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 March 31, 2024

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

For the transition period from _______ to_________

Commission File Number 1-10324

THE INTERGROUP CORPORATION

(Exact name of registrant as specified in its charter)

delaware		13-3293645
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

1516 S. Bundy Dr., Suite 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.

☒ 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).

☒ Yes ☐ No

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

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☐

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

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

☐ Yes ☒ 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 May 14, 2024 was 2,187,214.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page

Item 1.	Financial Statements.

	Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and June 30, 2023	3
	Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Nine Months ended March 31, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Shareholders’ Deficit for the Three and Nine Months ended March 31, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2024 and 2023 (Unaudited)	7
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	8-20

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21-28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	28

Item 4.	Controls and Procedures.	28

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	29

Item 1A.	Risk Factors.	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29

Item 3.	Defaults Upon Senior Securities.	30

Item 4.	Mine Safety Disclosures.	30

Item 5.	Other Information.	30

Item 6.	Exhibits.	30

Signatures		31

-2-

PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of	March 31, 2024			June 30, 2023
	(unaudited)
ASSETS
Investment in Hotel, net	$	40,371,000		$	40,318,000
Investment in real estate, net		47,907,000			48,057,000
Investment in marketable securities		14,684,000			18,345,000
Cash and cash equivalents		7,763,000			5,960,000
Restricted cash		4,225,000			6,914,000
Other assets, net		4,005,000			2,764,000
Total assets	$	118,955,000		$	122,358,000

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities - Hotel	$	13,152,000		$	11,616,000
Accounts payable and other liabilities		2,639,000			2,574,000
Due to securities broker		2,944,000			1,601,000
Obligations for securities sold		23,000			1,416,000
Other notes payable		2,529,000			2,954,000
Deferred tax liability		4,633,000			4,927,000
Mortgage notes payable - Hotel, net		106,045,000			107,117,000
Mortgage notes payable - real estate, net		88,416,000			84,757,000
Total liabilities		220,381,000			216,962,000

Shareholders’ deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued		-			-
Common stock, $.01 par value, 4,000,000 shares authorized; 3,459,888 and 3,459,888 issued; 2,187,214 and 2,205,927 outstanding, respectively		33,000			33,000
Additional paid-in capital		3,602,000			2,445,000
Accumulated deficit		(58,772,000	)		(52,835,000	)
Treasury stock, at cost, 1,272,674 and 1,253,961 shares as of March 31, 2024 and June 30, 2023, respectively		(21,223,000	)		(20,794,000	)
Total InterGroup shareholders’ deficit		(76,360,000	)		(71,151,000	)
Noncontrolling interest		(25,066,000	)		(23,453,000	)
Total shareholders’ deficit		(101,426,000	)		(94,604,000	)

Total liabilities and shareholders’ deficit	$	118,955,000		$	122,358,000

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

-3-

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended March 31,	2024			2023
Revenues:
Hotel	$	10,758,000		$	10,430,000
Real estate		4,125,000			3,932,000
Total revenues		14,883,000			14,362,000

Costs and operating expenses:
Hotel operating expenses		(9,239,000	)		(8,413,000	)
Real estate operating expenses		(2,612,000	)		(2,770,000	)
Depreciation and amortization expenses		(1,607,000	)		(1,380,000	)
General and administrative expenses		(716,000	)		(836,000	)
Total costs and operating expenses		(14,174,000	)		(13,399,000	)

Income from operations		709,000			963,000

Other (expense) income:
Interest expense - mortgages		(3,234,000	)		(2,101,000	)
Net unrealized (loss) gain on marketable securities		(820,000	)		503,000
Net realized gain on marketable securities		9,000			363,000
Loss on extinguishment of debt		(453,000	)		-
Gain on insurance recovery
Dividend and interest income		63,000			72,000
Trading and margin interest expense		(430,000	)		(473,000	)
Total other (expense) income, net		(4,865,000	)		(1,636,000	)

Loss before income taxes		(4,156,000	)		(673,000	)
Income tax benefit		295,000			59,000
Net loss		(3,861,000	)		(614,000	)
Less: Net loss attributable to the noncontrolling interest		697,000			258,000
Net loss attributable to The InterGroup Corporation	$	(3,164,000	)	$	(356,000	)

Net (loss) income per share attributable to The InterGroup Corporation
Basic	$	(1.44	)	$	(0.16	)
Diluted	$	(1.44	)	$	(0.16	)

Weighted average number of basic common shares outstanding		2,192,862			2,211,066
Weighted average number of diluted common shares outstanding		2,192,862			2,211,066

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

-4-

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the nine months ended March 31,	2024			2023
Revenues:
Hotel	$	32,076,000		$	32,632,000
Real estate		12,638,000			11,991,000
Total revenues		44,714,000			44,623,000

Costs and operating expenses:
Hotel operating expenses		(27,925,000	)		(26,445,000	)
Real estate operating expenses		(7,774,000	)		(7,695,000	)
Depreciation and amortization expenses		(4,691,000	)		(4,012,000	)
General and administrative expenses		(3,365,000	)		(2,448,000	)
Total costs and operating expenses		(43,755,000	)		(40,600,000	)

Income from operations		959,000			4,023,000

Other (expense) income:
Interest expense - mortgages		(7,695,000	)		(6,483,000	)
Net unrealized (loss) gain on marketable securities		(1,210,000	)		2,459,000
Net realized gain (loss) on marketable securities		1,374,000			(1,019,000	)
Loss on extinguishment of debt		(453,000	)		-
Gain on insurance recovery		-			2,692,000
Dividend and interest income		333,000			369,000
Trading and margin interest expense		(1,133,000	)		(1,182,000	)
Total other expense, net		(8,784,000	)		(3,164,000	)

(Loss) income before income taxes		(7,825,000	)		859,000
Income tax benefit (expense)		191,000			(107,000	)
Net (loss) income		(7,634,000	)		752,000
Less: Net loss attributable to the noncontrolling interest		1,697,000			583,000
Net (loss) income attributable to The InterGroup Corporation	$	(5,937,000	)	$	1,335,000

Net (loss) income per share attributable to The InterGroup Corporation
Basic	$	(2.70	)	$	0.60
Diluted	$	(2.70	)	$	0.54

Weighted average number of basic common shares outstanding		2,200,515			2,222,801
Weighted average number of diluted common shares outstanding		2,200,515			2,473,996

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

-5-

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit
	Common Stock				Additional Paid-in			Accumulated			Treasury			InterGroup Shareholders’			Noncontrolling			Total Shareholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit
Balance at July 1, 2023		3,459,888	$	33,000	$	2,445,000		$	(52,835,000	)	$	(20,794,000	)	$	(71,151,000	)	$	(23,453,000	)	$	(94,604,000	)
Net Loss		-		-		-			(1,244,000	)		-			(1,244,000	)		(378,000	)		(1,622,000	)
Investment in Portsmouth		-		-		(106,000	)		-			-			(106,000	)		84,000			(22,000	)
Purchase of treasury stock		-		-		-			-			(39,000	)		(39,000	)		-			(39,000	)
Balance at September 30, 2023		3,459,888		33,000		2,339,000			(54,079,000	)		(20,833,000	)		(72,540,000	)		(23,747,000	)		(96,287,000	)
Net Loss		-		-		-			(1,529,000	)		-			(1,529,000	)		(622,000	)		(2,151,000	)
Stock options expense		-		-		1,175,000			-			-			1,175,000			-			1,175,000
Purchase of treasury stock		-		-		-			-			(142,000	)		(142,000	)		-			(142,000	)
Balance at December 31, 2023		3,459,888	$	33,000	$	3,514,000		$	(55,608,000	)	$	(20,975,000	)	$	(73,036,000	)	$	(24,369,000	)	$	(97,405,000	)
Net Loss		-		-		-			(3,164,000	)		-			(3,164,000	)		(697,000	)		(3,861,000	)
Stock options expense		-		-		88,000			-			-			88,000			-			88,000
Purchase of treasury stock		-		-		-			-			(248,000	)		(248,000	)		-			(248,000	)
Balance at March 31, 2024		3,459,888	$	33,000	$	3,602,000		$	(58,772,000	)	$	(21,223,000	)	$	(76,360,000	)	$	(25,066,000	)	$	(101,426,000	)

	Common Stock				Additional Paid-in			Accumulated			Treasury			InterGroup Shareholders’			Noncontrolling			Total Shareholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit
Balance at July 1, 2022		3,459,888	$	33,000	$	3,277,000		$	(46,116,000	)	$	(19,324,000	)	$	(62,130,000	)	$	(20,874,000	)	$	(83,004,000	)
Net Loss		-		-		-			(199,000	)		-			(199,000	)		(2,000	)		(201,000	)
Investment in Portsmouth		-		-		(19,000	)		-			-			(19,000	)		14,000			(5,000	)
Purchase of treasury stock		-		-		-			-			(872,000	)		(872,000	)		-			(872,000	)
Balance at September 30, 2022		3,459,888		33,000		3,258,000			(46,315,000	)		(20,196,000	)		(63,220,000	)		(20,862,000	)		(84,082,000	)
Net Income (Loss)		-		-		-			1,890,000			-			1,890,000			(323,000	)		1,567,000
Investment in Portsmouth		-		-		(670,000	)		-			-			(670,000	)		509,000			(161,000	)
Purchase of treasury stock		-		-		-			-			(370,000	)		(370,000	)		-			(370,000	)
Balance at December 31, 2022		3,459,888	$	33,000	$	2,588,000		$	(44,425,000	)	$	(20,566,000	)	$	(62,370,000	)	$	(20,676,000	)	$	(83,046,000	)
Balance , value		3,459,888	$	33,000	$	2,588,000		$	(44,425,000	)	$	(20,566,000	)	$	(62,370,000	)	$	(20,676,000	)	$	(83,046,000	)
Net Loss		-		-		-			(356,000	)		-			(356,000	)		(258,000	)		(614,000	)
Net Income (Loss)		-		-		-			(356,000	)		-			(356,000	)		(258,000	)		(614,000	)
Investment in Portsmouth		-		-		(37,000	)		-			-			(37,000	)		28,000			(9,000	)
Purchase of treasury stock		-		-		-			-			(190,000	)		(190,000	)		-			(190,000	)
Balance at March 31, 2023		3,459,888	$	33,000	$	2,551,000		$	(44,781,000	)	$	(20,756,000	)	$	(62,953,000	)	$	(20,906,000	)	$	(83,859,000	)
Balance , value		3,459,888	$	33,000	$	2,551,000		$	(44,781,000	)	$	(20,756,000	)	$	(62,953,000	)	$	(20,906,000	)	$	(83,859,000	)

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

-6-

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the nine months ended March 31,	2024			2023
Cash flows from operating activities:
Net (loss) income	$	(7,634,000	)	$	752,000
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		4,691,000			4,012,000
Amortization of loan costs		210,000			265,000
Amortization of other notes payable		(425,000	)		(425,000	)
Gain on insurance recovery		-			(2,692,000	)
Deferred taxes		(294,000	)		-
Net unrealized loss (gain) on marketable securities		1,210,000			(2,459,000	)
Stock compensation expense		1,263,000			-
Changes in operating assets and liabilities:
Investment in marketable securities		2,451,000			(3,459,000	)
Accounts receivable		-			(11,000	)
Other assets, net		(1,241,000	)		(738,000	)
Accounts payable and other liabilities - Hotel		1,536,000			9,019,000
Accounts payable and other liabilities		65,000			(6,585,000	)
Due to securities broker		1,343,000			(314,000	)
Obligations for securities sold		(1,393,000	)		208,000
Net cash provided by (used in) operating activities		1,782,000			(2,427,000	)

Cash flows from investing activities:
Payments for hotel investments		(2,649,000	)		(4,131,000	)
Payments for real estate investments		(1,944,000	)		(1,940,000	)
Insurance proceeds for property damage claims		-			2,325,000
Payments for investment in Portsmouth		(22,000	)		(175,000	)
Net cash used in investing activities		(4,615,000	)		(3,921,000	)

Cash flows from financing activities:
Payments of mortgage, financed leases and other notes payable		(2,113,000	)		(2,312,000	)
Proceeds from refinance of mortgage notes payable		4,489,000			-
Purchase of treasury stock		(429,000	)		(1,432,000	)
Payments of finance leases		-			(158,000	)
Net cash provided by (used in) financing activities		1,947,000			(3,902,000	)

Net decrease in cash, cash equivalents and restricted cash		(886,000	)		(10,250,000	)
Cash, cash equivalents and restricted cash at the beginning of the period		12,874,000			23,349,000
Cash, cash equivalents and restricted cash at the end of the period	$	11,988,000		$	13,099,000
Supplemental information:
Interest paid	$	4,750,000		$	5,862,000
Taxes paid	$	44,000		$	-

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

-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”), 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, 2023. The June 30, 2023 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, 2023.

The unaudited condensed consolidated financial statements include the accounts of our wholly owned and majority-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended March 31, 2024 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2024.

Effective February 19, 2021, the Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF), was liquidated and all of its assets including its 68.8% interest in Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI) were distributed to its shareholders in exchange for their Santa Fe common stock. As of March 31, 2024, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth and the Company’s President, Chairman of the Board and Chief Executive Officer, John V. Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.

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

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

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

-8-

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

There have been no material changes to the Company’s significant accounting policies during the nine months ended March 31, 2024. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for a summary of the significant accounting policies.

Reclassification

Certain line items on the statement of cash flows for the nine months ended March 31, 2023 have been reclassified to conform to the current period presentation. Net cash provided by (used in) operating, investing and financing activities did not change as a result of this reclassification.

Recently Issued and Adopted Accounting Pronouncements

As of March 31, 2024, there was no material impact from the recent adoption of new accounting pronouncements, nor expected material impact from recently issued accounting pronouncements yet to be adopted, on the Company’s condensed consolidated financial statements.

Going Concern

The financial statements of the Hotel have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 11 – Related Party and Other Financing Transactions, as of March 31, 2024, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $

SEC Form 10-Q filed by Intergroup Corporation