Company: INTG
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010724
Chunk: 14

Company: INTERGROUP CORP
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 requirements. Since the refinancing, Portsmouth has remained current on all required debt service
payments. Additionally, Portsmouth has invested in extensive property improvements, including guest room, public area, and common space
renovations, which are expected to enhance the asset’s competitiveness and support revenue growth.

Nevertheless,
Portsmouth continues to operate in a challenging environment, particularly in the San Francisco market, which is characterized by elevated
interest rates, reduced business travel demand, and increased labor costs. While management is actively managing these headwinds, including
through cost control initiatives and revenue optimization strategies, these factors continue to impact operating performance.

    -9-

Management
believes the refinancing completed in March 2025, along with ongoing operational initiatives and forecasted performance improvements,
provide a viable path to meet Portsmouth’s obligations over the next twelve months. However, Portsmouth’s ability to continue
as a going concern will depend on its ability to achieve forecasted cash flows, maintain compliance with financial covenants, and secure
additional financing or extensions if necessary at or before the extended loan maturities. These conditions, while mitigated by Portsmouth’s
recent actions and current plans, continue to raise substantial doubt about the Portsmouth’s ability to continue as a going concern
within one year after the issuance of these financial statements.

Accordingly,
the accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty.

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 provided for operating activities of $1,725,000 for the nine months ended March 31, 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. During the nine months ended March 31, 2025, Portsmouth continued to invest