Company: INTG
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021858
Chunk: 36

Company: INTERGROUP CORP
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 36
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 result of (i) Portsmouth completing a comprehensive refinancing on March 28, 2025 of its senior mortgage and
(ii) executing restated and amended of its mezzanine loan, resulting in extended maturities, favorable interest terms, and improved covenant
compliance. Since closing, Portsmouth has remained current on all required debt service and has continued property enhancements to support
the Hotel’s competitive positioning (including renovation of additional guest rooms returned to inventory). In addition, in March
2025 and May 2025, the related-party facility with the Company was amended to increase borrowing capacity to $40,000,000, extend maturity
to July 31, 2027, and reduce the rate to 9%, providing a contingency source of liquidity without required monthly principal or interest
payments prior to maturity.

Management
has re-evaluated Portsmouth’s liquidity position as of September 30, 2025, and concluded that no conditions or events exist that
raise substantial doubt about its ability to continue as a going concern for at least the next twelve months.

This
disclosure relates to Portsmouth and reflects management’s fiscal year 2026 evaluation of that subsidiary; it does not modify or
supersede going-concern disclosures in previously issued fiscal year 2024 financial statements and interim filings, and it does not indicate
a going-concern uncertainty for InterGroup. See also InterGroup MD&A – Liquidity and Capital Resources (Going concern) for
a cross-reference to Portsmouth’s Note 1.

NOTE
2 - LIQUIDITY

Historically,
the Company has relied primarily on cash flows generated from operations at its hotel property, the Hilton San Francisco Financial District
(the “Hotel”), as its primary source of liquidity. However, the pace of recovery in the San Francisco hospitality market
remains slower than anticipated due to several factors, including a sustained decline in business travel driven by remote work trends,
as well as broader municipal challenges such as safety concerns, homelessness, and increased crime. These conditions have limited demand
in key customer segments and shifted the Hotel’s revenue base toward lower-yielding leisure travel.

As
a result, the Company experienced net cash used in operating activities of $296,000 for the three months ended September 30, 2025. In
response to ongoing market pressures, Portsmouth has adopted several capital preservation initiatives, including deferral of non-essential
capital projects, temporary suspension of certain Hotel services, renegotiation of vendor agreements, and reduction of controllable operating
expenses.