | Obligation Type | Amount Due in FY2024 | | :--- | :--- | | **Mortgage and subordinated notes payable** | $108.42 | | **Other notes payable** | $0.57 | | **Interest** | $3.85 | | **Total** | **$112.84** | [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management's critical accounting policies involve significant judgment, particularly for income taxes and asset impairment assessments - The company's critical accounting policies involve significant judgment, especially regarding income taxes, asset impairment, and the valuation of deferred tax assets[192](index=192&type=chunk) - A valuation allowance is recognized for deferred tax assets when it is more likely than not that they will not be realized, relying heavily on recent financial results[194](index=194&type=chunk) - The company evaluates its property, equipment, and intangible assets for impairment quarterly or when triggering events occur, using projected undiscounted cash flows[195](index=195&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section is not required for smaller reporting companies - Not required for smaller reporting companies[196](index=196&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) The consolidated financial statements for FY2023 and FY2022 include a 'Going Concern' uncertainty and a critical audit matter regarding deferred tax assets - The independent auditor's report expresses substantial doubt about the Company's ability to continue as a going concern[199](index=199&type=chunk) - The auditor identified the deferred tax asset valuation allowance as a critical audit matter due to significant management judgment and estimation[204](index=204&type=chunk)[205](index=205&type=chunk) Key Consolidated Balance Sheet Data (as of June 30, in millions) | Item | 2023 | 2022 | | :--- | :--- | :--- | | **Total Assets** | $122.36 | $126.05 | | **Total Liabilities** | $216.96 | $209.05 | | **Total Shareholders' Deficit** | $(94.60) | $(83.00) | Key Consolidated Operations Data (for year ended June 30, in millions) | Item | 2023 | 2022 | | :--- | :--- | :--- | | **Total Revenues** | $57.61 | $47.22 | | **Net Loss** | $(9.93) | $(10.62) | | **Net Loss per Share (Basic) ($)** | $(4.77) | $(4.77) | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=69&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) The company reported no disagreements with its accountants on any accounting or auditing matters - There were no disagreements with accountants on accounting or auditing matters[360](index=360&type=chunk) [Item 9A. Controls and Procedures](index=69&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that disclosure controls were not effective due to a material weakness in deferred tax asset valuation accounting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June **30, 2023**[362](index=362&type=chunk) - A material weakness was identified in internal control over financial reporting, specifically concerning the control around the interpretation and accounting for the deferred tax asset valuation allowance[362](index=362&type=chunk) [Item 9B. Other Information](index=69&type=section&id=Item%209B.%20Other%20Information.) There is no other information to report - None[366](index=366&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section details the Company's directors and executive officers, including CEO John V. Winfield, board structure, and ethics code - John V. Winfield holds the positions of Chairman of the Board, President, and Chief Executive Officer[368](index=368&type=chunk)[369](index=369&type=chunk) - The company has established Audit, Nominating, and Compensation committees, with independent directors comprising the majority of the board[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - The Company has adopted a Code of Ethics applicable to its principal officers and Board of Directors[381](index=381&type=chunk) [Item 11. Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation.) Executive compensation for FY2023 included significant bonuses for CEO John V. Winfield and COO David C. Gonzalez, with details on outstanding stock options Summary Compensation Table (FY 2023, in millions) | Name and Position | Salary ($) | Bonus ($) | Total Compensation ($) | | :--- | :--- | :--- | :--- | | **John V. Winfield** (Chairman, President & CEO) | $0.84 | $0.60 | $1.50 | | **David C. Gonzalez** (Chief Operating Officer) | $0.44 | $0.60 | $1.04 | Outstanding Option Awards (as of June 30, 2023) | Name | Unexercised Options () | Exercise Price ($) | Expiration Date | | :--- | :--- | :--- | :--- | | **John V. Winfield** | 100,000 | 10.30 | 3/16/2026 | | **John V. Winfield** | 133,195 | 18.65 | 12/26/2023 | | **David C. Gonzalez** | 18,000 | 27.30 | 3/2/2027 | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=79&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) The Company's ownership is highly concentrated, with CEO John V. Winfield beneficially owning **68.6%** of common stock - John V. Winfield, the Chairman, President, and CEO, is the beneficial owner of **1,686,374** shares, representing **68.6%** of the company's common stock[416](index=416&type=chunk)[418](index=418&type=chunk) - All directors and executive officers as a group beneficially own **1,789,932** shares, or **72.9%** of the company's common stock[420](index=420&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of June 30, 2023) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price ($) | | :--- | :--- | :--- | | **Equity compensation plans approved by security holders** | 251,195 | $15.95 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=81&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) This section details related-party transactions, including CEO John V. Winfield's investment activities, and confirms director independence - CEO John V. Winfield directs investment activities for both the Company and its subsidiary Portsmouth, and may invest in the same companies, aligning his personal interests with the company's[429](index=429&type=chunk) - All members of the Board of Directors, except for CEO John V. Winfield, are considered independent under SEC and NASDAQ rules[430](index=430&type=chunk) [Item 14. Principal Accounting Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) The company paid **$0.35 million** in audit and tax fees to its current independent registered public accounting firm, WithumSmith+Brown, PC, for fiscal year 2023 Accounting Fees (Fiscal Years 2023 & 2022, in millions) | Fee Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | **Audit fees – Withum** | $0.22 | $0.05 | | **Tax fees – Withum** | $0.13 | $0.03 | | **Audit fees – Moss Adams** | - | $0.21 | | **Tax fees – Moss Adams** | - | $0.10 | | **TOTAL** | **$0.35** | **$0.39** | - All audit and non-audit services provided by the independent accountants were pre-approved by the Audit Committee[433](index=433&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists all financial statements, schedules, and exhibits included in the annual report filing - This section provides an index of all financial statements, schedules, and exhibits included with the Form **10-K** filing[437](index=437&type=chunk)[438](index=438&type=chunk) - Key exhibits filed include the Code of Ethics, consent of the independent accounting firm, and certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act[441](index=441&type=chunk) [Signatures](index=86&type=section&id=Signatures) The report was signed and authorized by the principal executive and financial officers on October **13, 2023** - The report was signed on October **13, 2023**, by John V. Winfield (President, CEO, Chairman) and Ann Marie Blair (Principal Financial Officer)[443](index=443&type=chunk)

PART I [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures. [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company reported a net income of $752,000 for the nine months ended March 31, 2023, a significant turnaround from a prior-year net loss, driven by a 41% revenue increase to $44.6 million, primarily from hotel operations, while assets slightly decreased and liabilities remained stable Condensed Consolidated Balance Sheet Highlights | Balance Sheet Items | March 31, 2023 (unaudited) | June 30, 2022 | | :--- | :--- | :--- | | Total Assets | $124,889,000 | $126,046,000 | | Cash and cash equivalents | $6,670,000 | $14,367,000 | | Total Liabilities | $208,748,000 | $209,050,000 | | Total Shareholders' Deficit | ($83,859,000) | ($83,004,000) | Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | Nine Months Ended Mar 31, 2023 | Nine Months Ended Mar 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $14,362,000 | $10,458,000 | $44,623,000 | $31,593,000 | | Net Income (Loss) | ($614,000) | ($873,000) | $752,000 | ($6,022,000) | | Net Income (Loss) Attributable to InterGroup | ($356,000) | ($466,000) | $1,335,000 | ($4,630,000) | | Basic EPS | ($0.16) | ($0.21) | $0.60 | ($2.09) | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended March 31) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,427,000) | ($8,871,000) | | Net cash used in investing activities | ($3,921,000) | ($3,771,000) | | Net cash (used in) provided by financing activities | ($3,902,000) | $11,526,000 | | Net change in cash, cash equivalents, and restricted cash | ($10,250,000) | ($1,116,000) | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's structure, including its 75.6% ownership of Portsmouth Square, Inc., disclose liquidity challenges, revenue sources, segment performance, related party transactions, and a legal dispute over a pedestrian bridge removal - As of March 31, 2023, InterGroup owns approximately **75.6%** of the outstanding common shares of Portsmouth Square, Inc., which operates the Hilton San Francisco Financial District[25](index=25&type=chunk) - The company is actively working to secure a new loan to replace its current first mortgage and mezzanine debt, which matures on January 1, 2024, and management anticipates a successful refinancing[36](index=36&type=chunk)[75](index=75&type=chunk) Hotel Revenue Disaggregation (Nine Months Ended March 31) | Revenue Stream | 2023 | 2022 | | :--- | :--- | :--- | | Hotel rooms | $28,020,000 | $16,285,000 | | Food and beverage | $1,905,000 | $934,000 | | Garage | $2,148,000 | $2,352,000 | | Other operating departments | $559,000 | $214,000 | | **Total hotel revenues** | **$32,632,000** | **$19,785,000** | Segment Performance (Nine Months Ended March 31, 2023) | Segment | Revenues | Net Income (Loss) | | :--- | :--- | :--- | | Hotel Operations | $32,632,000 | ($639,000) | | Real Estate Operations | $11,991,000 | $3,319,000 | | Investment Transactions | $0 | $627,000 | | Corporate | $0 | ($2,555,000) | | **Total** | **$44,623,000** | **$752,000** | - Subsequent to March 31, 2023, the Company listed its St. Louis, Missouri property for sale[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved financial results to hospitality industry recovery, with hotel revenues up 65% year-over-year, leading to a net income turnaround, supported by gains on marketable securities and insurance recovery, while actively pursuing hotel debt refinancing - The company's business continues to be affected by the COVID-19 pandemic, but has seen a robust recovery in leisure demand and an acceleration in group and business transient demand through 2022, though a potential economic slowdown in 2023 poses a risk to this momentum[84](index=84&type=chunk) - The company is actively seeking to refinance its hotel's first mortgage and mezzanine debt, which matures on January 1, 2024, and management anticipates a successful outcome[117](index=117&type=chunk) - As of March 31, 2023, the company had cash, cash equivalents, and restricted cash of **$13.1 million** and net marketable securities of **$16.1 million**, with management believing its cash position is adequate to meet requirements for at least the next twelve months[112](index=112&type=chunk)[118](index=118&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) For the nine months ended March 31, 2023, the company achieved a net income of $752,000, a significant improvement from a prior-year loss, primarily due to a 65% increase in hotel revenues and improved hotel performance metrics, supplemented by gains on marketable securities and insurance recovery Hotel Performance Metrics (Three Months Ended March 31) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Average Daily Rate (ADR) | $234 | $149 | +$85 | | Average Occupancy % | 78% | 74% | +4% | | RevPAR | $183 | $110 | +$73 | Hotel Performance Metrics (Nine Months Ended March 31) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Average Daily Rate (ADR) | $221 | $143 | +$78 | | Average Occupancy % | 85% | 76% | +9% | | RevPAR | $188 | $109 | +$79 | - For the nine months ended March 31, 2023, the company recorded a net gain on marketable securities of **$1,440,000**, compared to a net loss of **$3,613,000** in the prior year period[104](index=104&type=chunk) - Real estate revenues for the nine-month period increased slightly to **$12.0 million** from **$11.8 million**, aided by a one-time **$404,000** storm damage insurance claim[105](index=105&type=chunk) [Marketable Securities](index=26&type=section&id=Marketable%20Securities) As of March 31, 2023, the company's $17.0 million marketable securities portfolio is diversified across 11 equity positions, with significant allocations to REITs and U.S. Treasury notes, and a 30% holding in American Realty Investors, Inc Marketable Securities Portfolio Composition (March 31, 2023) | Industry Group | Fair Value | % of Total | | :--- | :--- | :--- | | REITs and real estate companies | $6,443,000 | 38.0% | | Treasury notes | $5,055,000 | 29.8% | | Financial services | $1,065,000 | 6.3% | | Technology | $1,139,000 | 6.7% | | Communications Services | $804,000 | 4.7% | | Other | $2,461,000 | 14.5% | | **Total** | **$16,967,000** | **100.0%** | - The portfolio's largest security position is a **30%** holding in American Realty Investors, Inc. (NYSE: ARL), and the second largest is a **29.8%** holding in U.S. government treasury notes[109](index=109&type=chunk) [Financial Condition and Liquidity](index=28&type=section&id=Financial%20Condition%20and%20Liquidity) The company's liquidity includes $13.1 million in cash and restricted cash and $16.1 million in net marketable securities as of March 31, 2023, with a primary focus on refinancing hotel debt maturing in January 2024, and management anticipates sufficient cash for the next twelve months - The company renewed its revolving line of credit with CIBC Bank USA in July 2022 for a reduced amount of **$2,000,000**, which remains fully available as of March 31, 2023[116](index=116&type=chunk) - Portsmouth, a subsidiary, has a note payable to InterGroup for **$14.2 million** as of March 31, 2023, under a **$16 million** funding agreement, with no additional funding currently anticipated[114](index=114&type=chunk) Material Financial Obligations Summary (as of March 31, 2023) | Obligation | Total | Due in Year 2024 | | :--- | :--- | :--- | | Mortgage note payable | $193,087,000 | $108,417,000 | | Related party notes payable | $3,096,000 | $567,000 | | Interest | $29,043,000 | $5,640,000 | | **Total** | **$225,226,000** | **$114,624,000** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and, as such, is not required to provide the information for this item - As a smaller reporting company, The Intergroup Corporation is not required to provide information regarding quantitative and qualitative disclosures about market risk[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the quarterly period covered by the report[128](index=128&type=chunk) - No changes in the Company's internal control over financial reporting occurred during the last quarter that have materially affected, or are reasonably likely to materially affect, these controls[129](index=129&type=chunk) PART II [PART II - OTHER INFORMATION](index=31&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits. [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is in a dispute with the City and County of San Francisco regarding the removal of a pedestrian bridge connected to its Hilton Hotel, disputing the legality of the permit revocation and its financial responsibility for estimated costs exceeding $2 million - The City of San Francisco has revoked a permit and directed the company to remove a pedestrian bridge connecting its hotel to Portsmouth Square at the company's expense[131](index=131&type=chunk) - The company disputes the legality of the permit revocation and its obligation to pay for the removal, stating that City representatives had previously agreed the City would pay for the costs[131](index=131&type=chunk) - Early cost estimates for the bridge removal plan exceed **$2 million**, and discussions with the City are expected to continue well into 2023[131](index=131&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, The Intergroup Corporation is not required to provide the information requested under this item - The company is a smaller reporting company and is not required to provide risk factor information in its Form 10-Q[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no events required to be reported under this item during the period - There have been no unregistered sales of equity securities or use of proceeds to report[134](index=134&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350) and Inline XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer as required by securities regulations[139](index=139&type=chunk) - The filing includes Inline XBRL documents for interactive data submission[139](index=139&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to_________ Commission File Number 1-10324 THE INTERGROUP CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-3293645 (State or oth ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to_________ Commission File Number 1-10324 Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth ...