UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



|☒ | ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For
the fiscal year ended June 30, 2023



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 Other Jurisdiction of |  | (I.R.S.
    Employer   
|Incorporation
    or Organization)  |  | Identification
    No.)



1516
S. Bundy Drive, Suite 200, Los Angeles, California 90025

(Address
of principal executive offices) (Zip Code)



(310)
889-2500

(Registrant’s
telephone number, including area code)



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



|Title
    of each class           |  | Trading
    Symbol |  | Name
    of exchange on which registered
|--------------------------------- |  | ------------------ |  | ----------------------------------------
|Common
    Stock, $0.01 par value |  | INTG               |  | The
    NASDAQ Stock Market, LLC        



Securities
registered pursuant to Section 12(g) of the Act: None



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



☐
Yes ☒ No



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.



☐
Yes ☒ No



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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).



☒
Yes ☐ No



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendments to this Form 10-K.



☒
Yes ☐ No



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|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



As
of December 31, 2022, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was
approximately $31,358,000 (based upon the closing sale price of the common stock on that date on The NASDAQ Stock Market LLC).



The
number of shares outstanding of registrant’s Common Stock, as of October 13, 2023 was 2,205,927.



DOCUMENTS
INCORPORATED BY REFERENCE: None
























TABLE
OF CONTENTS



|             |                                                                                                               | Page
|------------ | ------------------------------------------------------------------------------------------------------------- | ----
|             | PART I                                                                                                        |     
|             |                                                                                                               |     
|Item
    1.  | Business.                                                                                                     | 4   
|             |                                                                                                               |     
|Item
    1A. | Risk Factors.                                                                                                 | 11  
|             |                                                                                                               |     
|Item
    1B. | Unresolved Staff Comments.                                                                                    | 15  
|             |                                                                                                               |     
|Item
    2.  | Properties.                                                                                                   | 15  
|             |                                                                                                               |     
|Item
    3.  | Legal Proceedings.                                                                                            | 22  
|             |                                                                                                               |     
|Item
    4.  | Mine Safety Disclosures.                                                                                      | 22  
|             |                                                                                                               |     
|             | PART II                                                                                                       |     
|             |                                                                                                               |     
|Item
    5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 22  
|             |                                                                                                               |     
|Item
    6.  | Selected Financial Data.                                                                                      | 23  
|             |                                                                                                               |     
|Item
    7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                        | 23  
|             |                                                                                                               |     
|Item
    7A. | Quantitative and Qualitative Disclosures About Market Risk.                                                   | 31  
|             |                                                                                                               |     
|Item
    8.  | Financial Statements and Supplementary Data.                                                                  | 32  
|             |                                                                                                               |     
|Item
    9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.                         | 66  
|             |                                                                                                               |     
|Item
    9A. | Controls and Procedures.                                                                                      | 66  
|             |                                                                                                               |     
|Item
    9B. | Other Information.                                                                                            | 66  
|             |                                                                                                               |     
|             | PART III                                                                                                      |     
|             |                                                                                                               |     
|Item
    10. | Directors, Executive Officers and Corporate Governance.                                                       | 67  
|             |                                                                                                               |     
|Item
    11. | Executive Compensation.                                                                                       | 70  
|             |                                                                                                               |     
|Item
    12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.               | 75  
|             |                                                                                                               |     
|Item
    13. | Certain Relationships and Related Transactions, and Director Independence.                                    | 76  
|             |                                                                                                               |     
|Item
    14. | Principal Accounting Fees and Services.                                                                       | 77  
|             |                                                                                                               |     
|             | PART IV                                                                                                       |     
|             |                                                                                                               |     
|Item
    15. | Exhibits, Financial Statement Schedules.                                                                      | 78  
|             |                                                                                                               |     
|Signatures   | 81                                                                                                           



2







FORWARD-LOOKING
STATEMENTS



This
Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended
(“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking
statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial
results, our liquidity and capital resources, including anticipated repayment of certain of the Company’s indebtedness, the impact
to our business and financial condition, the effects of competition and the effects of future legislation or regulations and other non-historical
statements, the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdown or a
recession and geopolitical conflicts). Forward-looking statements include all statements that are not historical facts, and in some cases,
can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,”
“projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”
or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect
our results of operations, financial condition, cash flows, performance or future achievements or events.



All
such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that
are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed
in these forward-looking statements. You should not place undue reliance on any forward-looking statements, and we urge investors to
carefully review the disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in this Annual Report
on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.



The
risk factors discussed in Item 1A: “Risk Factors” could cause our results to differ materially from those expressed in forward-looking
statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect
to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in
forward-looking statements.



Other
factors that may cause actual results to differ materially from current expectations include, but are not limited to:



| | ● | risks
    associated with the lodging industry, including competition, increases in wages, labor relations, energy and fuel costs, actual and
    threatened pandemics, actual and threatened terrorist attacks, and downturns in domestic and international economic and market conditions,
    particularly in the San Francisco Bay area;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | risks
    associated with the real estate industry, including changes in real estate and zoning laws or regulations, increases in real property
    taxes, rising insurance premiums, costs of compliance with environmental laws and other governmental regulations;                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | the
    availability and terms of financing and capital and the general volatility of securities markets;                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | changes
    in the competitive environment in the hotel industry;                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | economic
    volatility and potential recessive trends;                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | risks
    related to natural disasters;                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | hyperinflation;                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | litigation;
    and                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | other
    risk factors discussed below in this Report.                                                                                                                                                                                                                                                                                      



All
such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that
are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed
in the statements. You should not put undue reliance on any forward-looking statements and we urge investors to carefully review the
disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in this Annual Report on Form 10-K, as
such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at
www.sec.gov, as well as risks, uncertainties and other factors discussed in this Annual Report on Form 10-K. Except as required by law,
we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future
events or otherwise.



3







PART
I



Item
1. Business.



GENERAL



The
InterGroup Corporation (“InterGroup” or the “Company” and may also be referred to as “we” “us”
or “our” in this report) is a Delaware corporation formed in 1985, as the successor to Mutual Real Estate Investment Trust
(“M-REIT”), a New York real estate investment trust created in 1965. The Company has been a publicly held company since M-REIT’s
first public offering of shares in 1966.



The
Company was organized to buy, develop, operate, rehabilitate, and dispose of real property of various types and descriptions, and to
engage in such other business and investment activities as would benefit the Company and its shareholders. The Company was founded upon,
and remains committed to, social responsibility. Such social responsibility was originally defined as providing decent and affordable
housing to people without regard to race. In 1985, after examining the impact of federal, state, and local equal housing laws, the Company
determined to broaden its definition of social responsibility. The Company changed its form from a REIT to a corporation so that it could
pursue a variety of investments beyond real estate and broaden its social impact to engage in any opportunity which would offer the potential
to increase shareholder value within the Company’s underlying commitment to social responsibility.



As
of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s
President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares
of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth. The Company’s Chief
Operating Officer, David Gonzalez was elected President of Portsmouth in May 2021.



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”). Portsmouth received management fees as a general partner
of Justice for its services in overseeing and managing the Partnership’s assets. Those fees were eliminated in consolidation. 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.



4







Effective
December 23, 2021, The partnership was dissolved. The financial statements of Justice were consolidated with those of the Company.



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 Justice, and 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.



In
addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale
of real estate. Properties include sixteen apartment complexes, one commercial real estate property and three single-family houses. The
properties are located throughout the United States but are concentrated in Texas and the County of Los Angeles, California. The Company
also has an investment in unimproved real property. As of June 30, 2023, all the Company’s operating real estate properties are
managed in-house.



The
Company acquires its investments in real estate and other investments utilizing cash, securities, or debt, subject to approval or guidelines
of the Board of Directors and its Executive Strategic Real Estate and Securities Investment Committee. The Company may also look for
new real estate investment opportunities in hotels, apartments, office buildings and development properties. The acquisition of any new
real estate investments will depend on the Company’s ability to find suitable investment opportunities and the availability of
sufficient financing to acquire such investments. To help fund any such acquisition, the Company may borrow funds to leverage its investment
capital. The amount of any such debt will depend on several factors including, but not limited to, the availability of financing and
the sufficiency of the acquisition property’s projected cash flows to support the operations and debt service.



The
Company also may derive income from the investment of its cash and investment securities assets. The Company has invested in income-producing
instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential. See
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s
marketable securities and other investments.



HILTON
HOTELS FRANCHISE LICENSE AGREEMENT



The
Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding
LLC (“Hilton”) on December 10, 2004. The term of the License Agreement was for an initial period of fifteen years commencing
on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject
to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended
the License Agreement through 2030, and provided the Partnership with certain key money cash incentives to be earned through 2030.



HOTEL
MANAGEMENT COMPANY AGREEMENT



Operating
entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel,
along with its five-level parking garage, with an effective date of February 3, 2017. 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, not
to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”)
payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic 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.



For
the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000,
respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated
statements of operations. As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary,
Kearny Street Parking LLC, manages the parking garage in-house.





5







CHINESE
CULTURE FOUNDATION LEASE



On
March 15, 2005, the Hotel entered into an amended lease with the Chinese Culture Foundation of San Francisco (the “Foundation”)
for the third-floor space of the Hotel commonly known as the Chinese Culture Center, which the Foundation had right to occupy pursuant
to a 50-year nominal rent lease that began in 1967.



The
amended lease, among other things, requires the Hotel to pay to the Foundation a monthly event space fee in the amount of $5,000, adjusted
annually based on the local Consumer Price Index. As of June 30, 2023, the monthly event space fee is $7,131. The term of the amended
lease expires on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a
hotel. Subject to certain conditions as set forth in the amended lease, the Foundation is entitled to reserve a maximum of 75 days per
calendar year for use of the event space. If the Hotel needs the event space during one of the dates previously reserved by the Foundation,
the Hotel shall pay the Foundation $4,000 per day for using the event space. During the fiscal years ended June 30, 2023 and 2022, the
Hotel paid the Foundation $20,000 and $12,000 for such fees, respectively.



SALES
AND REFINANCING OF REAL ESTATE PROPERTIES



In
July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages
totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing. The interest rate on the
three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained a mortgage
note payable on one of its California properties for $830,000. The Company received net proceeds of $836,000 which exceeded the new loan
amount by $6,000 due to advanced deposits made by the Company prior to closing. The interest rate on the mortgage is fixed at 3.50% for
five years and the mortgage note payable matures in August 2051.



On
October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and
obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance.
The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year
amortization thereafter. The mortgage loan matures in November 2031.



On
June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California
and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $584,000 as a result of the refinance.
The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in
July 2052.



On
May 31, 2023, the Company refinanced its $4,823,000 mortgage note payable on its 264-unit apartment complex in St Louis, Missouri and
obtained a new two year mortgage for $5,360,000. The Company deposited the existing cash in escrow for Capital Expenditure Reserve of
$616,000 and $244,000 in Additional Reserve for taxes and insurance. The mortgage has a floating monthly rate of 30-day SOFR (capped
at 5.5%) plus SOFR margin of 3.10% interest-only payments are due for the 12 months and $5,500 principal paydowns commencing in June
2024. The mortgage loan matures in May 2025.



6







MARKETABLE
SECURITIES INVESTMENT POLICIES



In
addition to its Hotel and real estate operations, the Company also invests from time to time in income producing instruments, corporate
debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs and other companies
which invest primarily in real estate.



The
Company’s securities investments are made under the supervision of an Executive Strategic Real Estate and Securities Investment
Committee of the Board of Directors (the “Committee”). The Committee currently has three members and is chaired by the Company’s
Chairman of the Board and President, John V. Winfield. The Committee has delegated authority to manage the portfolio to the Company’s
Chairman and President together with such assistants and management committees he may engage. The Committee generally follows certain
established investment guidelines for the Company’s investments. These guidelines presently include: (i) corporate equity securities
should be listed on the New York Stock Exchange (NYSE), NYSE MKT, NYSE Arca or the Nasdaq Stock Market (NASDAQ); (ii) the issuer of the
listed securities should be in compliance with the listing standards of the applicable national securities exchange; and (iii) investment
in a particular issuer should not exceed 10% of the market value of the total portfolio. The investment guidelines do not require the
Company to divest itself of investments, which initially meet these guidelines but subsequently fail to meet one or more of the investment
criteria. The Committee has in the past approved non-conforming investments and may in the future approve non-conforming investments.
The Committee may modify these guidelines from time to time.



The
Company may also invest, with the approval of the Committee, in unlisted securities, such as convertible notes, through private placements
including private equity investment funds. Those investments in non-marketable securities are carried at cost on the Company’s
consolidated balance sheets as part of Other Assets, net and reviewed for impairment on a periodic basis.



As
part of its investment strategies, the Company may assume short positions in marketable securities. Short sales are used by the Company
to potentially offset normal market risks undertaken in the course of its investing activities or to provide additional return opportunities.
As of June 30, 2023 and 2022, the Company had obligations for securities sold (equities short) of $1,416,000 and $449,000, respectively.



The
Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage
firms. The margin used by the Company may fluctuate depending on market conditions. The use of leverage could be viewed as risky, and
the market values of the portfolio may be subject to large fluctuations. Margin balances due as of June 30, 2023 and 2022 were $1,601,000
and $490,000, respectively.



7







As
Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive
Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted
by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the
investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position
until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive
Officer, and Portsmouth, at times, invest in the same companies in which the Company invests. Such investments align the interests of
the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources
of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the
Company.



Further
information with respect to investment in marketable securities and other investments of the Company is set forth in Management Discussion
and Analysis of Financial Condition and Results of Operations section and Notes 5 and 6 of the Notes to Consolidated Financial Statements.



SEASONALITY



Historically,
the Hotel’s operation has been seasonal under normal circumstances. Like most hotels in the San Francisco area, the Hotel generally
maintained high occupancy and room rates during the entire year except for the weeks starting from Thanksgiving to first week of January
due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel. See
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the
effects on our results of operations.



COMPETITION



The
Hotel has navigated this very competitive market nimbly and has consistently been ranked the number one hotel in its Competitive Set
(“CompSet”) based on our ability to drive occupancy. During 2021 and first part of calendar 2022, we took advantage of the
slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the
hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed
the carpet and wall covering corridor installation. In November 2022, we began our guestroom renovation and had completed approximately
200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations
by the end March 2024.



As
of the date of this report, the competition for business is very strong as there still hasn’t been a rebound close to 2019 for
the overall San Francisco market. The fiscal year ending June 30, 2023, the Hotel’s Competitive Set (“CompSet”) was
running 64% occupancy and average daily rate of $236 for a RevPAR of $152. The Hotel has fared drastically better than its CompSet by
aggressively pursuing all segments and opening all channels on off peak days and limiting access over peak demand dates. At the end of
fiscal year ending June 30, 2023, the Hotel was running occupancy of 83% including the vacancy of the “Out Of Order” rooms
of about 13% at $195 average daily rate for a RevPAR of $161, giving the Hotel a RevPAR index of 106%.



The
Hotel’s location in the San Francisco Financial District historically had provided greater opportunities over its competitors when
it comes to developing relationships with the Financial District entities and the customers who regularly do business in the downtown
area. With limited business travel to San Francisco for the time, we are competing with hotels in more tourist attracting locations and
amenities for the leisure traveler. The ability to capitalize on the strong midweek demand of the individual business traveler to the
Financial District has been the focus during the timeframe of strong growth in the market. The shift to attracting leisure travel has
pushed the hotel to price aggressively to lure competition from the more tourist locations in San Francisco.



8









The
Hotel is also subject to certain operating risks common to all of the hotel industry, which could adversely impact performance. These
risks include, but are not limited to:



| | ● | Competition
    for guests and meetings from other hotels including competition and pricing pressure from internet wholesalers and distributors;                                                         
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                          
| | ● | increases
    in operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may
    not be offset in the future by increased room rates;
| |   |                                                                                                                                                                                                          
| | ● | labor
    strikes, disruptions or lock outs;                                                                                                                                                             
| |   |                                                                                                                                                                                                          
| | ● | dependence
    on demand from business and leisure travelers, which may fluctuate and is seasonal;                                                                                                       
| |   |                                                                                                                                                                                                          
| | ● | increases
    in energy costs, cost of fuel, airline fares and other expenses related to travel, which may negatively affect traveling;                                                                  
| |   |                                                                                                                                                                                                          
| | ● | terrorism,
    terrorism alerts and warnings, wars and other military actions, pandemics or other medical events or warnings which may result in
    decreases in business and leisure travel;           
| |   |                                                                                                                                                                                                          
| | ● | natural
    disasters; and                                                                                                                                                                               
| |   |                                                                                                                                                                                                          
| | ● | adverse
    effects of downturns and recessionary conditions in international, national and/or local economies and market conditions.                                                                    



ENVIRONMENTAL
MATTERS



In
connection with the ownership of the Hotel, the Company is subject to various federal, state and local laws, ordinances and regulations
relating to environmental protection. Under these laws, a current or previous owner or operator of real estate may be liable for the
costs of removal or remediation of certain hazardous or toxic substances on, under or in such property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances.



Environmental
consultants retained by Justice and its lenders conducted updated Phase I environmental site assessments in fiscal year ended June 30,
2014 on the Hotel property. These Phase I assessments relied, in part, on Phase I environmental assessments prepared in connection with
the Partnership’s first mortgage loan obtained in December 2013. Phase I assessments are designed to evaluate the potential for
environmental contamination on properties based generally upon site inspections, facility personnel interviews, historical information,
and certain publicly available databases; however, Phase I assessments will not necessarily reveal the existence or extent of all environmental
conditions, liabilities or compliance concerns at the properties.



Although
the Phase I assessments and other environmental reports we have reviewed disclose certain conditions on our property and the use of hazardous
substances in operation and maintenance activities that could pose a risk of environmental contamination or liability, we are not aware
of any environmental liability that we believe would have a material adverse effect on our business, financial position, results of operations
or cash flows.



The
Company believes that the Hotel is in compliance, in all material respects, with all federal, state and local environmental ordinances
and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which could have a material
adverse effect on the Company. The Company has not received written notice from any governmental authority of any material noncompliance,
liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of its present properties.



9









Competition
– Rental Properties



The
ownership, operation, and leasing of multifamily rental properties are highly competitive. The Company competes with domestic and foreign
financial institutions, REITs, life insurance companies, pension trusts, trust funds, partnerships and individual investors. In addition,
The Company competes for tenants in markets primarily on the basis of property location, rent charged, services provided and the design
and condition of improvements. The Company also competes with other quality apartments owned by public and private companies. The number
of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily
properties, as well as the rents it is able to charge. In addition, other forms of residential properties, including single family housing
and town homes, provide housing alternatives to potential residents of quality apartment communities or potential purchasers of for-sale
condominium units. The Company competes for residents in its apartment communities based on resident service and amenity offerings and
the desirability of the Company’s locations. Resident leases at the Company’s apartment communities are priced competitively
based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities.



EMPLOYEES



As
of June 30, 2023, the Company’s corporate office and multifamily operations had 32 employees. Effective August 2014, the Company
entered into a client service agreement with Automatic Data Processing (“ADP”), a professional employer organization serving
as an off-site, full-service human resource department for its employees. ADP personnel management services are delivered by entering
into a co-employment relationship with the Company’s employees. The employees and the Company are not party to any collective bargaining
agreement, and the Company believes that its employee relations are satisfactory.



The
hotel operations had 187 employees as of June 30, 2023. On February 3, 2017, Aimbridge assumed all labor union agreements and Justice
provides all funding for all payroll and related costs. As of June 30, 2023, approximately 90% of those employees were represented by
one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”)
to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and a new MOU was signed
June 26, 2023. CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed
on April 26, 2023. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.



Negotiation
of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees,
is a regular and expected course of business operations for the Partnership and Aimbridge. The Partnership expects and anticipates that
the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during
the life of each CBA and incorporates these principles into its operating and budgetary practices.



ADDITIONAL
INFORMATION



The
Company files required annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the
Securities and Exchange Commission (“SEC” or the “Commission”). The public may read and copy any materials that
we file with the Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business
days during the hours of 10:00 a.m. to 3:00 p.m. You may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission also maintains an Internet site at http://www.sec.gov that contains reports,
proxy and information statements, and other information regarding issuers that file electronically with the Commission.



Other
information about the Company can be found on its website www.intgla.com. Reference in this document to that website address does
not constitute incorporation by reference of the information contained on the website.



10









Item
1A. Risk Factors.



Adverse
changes in the U.S. and global economies could negatively impact our financial performance.



Due
to a number of factors affecting consumers, the outlook for the lodging industry remains uncertain. These factors have resulted at times
in the past and could continue to result in the future in fewer customers visiting, or customers spending less, in San Francisco, as
compared to prior periods. The macro-economic situation of a looming US/Global recession has seen business reducing or eliminating typical
travel and group meetings in efforts to be conservative in uncertain financial times. Leisure travel and other leisure activities represent
discretionary expenditures, and participation in such activities tends to decline during economic downturns, during which consumers generally
have less disposable income. As a result, in those times customer demand for the luxury amenities and leisure activities that we offer
may decline. Furthermore, during periods of economic contraction, revenues may decrease while some of our costs remain fixed or even
increase, resulting in decreased earnings.



Weakened
global economic conditions may adversely affect our industry, business, and results of operations.



Our
overall performance depends in part on worldwide economic conditions, which could adversely affect the tourism industry. According to
current economic news reports, the United States and other key international economies may be subject to a recession, characterized by
falling demand for a variety of goods and services, restricted credit, going concern threats to financial institutions, major multinational
companies and medium and small businesses, poor liquidity, declining asset values, reduced corporate profitability, and volatility in
credit, equity and foreign exchange markets. These conditions affect discretionary and leisure spending and could adversely affect our
customers’ ability or willingness to travel to destinations for leisure and cutback on discretionary business travel, which could
adversely affect our operating results. In addition, in a weakened economy, companies that have competing properties may reduce room
rates and other prices which could also reduce our average revenues and harm our operating results.



We
operate a single property located in San Francisco and rely on the San Francisco market. Changes adversely impacting this market could
have a material effect on our business, financial condition, results of operations, and fair market value of the Hotel.



Our
business in San Francisco and the hospitality industry has a limited base of operations and substantially all of our revenues are currently
generated by the Hotel in San Francisco, California. Accordingly, we are subject to greater risks than a more diversified hotel or resort
operator and the profitability of our operations is linked to local economic conditions in San Francisco. The combination of a decline
in the local economy of San Francisco, reliance on a single location and the significant investment associated with it may cause our
operating results to fluctuate significantly and may adversely affect us and materially affect our total profitability.



We
face intense local and increasingly national competition which could impact our operations and adversely affect our business and the
results of operations.



We
operate in the highly competitive San Francisco hotel industry. The Hotel competes with other high-quality Northern California hotels
and resorts. Many of these competitors seek to attract customers to their properties by providing food and beverage outlets, retail stores
and other related amenities, in addition to recently renovated hotel accommodations. To the extent that we seek to enhance our revenue
base by offering our own various amenities, we compete with the service offerings provided by these competitors.



Many
of the competing properties have themes and attractions which draw a significant number of visitors and directly compete with our operations.
Some of these properties are operated by subsidiaries or divisions of large public companies that may have greater name recognition and
financial and marketing resources than we do and market to the same target demographic group as we do. Various competitors are expanding
and renovating their existing facilities. We believe that competition in the San Francisco hotel and resort industry is based on certain
property-specific factors, including overall atmosphere, range of amenities, price, location, technology infrastructure, entertainment
attractions, theme and size. Any market perception that we do not excel with respect to such property-specific factors could adversely
affect our ability to compete effectively. If we are unable to compete effectively, we could lose market share, which could adversely
affect our business and results of operations.



11









The
San Francisco hotel and resort industry is capital intensive; financing our renovations and future capital improvements could reduce
our cash flow and adversely affect our financial performance.



The
Hotel has an ongoing need for renovations and other capital improvements to remain competitive, including replacement, from time to time,
of furniture, fixtures and equipment. We will also need to make capital expenditures to comply with applicable laws and regulations.



Renovations
and other capital improvements of hotels require significant capital expenditures. In addition, renovations and capital improvements
of hotels usually generate little or no cash flow until the project’s completion. We may not be able to fund such projects solely
from cash provided from our operating activities. Consequently, we will rely upon the availability of debt or equity capital and reserve
funds to fund renovations and capital improvements and our ability to carry them out will be limited if we cannot obtain satisfactory
debt or equity financing, which will depend on, among other things, market conditions. No assurances can be made that we will be able
to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms.



Renovations
and other capital improvements may give rise to the following additional risks, among others: construction cost overruns and delays;
increased prices of materials due to tariffs; temporary closures of all or a portion of the Hotel to customers; disruption in service
and room availability causing reduced demand, occupancy and rates; and possible environmental issues.



As
a result, renovations and any other future capital improvement projects may increase our expenses, reduce our cash flows and our revenues.
If capital expenditures exceed our expectations, this excess would have an adverse effect on our available cash.



We
have substantial debt, and we may incur additional indebtedness, which may negatively affect our business and financial results.



We
have substantial debt service obligations. Our substantial debt may negatively affect our business and operations in several ways, including:
requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest, which will
reduce funds available for operations and capital expenditures, future business opportunities and other purposes; making us more vulnerable
to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; limiting
our flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; placing us at a competitive
disadvantage compared to our competitors that have less debt; limiting our ability to borrow more money for operations, capital or to
finance acquisitions in the future; and requiring us to dispose of assets, if needed, in order to make required payments of interest
and principal.



The
debt agreement that governs our outstanding indebtedness due January 2024 could result in our being required to repay these borrowings
on their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings,
the Hotel financial condition and results of operations could be adversely affected.



Our
business model involves high fixed costs, including property taxes and insurance costs, which we may be unable to adjust in a timely
manner in response to a reduction in our revenues.



The
costs associated with owning and operating the Hotel are significant. Some of these costs (such as property taxes and insurance costs)
are fixed, meaning that such costs may not be altered in a timely manner in response to changes in demand for services. Failure to adjust
our expenses may adversely affect our business and results of operations. Our real property taxes may increase as property tax rates
change and as the values of properties are assessed and reassessed by tax authorities. Our real estate taxes do not depend on our revenues,
and generally we could not reduce them other than by disposing of our real estate assets.



Insurance
premiums have increased significantly in recent years, and continued escalation may result in our inability to obtain adequate insurance
at acceptable premium rates. A continuation of this trend would appreciably increase the operating expenses of the Hotel. If we do not
obtain adequate insurance, to the extent that any of the events not covered by an insurance policy materialize, our financial condition
may be materially adversely affected.



In
the future, our property may be subject to increases in real estate and other tax rates, utility costs, operating expenses, insurance
costs, repairs and maintenance and administrative expenses, which could reduce our cash flow and adversely affect our financial performance.
If our revenues decline and we are unable to reduce our expenses in a timely manner, our business and results of operations could be
adversely affected.



12









Risk
of declining market values in marketable securities.



The
Company invests from time to time in marketable securities. As a result, the Company is exposed to market volatility in connection with
these investments. The Company’s financial position and financial performance could be adversely affected by worsening market conditions
or sluggish performance of such investments.



Illiquidity
risk in nonmarketable securities.



Nonmarketable
securities are, by definition, instruments that are not readily salable in the capital markets, and when sold are usually at a substantial
discount. Thus, the holder is limited to return on investment from any income producing feature of the instrument, as any sale of such
an instrument would be subject to a substantial discount. Thus, a holder may need to hold such instruments for long period of time and
not be able to realize a return of their cash investment should there be a need to liquidate to obtain cash at any given time.



Litigation
and legal proceedings could expose us to significant liabilities and thus negatively affect our financial results.



We
are a party, from time to time, to various litigation claims and legal proceedings, government and regulatory inquiries and/or proceedings,
including, but not limited to, intellectual property, premises liability and breach of contract claims. Material legal proceedings are
described more fully in Note 17, Commitments and Contingencies, to our consolidated financial statements, included in Item 8 of this
Annual Report on Form 10-K.



Litigation
is inherently unpredictable and defending these proceedings can result in significant ongoing expenditures and the diversion of our management’s
time and attention from the operation of our business, which could have a negative effect on our business operations. Our failure to
successfully defend or settle any litigation or legal proceedings could result in liabilities that, to the extent not covered by our
insurance, could have a material adverse effect on our financial condition, revenue and profitability.



The
threat of terrorism could adversely affect the number of customer visits to the Hotel.



The
threat of terrorism has caused, and may in the future cause, a significant decrease in customer visits to San Francisco due to disruptions
in commercial and leisure travel patterns and concerns about travel safety. We cannot predict the extent to which disruptions in air
or other forms of travel as a result of any further terrorist act, outbreak of hostilities or escalation of war would adversely affect
our financial condition, results of operations or cash flows. The possibility of future attacks may hamper business and leisure travel
patterns and, accordingly, the performance of our business and our operations.



We
depend in part, on third party management companies for the future success of our business and the loss of one or more of their key personnel
could have an adverse effect on our ability to manage our business and operate successfully and competitively or could be negatively
perceived in the capital markets.



The
Hotel is managed by Aimbridge. Their ability to manage the Hotel and to operate successfully and competitively is dependent, in part,
upon the efforts and continued service of their managers. The departure of key personnel of current or future management companies could
have an adverse effect on our business and our ability to operate successfully and competitively, and it could be difficult to find replacements
for these key personnel, as competition for such personnel is intense.



Seasonality
and other related factors such as weather can be expected to cause quarterly fluctuations in revenue at the Hotel.



The
hotel and resort industry are seasonal in nature. This seasonality can tend to cause quarterly fluctuations in revenues at the Hotel.
Our quarterly earnings may also be adversely affected by other related factors outside our control, including weather conditions and
poor economic conditions. As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these quarterly
fluctuations in our revenues.



13









The
hotel industry is heavily regulated and failure to comply with extensive regulatory requirements may result in an adverse effect on our
business.



The
hotel industry is subject to extensive regulation and the Hotel must maintain its licenses and pay taxes and fees to continue operations.
Our property is subject to numerous laws, including those relating to the preparation and sale of food and beverages, including alcohol.
We are also subject to laws governing our relationship with our employees in such areas as minimum wage and maximum working hours, overtime,
working conditions, hiring and firing employees and work permits. Also, our ability to remodel, refurbish or add to our property may
be dependent upon our obtaining necessary building permits from local authorities. The failure to obtain any of these permits could adversely
affect our ability to increase revenues and net income through capital improvements of our property. In addition, we are subject to the
numerous rules and regulations relating to state and federal taxation. Compliance with these rules and regulations requires significant
management attention. Furthermore, compliance costs associated with such laws, regulations and licenses are significant. Any change in
the laws, regulations or licenses applicable to our business or a violation of any current or future laws or regulations applicable to
our business or gaming license could require us to make substantial expenditures or could otherwise negatively affect our gaming operations.
Any failure to comply with all such rules and regulations could subject us to fines or audits by the applicable taxation authority.



Violations
of laws could result in, among other things, disciplinary action. If we fail to comply with regulatory requirements, this may result
in an adverse effect on our business.



Uninsured
and underinsured losses could adversely affect our financial condition and results of operations.



There
are certain types of losses, generally of a catastrophic nature, such as earthquakes and floods or terrorist acts, which may be uninsurable
or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. We will
use our discretion in determining amounts, coverage limits, deductibility provisions of insurance and the appropriateness of self-insuring,
with a view to maintaining appropriate insurance coverage on our investments at a reasonable cost and on suitable terms. Uninsured and
underinsured losses could harm our financial condition and results of operations. We could incur liabilities resulting from loss or injury
to the Hotel or to persons at the Hotel. Claims, whether or not they have merit, could harm the reputation of the Hotel or cause us to
incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, which could harm our results of operations.



In
the event of a catastrophic loss, our insurance coverage may not be sufficient to cover the full current market value or replacement
cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of
the capital we have invested in the Hotel, as well as the anticipated future revenue from the property. In that event, we might nevertheless
remain obligated for any mortgage debt or other financial obligations related to the Hotel. In the event of a significant loss, our deductible
may be high, and we may be required to pay for all such repairs and, therefore, it could materially adversely affect our financial condition.
Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance
proceeds to replace or renovate the Hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we
receive might be inadequate to restore our economic position on the damaged or destroyed property.



It
has generally become more difficult and expensive to obtain property and casualty insurance, including coverage for terrorism. When our
current insurance policies expire, we may encounter difficulty in obtaining or renewing property or casualty insurance on our property
at the same levels of coverage and under similar terms. Such insurance may be more limited and for some catastrophic risks (for example,
earthquake, flood and terrorism) may not be generally available at current levels. Even if we can renew our policies or to obtain new
policies at levels and with limitations consistent with our current policies, we cannot be sure that we will be able to obtain such insurance
at premium rates that are commercially reasonable. If we were unable to obtain adequate insurance on the Hotel for certain risks, it
could cause us to be in default under specific covenants on certain of our indebtedness or other contractual commitments that require
us to maintain adequate insurance on the Hotel to protect against the risk of loss. If this were to occur, or if we were unable to obtain
adequate insurance and the Hotel experienced damage which would otherwise have been covered by insurance, it could materially adversely
affect our financial condition and the operations of the Hotel.



14









In
addition, insurance coverage for the Hotel and for casualty losses does not customarily cover damages that are characterized as punitive
or similar damages. As a result, any claims or legal proceedings, or settlement of any such claims or legal proceedings that result in
damages that are characterized as punitive or similar damages may not be covered by our insurance. If these types of damages are substantial,
our financial resources may be adversely affected.



You
may lose all or part of your investment.



There
is no assurance that the Company’s initiatives to improve its profitability or liquidity and financial position will be successful.



The
price of the Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of its common
stock.



The
market price of the Company’s common stock may fluctuate significantly from time to time as a result of many factors, including:
investors’ perceptions of the Company and its prospects; investors’ perceptions of the Company’s and/or the industry’s
risk and return characteristics relative to other investment alternatives; difficulties between actual financial and operating results
and those expected by investors and analysts; changes in our capital structure; trading volume fluctuations; actual or anticipated fluctuations
in quarterly financial and operational results; volatility in the equity securities market; and sales, or anticipated sales, of large
blocks of the Company’s common stock.



The
concentrated beneficial ownership of our common stock and the ability it affords to control our business may limit or eliminate other
shareholders’ ability to influence corporate affairs.



The
Company’s President, Chief Executive Officer, and Chairman of the Board of Directors, John V. Winfield is a 68.6% beneficial shareholder
of the Company. Because of this concentrated stock ownership, Mr. Winfield will be able to significantly influence the election of the
Company’s board of directors and all other decisions on all matters requiring shareholder approval. As a result, the ability of
other shareholders to determine the management and policies of the Company is significantly limited. The interests of the Company’s
largest shareholder may differ from the interests of other shareholders with respect to the issuance of shares, business transactions
with or sales to other companies, selection of officers and directors and other business decisions. This level of control may also have
an adverse impact on the market value of our shares because our largest shareholder may institute or undertake transactions, policies
or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell enough
shares to significantly decrease our price per share.



Item
1B. Unresolved Staff Comments.



None.



Item
2. Properties.



SAN
FRANCISCO HOTEL PROPERTY



The
Hotel is owned by Portsmouth through its wholly owned subsidiary, Operating. The Hotel is centrally located in the Financial District
in San Francisco, one block from the Transamerica Pyramid. The Embarcadero Center is within walking distance and North Beach is two blocks
away. Chinatown is directly across the bridge that runs from the Hotel to Portsmouth Square Park. The Hotel is a 31-story (including
parking garage), steel and concrete, A-frame building, built in 1970. The Hotel has 544 well-appointed guest rooms and luxury suites
situated on 22 floors. The Hotel has a restaurant, a lounge, and a private dining room on 3,700 square feet; additionally, there are
two kitchens to service the restaurant and banquets and a fully equipped gym. The third floor houses the Chinese Culture Center (the
“CCC”), its administrative office, and a grand ballroom. The Hotel has approximately 22,000 square feet of meeting room space,
including the grand ballroom. Other features of the Hotel include a 5-level underground parking garage and pedestrian bridge across Kearny
Street connecting the Hotel and the CCC with Portsmouth Square Park in Chinatown.



As
required by its senior lender, Operating will continue to make minimum payments into its furniture, fixtures, and equipment (“FF&E”)
escrow account held by its senior lender of the greatest of 4% of annual revenues or a minimum of $1,952,000 per annum. In the opinion
of management, the Hotel is adequately covered by insurance.



15









HOTEL
FINANCING



On
December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a
loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine
Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan
Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender
LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Company is the sole member of
Mezzanine, and Mezzanine is the sole member of Operating.



The
Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used
to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.



The
Mortgage Loan is secured by Portsmouth’s principal asset, the Hotel. The Mortgage Loan bears an interest rate of 5.275% per annum
and matures in January 2024. The term of the loan is ten years with interest only due in the first three years and principal and interest
payments to be made during the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also
requires payments for impounds related to property tax, insurance, and FF&E reserves. As additional security for the Mortgage Loan,
there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.



The
Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. On July 31,
2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”)
with Cred Reit Holdco LLC in the amount of $20,000,000. The interest rate on the new mezzanine loan is 7.25% and the loan matures on
January 1, 2024. Interest only payments are due monthly. As additional security for the new mezzanine loan, there is a limited guaranty
executed by the Company in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty,
the “Guaranties”).



The
Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations;
(ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation
proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including
failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy
of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring
debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership
was required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional
guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for the $97,000,000 mortgage loan
and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity.
As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements. Justice Operating Company, LLC is not meeting certain
of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and
cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to
replace its hotel management company. The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter
of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox
has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not
missed any of its debt service payments and does not anticipate missing any debt obligations up to their maturity.



Each
of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants,
and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations
of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under
certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions
set forth in the Loan Agreements. The Company is working with various potential lenders to refinance its current senior mortgage and
mezzanine debt which will mature on January 1, 2024.



16









On
July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed
interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any
time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan
modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution
of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000.
On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing
from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net
of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing
amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.



As
a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional
avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses
through programs administered by the Small Business Administration (“SBA”). The CARES Act includes, among other things, provisions
relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections
to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”),
whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On February 3, 2021, Justice
entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000
from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled
to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered
by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000
was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022.



RENTAL
PROPERTIES



As
June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States, with
a concentration in Texas and Los Angeles County, California. These properties include sixteen apartment complexes, three single-family
houses as strategic investments and one commercial real estate property. All properties are operating properties. In addition to the
properties, the Company owns approximately 2 acres of unimproved land in Maui, Hawaii. As of June 30, 2023, all the Company’s operating
real estate properties are managed in-house.



17







Description
of Properties



Las
Colinas, Texas.The Las Colinas property is a waterfront apartment community along Beaver Creek that was developed in 1993 with 358
units on approximately 15.6 acres of land. The Company acquired the complex on April 30, 2004 for approximately $27,145,000. Depreciation
is recorded on the straight-line method, based upon an estimated useful life of 27.5 years. Real estate property taxes for the year ended
June 30, 2023 were approximately $1,054,000. In October 2021, the Company refinanced its 3.73% existing $15,900,000 mortgage note payable
on the property and generated net proceeds of $12,938,000. The outstanding new mortgage balance was $28,800,000 as of June 30, 2023.
The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year
amortization thereafter. The mortgage loan matures in November 2031.



Morris
County, New Jersey. The Morris County property is a two-story garden apartment complex that was completed in June 1964 with 151 units
on approximately 8 acres of land. The Company acquired the complex on September 15, 1967 at an initial cost of approximately $1,600,000.
Real estate property taxes for the year ended June 30, 2023 were approximately $285,000. Depreciation is recorded on the straight-line
method, based upon an estimated useful life of 40 years. In April 2020, the Company refinanced its 3.51% and 4.51% existing $8,737,000
and $2,512,000 mortgages and generated net proceeds of $6,814,000. The outstanding new mortgage balance was approximately $17,208,000
at June 30, 2023 with a fixed interest rate of 3.17% per annum and the maturity date of the new mortgage is May 1, 2030.



St.
Louis, Missouri. The St. Louis property is a two-story project with 264 units on approximately 17.5 acres. The Company acquired the
complex on November 1, 1968 at an initial cost of $2,328,000. For the year ended June 30, 2023, real estate property taxes were approximately
$134,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. On May 31, 2023, the
Company refinanced its $4,823,000 mortgage with a new two-year $5,360,000 mortgage. Interest-only payments are due monthly and commencing
on June 10, 2024, the Company will be required to make equal monthly principal installments of $5,500 up to the loan maturity of May
31, 2025. The floating interest rate is based on the one month term SOFR plus 310 bps floating with a SOFR cap of 5.5%. The interest
rate of the greater of (a) the Prime Rate for such day and (b) the Federal Funds Rate for plus 0.50%. 5.5% per annum for two years with
interest-only payments for the first year. The maturity date of the mortgage is May 31, 2025.



Florence,
Kentucky. The Florence property is a three-story apartment complex with 157 units on approximately 6.0 acres. The Company acquired
the property on December 20, 1972 at an initial cost of approximately $1,995,000. For the year ended June 30, 2023, real estate property
taxes were approximately $64,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.
The outstanding mortgage balance was approximately $2,917,000 as of June 30, 2023 with a fixed interest rate of 3.875% per annum and
the maturity date of the mortgage is April 1, 2025.



Los
Angeles, California. The Company owns one commercial property, twelve apartment complexes, and three single-family houses in the
general area of County of Los Angeles, California (“Los Angeles”).



The
Company’s Los Angeles commercial property is a 5,503 square foot, two story building that served as the Company’s corporate
offices until it was leased out, effective October 1, 2009 and the Company leased a new space for its corporate office. The Company acquired
the building on March 4, 1999 for $1,876,000. Property taxes for the year ended June 30, 2023 were approximately $33,000. Depreciation
is recorded on the straight-line method, based upon an estimated useful life of 40 years. As of June 30, 2023, this property was not
encumbered by a mortgage.



The
first Los Angeles apartment complex is a 10,600 square foot two-story apartment with 12 units. The Company acquired the property on July
30, 1999 at an initial cost of approximately $1,305,000. For the year ended June 30, 2023, real estate property taxes were approximately
$25,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage
balance was approximately $1,974,000 as of June 30, 2023 with a fixed interest rate of 3.59% per annum and the maturity date of the mortgage
is June 23, 2026.



The
second Los Angeles apartment complex is a 12,700 square foot apartment with 14 units. The Company acquired the property on October 20,
1999 at an initial cost of approximately $2,150,000. For the year ended June 30, 2023, real estate property taxes were approximately
$38,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In January 2021, the
Company refinanced its 5.89% existing $1,597,000 mortgage and generated net proceeds of $1,057,000. The outstanding new mortgage balance
was approximately $2,645,000 at June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage
is February 1, 2031.



18







The
third Los Angeles apartment complex is a 10,500 square foot apartment with 9 units. The Company acquired the property on November 10,
1999 at an initial cost of approximately $1,675,000. For the year ended June 30, 2023, real estate property taxes were approximately
$30,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In November 2020, the
Company refinanced its 5.89% existing $1,088,000 mortgage and generated net proceeds of $798,000. The outstanding new mortgage balance
was approximately $1,891,000 as of June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage
is December 1, 2030.



The
fourth Los Angeles apartment complex is a 26,100 square foot two-story apartment with 31 units. The Company acquired the property on
May 26, 2000 at an initial cost of approximately $7,500,000. For the year ended June 30, 2023, real estate property taxes were approximately
$127,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In October 2020, the
Company refinanced its 4.85% existing $4,800,000 mortgage and generated net proceeds of $3,529,000. The outstanding new mortgage balance
was approximately $8,291,000 at June 30, 2023 with a fixed interest rate of 2.52% per annum and the maturity date of the new mortgage
is November 1, 2030. The new mortgage requires interest-only payments for the first two years and will amortize over 30 years thereafter.



The
fifth Los Angeles apartment complex is a 27,600 square foot two-story apartment with 30 units. The Company acquired the property on July
7, 2000 at an initial cost of approximately $4,411,000. For the year ended June 30, 2023, real estate property taxes were approximately
$78,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. On June 30, 2022, the
Company refinanced its 5.97%, $5,283,000 mortgage note payable on this property and obtained a new mortgage note payable for $5,850,000.
The Company received net proceeds of $584,000 because of the refinance. The outstanding new mortgage balance was approximately $5,762,000
at June 30, 2023 with a fixed annual interest rate on the new mortgage at 4.40% for the first five years and 5.44% thereafter. The mortgage
loan matures in July 2052.



The
sixth Los Angeles apartment complex is a 3,000 square foot apartment with 4 units. The Company acquired the property on July 19, 2000
at an initial cost of approximately $1,070,000. For the year ended June 30, 2023, real estate property taxes were approximately $18,000.
Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In July 2021, the Company refinanced
its 3.75% existing $323,000 mortgage and generated net proceeds of $846,000. The outstanding new mortgage balance was approximately $1,112,000
as of June 30, 2023 with a fixed interest rate of 3.50% per annum and the maturity date of the new mortgage is July 1, 2051.



The
seventh Los Angeles apartment complex is a 4,500 square foot two-story apartment with 4 units. The Company acquired the property on July
28, 2000 at an initial cost of approximately $1,005,000. For the year ended June 30, 2023, real estate property taxes were approximately
$17,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company
refinanced its 3.75% existing $563,000 mortgage and generated net proceeds of $619,000. The outstanding new mortgage balance was approximately
$1,112,000 at June 30, 2023 with a five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month
LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with
a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.



The
eighth Los Angeles apartment complex is a 7,500 square foot apartment with 7 units. The Company acquired the property on August 9, 2000
at an initial cost of approximately $1,308,000. For the year ended June 30, 2023, real estate property taxes were approximately $23,000.
Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance
was approximately $751,000 as of June 30, 2023 with an interest rate of 4.125% and the maturity date of the mortgage is September 1,
2042.



The
ninth Los Angeles apartment complex is a 13,000 square foot two-story apartment with 8 units. The Company acquired the property on May
1, 2001 at an initial cost of approximately $1,206,000. For the year ended June 30, 2023, real estate property taxes were approximately
$21,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In July 2021, the Company
refinanced the property’s existing 3.75%, $416,000 mortgage with a new mortgage for $1,595,000. The Company generated net proceeds
of $1,098,000 because of the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgages mature
in July 2051. Outstanding mortgage balance was approximately $1,535,000 as of June 30, 2023.



19







The
tenth Los Angeles apartment complex, which was owned 100% by the Company’s subsidiary Santa Fe, is a 4,200 square foot two-story
apartment with 2 units. Santa Fe acquired the property on February 1, 2002 at an initial cost of approximately $785,000. For the year
ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method based
upon an estimated useful life of 40 years. On November 23, 2020, Santa Fe sold this property to InterGroup for $1,530,000 in exchange
for a reduction of $1,196,000 of its obligation to InterGroup. The outstanding mortgage on the property for $334,000 was simultaneously
transferred to InterGroup. Santa Fe realized a gain on the sale of approximately $901,000, which was eliminated in consolidation at InterGroup.
The sales price of the property represents the current value as of the sale date as appraised by a licensed independent third-party appraiser.
The fairness of the sale terms of the transaction were reviewed and approved by the independent directors of Santa Fe and InterGroup,
and unanimously approved by the entire Board of Directors of both companies. In July 2021, the Company refinanced the property’s
existing 3.75%, $327,000 mortgage with a new mortgage for $700,000. The Company generated net proceeds of $381,000 because of the refinancing.
Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgage matures in July 2051. Outstanding mortgage balance
was approximately $673,000 as of June 30, 2023.



The
eleventh apartment which is located in Marina del Rey, California, is a 6,316 square foot two-story apartment with 9 units. The Company
acquired the property on April 29, 2011 at an initial cost of approximately $4,000,000. For the year ended June 30, 2023, real estate
property taxes were approximately $58,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life
of 27.5 years. In June 2020, the Company refinanced its 5.6% existing $1,303,000 mortgage and generated net proceeds of $1,144,000. The
outstanding new mortgage balance was approximately $2,443,000 as of June 30, 2023 with a fixed interest rate of 3.09% per annum and the
maturity date of the new mortgage is July 1, 2030.



The
twelfth Los Angeles apartment complex is a 4,093 square foot apartment with 4 units. In an all-cash transaction, the Company acquired
the property on May 14, 2021 at an initial cost of approximately $2,600,000. Depreciation is recorded on the straight-line method, based
upon an estimated useful life of 40 years. For the year ended June 30, 2023, real estate property taxes were approximately $32,000. In
July 2021, the Company obtained a mortgage on the property for $830,000, generating net proceeds of $836,000. Interest rate on the mortgage
is fixed at 3.50% for five years and the mortgage matures in August 2051. Outstanding mortgage balance was approximately $800,000 as
of June 30, 2023.



The
first Los Angeles single-family house is a 2,771 square foot home. The Company acquired the property on November 9, 2000 at an initial
cost of approximately $660,000. For the year ended June 30, 2023, real estate property taxes were approximately $11,000. Depreciation
is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75%
existing $363,000 mortgage and generated net proceeds of $576,000. The outstanding new mortgage balance was approximately $886,000 as
of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index
with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal
to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.



The
second Los Angeles single-family house is a 2,201 square foot home. The Company acquired the property on August 22, 2003 at an initial
cost of approximately $700,000. For the year ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation
is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75%
existing $388,000 mortgage and generated net proceeds of $183,000. The outstanding new mortgage balance was approximately $534,000 as
of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index
with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal
to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.



20







The
third Los Angeles single-family house is a 2,387 square foot home. The company acquired the property in July of 2015 as a strategic asset
for $1,975,000. For the year ended June 30, 2023, real estate property taxes were approximately $26,000. Depreciation is recorded on
the straight-line method, based upon an estimated useful life of 40 years. In September 2021, the Company refinanced the property’s
existing 4.75% per annum mortgage and reduced the rate to five-year fixed at 3.5% per annum, adjustable thereafter at 2.5% over the 6-month
LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with
a floor equal to the start rate and ceiling of 9.95%. The outstanding mortgage balance was approximately $934,000 as of June 30, 2023
and the maturity date of the mortgage is October 1, 2048.



Maui,
Hawaii. In August 2004, the Company purchased an approximately two-acre parcel of unimproved land in Kihei, Maui, Hawaii for $1,467,000.
Upon the recent wildfires in the area the land was not impacted. As of June 30, 2023, this property is not encumbered by a mortgage.



MORTGAGES





Further
information with respect to mortgage notes payable of the Company is set forth in Note 10 of the Notes to Consolidated Financial Statements.



ECONOMIC
AND PHYSICAL OCCUPANCY RATES



The
Company leases units in its residential rental properties on a short-term basis, with no lease extending beyond one year. The economic
occupancy (gross potential less rent below market, vacancy loss, bad debt, discounts and concessions divided by gross potential rent)
and the physical occupancy (gross potential rent less vacancy loss divided by gross potential rent) for each of the Company’s operating
properties for fiscal year ended June 30, 2023 are provided below.



|Property                 |  | Economic  Occupancy |     |   | Physical  Occupancy | 
|------------------------ |  | ------------------- | --- | - | ------------------- | 
|1. Las Colinas, TX       |  |                     | 100 | % |                     | 
|2. Morris County, NJ     |  |                     | 92  | % |                     | 
|3. St. Louis, MO         |  |                     | 68  | % |                     | 
|4. Florence, KY          |  |                     | 80  | % |                     | 
|5. Los Angeles, CA (1)   |  |                     | 92  | % |                     | 
|6. Los Angeles, CA (2)   |  |                     | 96  | % |                     | 
|7. Los Angeles, CA (3)   |  |                     | 96  | % |                     | 
|8. Los Angeles, CA (4)   |  |                     | 81  | % |                     | 
|9. Los Angeles, CA (5)   |  |                     | 100 | % |                     | 
|10. Los Angeles, CA (6)  |  |                     | 98  | % |                     | 
|11. Los Angeles, CA (7)  |  |                     | 100 | % |                     | 
|12. Los Angeles, CA (8)  |  |                     | 100 | % |                     | 
|13. Los Angeles, CA (9)  |  |                     | 100 | % |                     | 
|14. Los Angeles, CA (10) |  |                     | 75  | % |                     | 
|15. Los Angeles, CA (11) |  |                     | 97  | % |                     | 
|16. Los Angeles, CA (12) |  |                     | 62  | % |                     | 
|17. Los Angeles, CA (13) |  |                     | 100 | % |                     | 
|18. Los Angeles, CA (14) |  |                     | 100 | % |                     | 
|19. Los Angeles, CA (15) |  |                     | 69  | % |                     | 





The
Company’s Los Angeles, California properties are subject to various rent control laws, ordinances and regulations which impact
the Company’s ability to adjust and achieve higher rental rates. In February 2022, the Los Angeles County Board of Supervisors
extended the majority of the eviction moratorium to 2022 and parts of it until 2023. The County’s non-payment COVID-19 tenant eviction
protection resolution expired on March 31, 2023. Landlords in California are not allowed to evict tenants for unpaid rent prior to March
2023 and are not allowed to file a civil complaint for such rent until 2025. The Company will file civil complaints as soon as it is
allowed by statue in an effort to collect any unpaid rent prior to March 2023.



21











Item
3. Legal Proceedings.



The
Company may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend
itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on
the financial conditions or result of operations when resolved.



Item
4. Mine Safety Disclosures.



Not
applicable.



PART
II





Item
5. Market for Common Equity and Related Stockholder Matters.



MARKET
INFORMATION



The
Company’s Common Stock is listed and trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC under the symbol:
“INTG”. As of June 30, 2023, the approximate number of holders of record of the Company’s Common Stock was 165. Such
number of owners was determined from the Company’s shareholders records and does not include beneficial owners of the Company’s
Common Stock whose shares are held in names of various brokers, clearing agencies or other nominees.



DIVIDENDS



The
Company has not declared any cash dividends on its common stock and does not foresee issuing cash dividends in the near future.



SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.



This
information appears in Part III, Item 12 of this report.



22







ISSUER
PURCHASES OF EQUITY SECURITIES



The
following table reflects purchases of InterGroup’s common stock made by The InterGroup Corporation, for its own account, during
the fourth quarter of its fiscal year ending June 30, 2023.







SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES





|Fiscal 2023 Period           |  | (a) Total Number of Shares Purchased |       |  | (b) Average Price Paid Per Share |   |       | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | (d) Maximum Number of shares that May Yet be Purchased Under the Plans or Programs | 
|---------------------------- |  | ------------------------------------ | ----- |  | -------------------------------- | - | ----- | ------------------------------------------------------------------------------------ |  |  | ---------------------------------------------------------------------------------- | 
|Month #1 (April 1- April 30) |  |                                      | 190   |  |                                  | $ | 41.94 |                                                                                      |  |  | 190                                                                                | 
|                             |  |                                      |       |  |                                  |   |       |                                                                                      |  |  |                                                                                    | 
|Month #2 (May 1- May 31)     |  |                                      | 530   |  |                                  | $ | 36.60 |                                                                                      |  |  | 530                                                                                | 
|                             |  |                                      |       |  |                                  |   |       |                                                                                      |  |  |                                                                                    | 
|Month #3 (June 1- June 30)   |  |                                      | 297   |  |                                  | $ | 36.20 |                                                                                      |  |  | 297                                                                                | 
|                             |  |                                      |       |  |                                  |   |       |                                                                                      |  |  |                                                                                    | 
|TOTAL:                       |  |                                      | 1,017 |  |                                  | $ | 37.94 |                                                                                      |  |  | 1,017                                                                              | 





The
Company has only one stock repurchase program. The program was initially announced on January 13, 1998 and was amended on February 10,
2003 and October 12, 2004. The total number of shares authorized to be repurchased pursuant to those prior authorizations was 870,000,
adjusted for stock splits. On June 3, 2009, the Board of Directors authorized the Company to purchase up to an additional 125,000 shares
of Company’s common stock. On November 15, 2012, the Board of Directors authorized the Company to purchase up to an additional
100,000 shares of Company’s common stock. On September 23, 2019, the Board of Directors authorized the Company to purchase up to
an additional 120,000 shares of Company’s common stock. On December 20, 2021, the Board of Directors authorized the Company to
purchase up to an additional 125,000 shares of Company’s common stock. The purchases will be made, in the discretion of management,
from time to time, in the open market or through privately negotiated third party transactions depending on market conditions and other
factors. The Company’s repurchase program has no expiration date and can be amended and increased, from time to time, in the discretion
of the Board of Directors. No plan or program expired during the period covered by the table.







Item
6. Selected Financial Data.







Not
required for smaller reporting companies.







Item
7. Management Discussion and Analysis of Financial Condition and Results of Operations.







The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying
consolidated financial statements, related notes included thereto and Item 1A., “Risk Factors,” appearing elsewhere in this
Annual Report on Form 10-K. For the discussion and analysis of our 2022 financial condition and results of operations compared to 2023,
refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual
Report on Form 10-K for the year ended June 30, 2023.



NEGATIVE
EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS



There
are several factors at play that are having a negative impact on our business and the entire hospitality community in San Francisco.
The constant “doom loop” of negative headlines picked up in main stream media, particularly outlets like Fox News that have
made San Francisco their punching back and find ways to amplify any negative story line in the city. The macro economic situation of
a looming US/Global recession have seen business reducing or eliminating typical travel and group meetings in efforts to be conservative
in uncertain financial times. The micro economic situation specific to San Francisco and Bay Area is many of the world’s largest
tech companies have taken even more drastic cost cutting measures laying off hundreds of thousands of workers in the area and have reduced
business travel, group meetings and even major citywides to cancel like Meta, Red Hat and VMWare. The ongoing conditions of the streets
in regards to cleanliness, safety and homelessness problems have driven many other citywide customers to rethink hosting meetings in
San Francisco and have relocated to other major markets like Las Vegas, Orlando and San Diego. Even factors like the recent culture wars
that are dividing much of the country are impacting San Francisco harder than other areas as the city have long been known as the LGBTQ
capital of the US, and made recent headlines after Mayor London Breed’s office named the first ever Drag Laureate to an 18 month
term as ambassador.



23







As
a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional
avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses
through programs administered by the Small Business Administration (“SBA”). The CARES Act includes, among other things, provisions
relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections
to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”),
whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs.



On
February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice
received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll
costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions
applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was
forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal
year ended June 30, 2022.



RESULTS
OF OPERATIONS



As
of June 30, 2023, the Company owned approximately 75.7% of the common shares of Portsmouth Square, Inc. The Company’s principal
sources of revenue are revenues from the hotel owned by Portsmouth, rental income from its investments in multi-family and commercial
real estate properties, and income received from investment of its cash and securities assets.



Portsmouth’s
primary asset is a 544-room hotel property located at 750 Kearny Street, San Francisco, California 94108, known as the “Hilton
San Francisco Financial District” (the “Hotel” or the “Property”) and related facilities, including a five-level
underground parking garage. The financial statements of Portsmouth have been consolidated with those of the Company.



In
addition to the operations of the Hotel, the Company also generates income from the ownership and management of its real estate. Properties
include sixteen apartment complexes, one commercial real estate property, and three single-family houses as strategic investments. The
properties are located throughout the United States but are concentrated in Texas and Southern California. The Company also has an investment
in unimproved real property in Hawaii.



The
Company acquires its investments in real estate and other investments utilizing cash, securities or debt, subject to approval or guidelines
of the Board of Directors. The Company also invests in income-producing instruments, equity and debt securities and will consider other
investments if such investments offer growth or profit potential.



Fiscal
Year Ended June 30, 2023 Compared to Fiscal Year Ended June 30, 2022



The
Company had a net loss of $9,932,000 for the year ended June 30, 2023 compared to a net loss of $10,616,000 for the year ended June 30,
2022. Income from operations was $4,336,000 for the year ended June 30, 2023 and income from operations was $3,671,000 for fiscal year
ended June 30, 2022. The Company recorded gains of $58,000 from marketable securities transactions during fiscal year ended June 30,
2023 as compared to losses of $8,101,000 during fiscal year ended June 30, 2022. Gain on insurance recovery of $2,692,000 was recorded
during fiscal year ended June 30, 2023. Gain on debt forgiveness was $2,000,000 during fiscal year ended June 30, 2022.



Hotel
Operations



The
Company had net loss of $1,612,000 from Hotel operations for the year ended June 30, 2023 compared to net loss of $2,776,000 for the
year ended June 30, 2022. The change was primarily attributable to the $10,493,000 increase in Hotel revenue, offset by $7,006,000 increase
in operating expenses and the $2,000,000 gain on forgiveness of debt during period ended June 30, 2022.



24









The
following tables set forth a more detailed presentation of Hotel operations for the years ended June 30, 2023 and 2022.



|For the year ended June 30,                                |  | 2023 |             |   | 2022 |  
|---------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Hotel revenues:                                            |  |      |             |   |      |  
|Hotel rooms                                                |  | $    | 35,684,000  |   |      | $
|Food and beverage                                          |  |      | 2,625,000   |   |      |  
|Garage                                                     |  |      | 2,790,000   |   |      |  
|Other operating departments                                |  |      | 928,000     |   |      |  
|Total hotel revenues                                       |  |      | 42,027,000  |   |      |  
|Operating expenses excluding depreciation and amortization |  |      | (34,457,000 | ) |      |  
|Operating income interest, depreciation and amortization   |  |      | 7,570,000   |   |      |  
|And gain on forgiveness of debt                            |  |      | -           |   |      |  
|Interest expense - mortgage                                |  |      | (6,467,000  | ) |      |  
|Depreciation and amortization expense                      |  |      | (2,815,000  | ) |      |  
|Net loss from Hotel operations                             |  | $    | (1,712,000  | ) |      | $



For
the year ended June 30, 2023, the Hotel had operating income of $7,570,000 before non-recurring charges, interest, depreciation, and
amortization on total operating revenues of $42,027,000. The year over year increase in all areas, except garage revenues, are result
of recovery from the business interruption attributable to a variety of responses by federal, state, and local civil authority to the
COVID-19 outbreak since March 2020. The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal
years ended June 30, 2023 and 2022.



|Month               |  | Jul  |    |   | Aug  |  |    | Sep  |  |  | Oct  |   |  | Nov  |    |   | Dec  |  |    | Jan  |  |  | Feb  |   |  | Mar  |    |   | Apr  |  |    | May  |  |  | Jun  |   |  | Fiscal Year |   
|------------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ----------- | --
|Year                |  | 2022 |    |   | 2022 |  |    | 2022 |  |  | 2022 |   |  | 2022 |    |   | 2022 |  |    | 2023 |  |  | 2023 |   |  | 2023 |    |   | 2023 |  |    | 2023 |  |  | 2023 |   |  | 2022 - 2023 |   
|Average Occupancy % |  |      | 93 | % |      |  | 94 | %    |  |  | 95   | % |  |      | 89 | % |      |  | 82 | %    |  |  | 77   | % |  |      | 76 | % |      |  | 77 | %    |  |  | 81   | % |  |             | 65



|Year                |  | 2021 |    |   | 2021 |  |    | 2021 |  |  | 2021 |   |  | 2021 |    |   | 2021 |  |    | 2022 |  |  | 2022 |   |  | 2022 |    |   | 2022 |  |    | 2022 |  |  | 2022 |   |  | 2021 - 2022 |   
|------------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ----------- | --
|Average Occupancy % |  |      | 82 | % |      |  | 77 | %    |  |  | 76   | % |  |      | 79 | % |      |  | 72 | %    |  |  | 74   | % |  |      | 68 | % |      |  | 74 | %    |  |  | 81   | % |  |             | 87



Beginning
in November 2022, the occupancy of our hotel has been reduced by approximately 13% every month to reflect the “out-of-order”
rooms that are being renovated at any given time. The guestroom renovation is scheduled to be completed by the end of March 31, 2024.
Additionally, 14 guest rooms will be added to inventory as a result of renovating such rooms which had been repurposed for administrative
offices in past years.



Total
operating expenses increased by $7,006,000 due to increase in rooms, food and beverage, salaries and wages, utilities, credit card
commissions, and franchise fees.



The
following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPAR”)
of the Hotel for the year ended June 30, 2023 and 2022.



|For the Year Ended June 30, |  | Average Daily Rate |     |  | Average Occupancy % |  |    | RevPAR | 
|--------------------------- |  | ------------------ | --- |  | ------------------- |  | -- | ------ | 
|                            |  |                    |     |  |                     |  |    |        | 
|2023                        |  | $                  | 217 |  |                     |  | 83 | %      | 
|2022                        |  | $                  | 168 |  |                     |  | 80 | %      | 



25









The
Hotel’s revenues increased by 33% year over year. Average daily rate increased by $49, average occupancy increased 3%, and RevPAR
increased by $46 for the twelve months ended June 30, 2023 compared to the twelve months ended June 30, 2022. As previously mentioned,
our occupancy is lowered by approximately 13% beginning November 2022 when we began to take three levels out of service in order to complete
our guestroom renovations. Had the Hotel been able to sell the additional 13% of rooms that were out of order, the RevPar would have
been approximately $192.



After
taking advantage of softer demand to refresh all public spaces and meeting rooms, the Hotel is now deep into a renovation of the guest
rooms and suites. The Hotel started it’s full renovation of all guest rooms and suites mid-November 2022 and is over half way complete
as of fiscal year end 2023. This includes new carpet, vinyl wall covering, headboards, end tables, wall sconces, art, soft seating and
refinish of existing desks and doors. The Hotel removed the existing armoire and has built a closet to replace it. After this project
is completed early calendar year 2024, the Hotel will add 14 additional guest rooms bringing back the old Justice offices, spa, and accounting
offices to their original purpose. This will all be funded from the Hotel’s cash from operations through the Hotel’s furniture,
fixture, and equipment reserve account with our senior lender.



Real
Estate Operations



Revenues
from real estate operations were consistent year over year for June 30, 2023 and 2022 at $15,580,000 and $15,685,000 respectively. Real
estate operating expenses increased to $10,017,000 from $8,694,000 primarily due to increased insurance expense of over $1,000,000 year
over year. Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates
and to reduce expenses and improve efficiencies.



Investment
Transactions



The
Company had a net income on marketable securities of $1,126,000 for the year ended June 30, 2023 compared to a net loss on marketable
securities of $7,614,000 for the year ended June 30, 2022. For the year ended June 30, 2022, the Company had a net realized loss of $2,581,000
related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE).



For
the year ended June 30, 2023, the Company had a net realized loss of $1,712,000 and a net unrealized gain of $2,838,000. For the year
ended June 30, 2022, the Company had a net realized loss of $2,206,000 and a net unrealized loss of $5,408,000.



Gains
and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact
on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have
no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the
composition of the Company’s marketable securities see the Marketable Securities section below.



During
the years ended June 30, 2023 and 2022, the Company performed an impairment analysis of its other investments and determined that its
investments had other than temporary impairment and recorded impairment losses of zero and $41,000, respectively.



The
Company and its subsidiary Portsmouth compute and file income tax returns and prepare discrete income tax provisions for financial reporting.
An income tax benefit was recorded for the year ended June 30, 2022, for the pre-tax loss. However, for the year ended June 30, 2023,
an expense was booked on the pre-tax loss due to the set up of a valuation allowance on all of Portsmouth (standalone) deferred tax assets.



26









MARKETABLE
SECURITIES AND OTHER INVESTMENTS



As
of June 30, 2023 and 2022, the Company had investments in marketable equity securities of $18,345,000 and $11,049,000, respectively.
The following table shows the composition of the Company’s marketable securities portfolio by selected industry groups:



|As of June 30, 2023  Industry Group |  | Fair Value |            |  | % of Total  Investment  Securities | 
|----------------------------------- |  | ---------- | ---------- |  | ---------------------------------- | 
|REITs and real estate companies     |  | $          | 6,985,000  |  |                                    | 
|Technology                          |  |            | 2,779,000  |  |                                    | 
|T-Notes                             |  |            | 2,093,000  |  |                                    | 
|                                    |  |            |            |  |                                    | 
|Financial services                  |  |            | 1,865,000  |  |                                    | 
|Consumer cyclical                   |  |            | 1,689,000  |  |                                    | 
|Basic materials                     |  |            | 1,047,000  |  |                                    | 
|Healthcare                          |  |            | 739,000    |  |                                    | 
|Communications Services             |  |            | 566,000    |  |                                    | 
|Industrial                          |  |            | 485,000    |  |                                    | 
|Utilities                           |  |            | 97,000     |  |                                    | 
|                                    |  | $          | 18,345,000 |  |                                    | 



|As of June 30, 2022 Industry Group |  | Fair Value |            |  | % of Total Investment Securities | 
|---------------------------------- |  | ---------- | ---------- |  | -------------------------------- | 
|REITs and real estate companies    |  | $          | 3,289,000  |  |                                  | 
|Communication Services             |  |            | 2,787,000  |  |                                  | 
|Financial Services                 |  |            | 1,755,000  |  |                                  | 
|Technology                         |  |            | 815,000    |  |                                  | 
|Basic materials                    |  |            | 769,000    |  |                                  | 
|Consumer cyclical                  |  |            | 693,000    |  |                                  | 
|Industrial                         |  |            | 385,000    |  |                                  | 
|Energy                             |  |            | 279,000    |  |                                  | 
|Other                              |  |            | 277,000    |  |                                  | 
|                                   |  | $          | 11,049,000 |  |                                  | 



As
of June 30, 2023, the Company’s investment portfolio is diversified with 59 different equity positions. The Company holds one equity
security that comprised more than 10% of the equity value of the portfolio. The three largest security position represent 19%, 4%, and
4% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NASDAQ: ARL), Ouster Inc – Common Stock
(NASDAQ: OUST), and Bank Hawaii Corp (NASDAQ: BOH), which are included in the REITs and real estate companies, Financial Services, and
Financial Services industry groups, respectively.



As
of June 30, 2022, the Company’s investment portfolio is diversified with 38 different equity positions. The Company holds three
equity securities that comprised more than 10% of the equity value of the portfolio. The three largest security positions represent 23%,
20%, and 13% of the portfolio and consists of the common stock of Paramount Global - Preferred Stock (NASDAQ: PARAP), American Realty
Investors, Inc. (NASDAQ: ARL), and BlackRock Muni holdings California Quality Fund Inc. (NASDAQ: MUC), which are included the Communications,
REITs and real estate companies, and Financial Services industry groups, respectively.



The
following table shows the net gain (loss) on the Company’s marketable securities and the associated margin interest and trading
expenses for the respective years.



|For the years ended June 30,             |  | 2023 |           |   | 2022 |  
|---------------------------------------- |  | ---- | --------- | - | ---- | -
|Net gain (loss) on marketable securities |  | $    | 1,126,000 |   |      | $
|Impairment loss on other investments     |  |      | -         |   |      |  
|Dividend and interest income             |  |      | 485,000   |   |      |  
|Margin interest expense                  |  |      | (848,000  | ) |      |  
|Trading expenses                         |  |      | (705,000  | ) |      |  
|Total                                    |  | $    | 58,000    |   |      | $



27









FINANCIAL
CONDITION, LIQUIDITY AND CAPITAL SOURCES



The
Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted
cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due
to securities brokers and obligations for securities sold of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively.
These marketable securities are short-term investments and liquid in nature.



On
December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup
as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. As of the date of this report, the maturity
date was extended to July 31, 2025. Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable
to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement
which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. During the fiscal year ending June 30, 2023
and 2022, InterGroup advanced to the Hotel $1,500,000 and $7,550,000, respectively, bringing the total amount due to InterGroup to $15,700,000
and $14,200,000 as of June 30, 2023 and 2022, respectively. In July 2023, Portsmouth and InterGroup entered into a new loan modification
agreement which increased Portsmouth’s borrowing from InterGroup up to $20,000,000. The Company could amend its by-laws and increase
the number of authorized shares to issue additional shares to raise capital in the public markets if needed.



During
the fiscal year ending June 30, 2023, we completed the refinancing on our St. Louis, Missouri property $4.9 million loan and obtain a
$5,360,000 new two-year loan at a floating interest rate of 3.1% over the cap 5.5% SOFR. During the fiscal year ending June 30, 2022,
we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties,
generating net proceeds totaling $16,683,000. We are currently evaluating other refinancing opportunities and we could refinance additional
multifamily properties should the need arise, or should management consider the interest rate environment favorable.



On
April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). On February
3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received
proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs.
The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable
to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was forgiven
in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending
June 30, 2022.



28









Our
known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management
and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness,
and repairs and maintenance of the Hotel.



Our
long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of
the Hotel. We will continue to finance our business activities primarily with existing cash, including from the activities described
above, and cash generated from our operations. After considering our approach to liquidity and accessing our available sources of cash,
We believe that our cash on hand, along with other potential sources of liquidity that management may be able to obtain, will be sufficient
to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond even
if current levels of occupancy and revenue per occupied room (“RevPAR”, calculated by multiplying the hotel’s average
daily room rate by its occupancy percentage) were to persist. The objectives of our cash management policy are to maintain existing leverage
levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will
be successful with its plan.



Going
Concern



The
Hotel financial statements 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 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding
balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition,
the Hotel has recurring losses and has an accumulated deficit of $105,727,000.



Due
to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment
gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement
issuance date.



The
Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel
is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel
may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional
liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of
the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of
the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed
the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200
guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations
by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average
daily rates to increase as it completes renovation up to the point of generating a positive cash flows.



The
financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be
necessary if the Hotel were unable to continue as a going concern.



29







MATERIAL
CONTRACTUAL OBLIGATIONS



The
following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest
payments.



|                                        |  |       |             |  | Year |   |             | Year |  |   | Year       |  |  | Year |           |  | Year |   |           |            | 
|--------------------------------------- |  | ----- | ----------- |  | ---- | - | ----------- | ---- |  | - | ---------- |  |  | ---- | --------- |  | ---- | - | --------- | ---------- | 
|                                        |  | Total |             |  | 2024 |   |             | 2025 |  |   | 2026       |  |  | 2027 |           |  | 2028 |   |           | Thereafter | 
|Mortgage and subordinated notes payable |  | $     | 192,870,000 |  |      | $ | 108,420,000 |      |  | $ | 9,318,000  |  |  | $    | 1,168,000 |  |      | $ | 3,299,000 |            | 
|Other notes payable                     |  |       | 2,956,000   |  |      |   | 567,000     |      |  |   | 567,000    |  |  |      | 567,000   |  |      |   | 463,000   |            | 
|Interest                                |  |       | 25,577,000  |  |      |   | 3,849,000   |      |  |   | 2,898,000  |  |  |      | 2,390,000 |  |      |   | 2,284,000 |            | 
|Total                                   |  | $     | 221,403,000 |  |      | $ | 112,836,000 |      |  | $ | 12,783,000 |  |  | $    | 4,125,000 |  |      | $ | 6,046,000 |            | 



OFF-BALANCE
SHEET ARRANGEMENTS



The
Company has no material off balance sheet arrangements.



IMPACT
OF INFLATION



Hotel
room rates are typically impacted by supply and demand factors, not inflation, since rental of a hotel room is usually for a limited
number of nights. Room rates can be, and usually are, adjusted to account for inflationary cost increases. Since Aimbridge has the power
and ability under the terms of its management agreement to adjust Hotel room rates on an ongoing basis, there
should be minimal impact on partnership revenues due to inflation. For the two most recent fiscal years, the impact of inflation on the
Company’s income is not viewed by management as material.



The
Company’s residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Rental
increases are expected to offset anticipated increased property operating expenses.



CRITICAL
ACCOUNTING POLICIES AND ESTIMATES



Critical
accounting policies are those that are most significant to the portrayal of our financial position and results of operations and require
judgments by management in order to make estimates about the effect of matters that are inherently uncertain. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements.
We evaluate our estimates on an on-going basis, including those related to the consolidation of our subsidiaries, to our revenues, allowances
for bad debts, accruals, asset impairments, other investments, income taxes and commitments and contingencies. We base our estimates
on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates,
or our estimates may be affected by different assumptions or conditions.



INCOME
TAXES



Judgment
is required in addressing the future tax consequences of events that have been recognized in our consolidated financial statements or
tax returns (e.g., realization of deferred tax assets, changes in tax laws, or interpretations thereof). In addition, we are subject
to examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of the outcomes of such matters
could materially impact our consolidated financial statements. We evaluate tax positions taken or expected to be taken on a tax return
to determine whether they are more likely than not of being sustained, assuming that the tax reporting positions will be examined by
taxing authorities with full knowledge of all relevant information, prior to recording the related tax benefit in our consolidated financial
statements. If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and
the use of estimates are required in determining if the “more likely than not” standard has been met when developing the
provision for income taxes. A change in the assessment of the “more likely than not” standard with respect to a position
could materially impact our consolidated financial statements.



30







DEFERRED
INCOME TAXES – VALUATION ALLOWANCE



We
assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that
some or all of our deferred tax assets are not realizable. This assessment is completed by tax jurisdiction and relies on the weight
of both positive and negative evidence available, with significant weight placed on recent financial results. Cumulative pre-tax losses
for the three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not
be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive
pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little or no weight
placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. When necessary, we use systematic and logical
methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse
and generate tax deductions. Assumptions, judgment, and the use of estimates are required when scheduling the reversal of deferred tax
assets and liabilities, and the exercise is inherently complex and subjective. However, significant judgment will be required to determine
the timing and amount of any reversal of the valuation allowance in future periods.



HOTEL
ASSETS AND DEFINITE-LIVED INTANGIBLE ASSETS



We
evaluate property and equipment, and definite-lived intangible assets for impairment quarterly, and when events or circumstances indicate
the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing to the projected undiscounted cash
flows of the assets. We use judgment to determine whether indications of impairment exist and consider our knowledge of the hospitality
industry, historical experience, location of the property, market conditions, and property-specific information available at the time
of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts
and circumstances available at the time of the analysis. When an indicator of impairment exists, judgment is also required in determining
the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset or asset group,
if applicable. Changes in economic and operating conditions impacting the judgments used could result in impairments to our long-lived
assets in future periods. Historically, changes in estimates used in the property and equipment and definite-lived intangible assets
impairment assessment process have not resulted in material impairment charges in subsequent periods as a result of changes made to those
estimates. There were no indicators of impairment on its hotel investments or intangible assets and accordingly no impairment losses
recorded for the years ended June 30, 2023 and 2022.





Item
7A. Quantitative and Qualitative Disclosures about Market Risk.



Not
required for smaller reporting companies.



31









Item
8. Financial Statements and Supplementary Data.



|INDEX
    TO CONSOLIDATED FINANCIAL STATEMENTS                                            | PAGE
|----------------------------------------------------------------------------------------- | ----
|                                                                                          |     
|Report of Independent Registered Public Accounting Firm                                   | 33  
|                                                                                          |     
|Consolidated Balance Sheets - June 30, 2023 and 2022                                      | 35  
|                                                                                          |     
|Consolidated Statements of Operations - For years ended June 30, 2023 and 2022            | 36  
|                                                                                          |     
|Consolidated Statements of Shareholders’ Deficit - For years ended June 30, 2023 and 2022 | 37  
|                                                                                          |     
|Consolidated Statements of Cash Flows - For years ended June 30, 2023 and 2022            | 38  
|                                                                                          |     
|Notes to the Consolidated Financial Statements                                            | 39  





32







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors and Shareholders,

The
InterGroup Corporation:



Opinion
on the Financial Statements



We
have audited the accompanying consolidated balance sheets of The InterGroup Corporation and its subsidiaries (the “Company”)
as of June 30, 2023 and 2022, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for
the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2023,
in conformity with accounting principles generally accepted in the United States of America.



Going
Concern



The
accompanying consolidated financial statements have been prepared assuming that the entity will continue as a going concern. As discussed
in Note 1, the outstanding balance as of June 30, 2023 of the mortgage notes payable consists of a senior mortgage loan and mezzanine
loan totaling $107,117,000. Both loans mature on January 1, 2024 In addition, the Company has recurring losses and has an accumulated
deficit. Due to these factors and the Company’s ability to successfully refinance the debt on favorable terms in the current lending
environment gives rise to substantial doubt about the Company’s ability to continue as a going concern for one year after the financial
statement issuance date. Management’s plans in regard to this matter are also described in Note 1. The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this
matter.



Basis
for Opinion



These
consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.







33







Critical
Audit Matters



The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts
or disclosures to which they relate.



Description
of the Matters: Deferred Tax Asset Valuation Allowance



As
discussed in Note 13 to the consolidated financial statements, it was determined that it is more likely than not that a significant portion
of the deferred tax assets at June 30, 2023 are not realizable and thus a valuation allowance of $33,784,000 has been recorded.



We
identified the deferred tax asset valuation allowance as a critical audit matter due to the uncertainty, subjectivity, estimates and
judgments required by management when forecasting future profitability and determining whether or not it is likely that the deferred
tax assets will be realized.



How
We Addressed the Matters in Our Audit



To
test the Company’s conclusions about their deferred tax valuation allowance, we obtained an analysis about their plans and reviewed
all the positive and negative conditions. In addition to considering the impact of any subsequent events, we received the Company’s
five-year income projection. We examined the forecast for reasonableness in addition to reviewing management’s plans and considered
whether it is likely that the Company’s projected future profitability will allow them to realize their current deferred tax assets.





/s/
WithumSmith+Brown, PC







We
have served as the Company’s auditor since 2022.



East
Brunswick, NJ

October
13, 2023



PCAOB
ID Number 100



34









THE
INTERGROUP CORPORATION

CONSOLIDATED
BALANCE SHEETS



|As of June 30,                                                                                                                                                            |  | 2023 |             |   | 2022 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|                                                                                                                                                                          |  |      |             |   |      |  
|ASSETS                                                                                                                                                                    |  |      |             |   |      |  
|Investment in Hotel, net                                                                                                                                                  |  | $    | 40,318,000  |   |      | $
|Investment in real estate, net                                                                                                                                            |  |      | 48,057,000  |   |      |  
|Investment in marketable securities                                                                                                                                       |  |      | 18,345,000  |   |      |  
|Cash and cash equivalents                                                                                                                                                 |  |      | 5,960,000   |   |      |  
|Restricted cash                                                                                                                                                           |  |      | 6,914,000   |   |      |  
|Other assets                                                                                                                                                              |  |      | 2,764,000   |   |      |  
|Deferred tax asset                                                                                                                                                        |  |      | -           |   |      |  
|Total assets                                                                                                                                                              |  | $    | 122,358,000 |   |      | $
|                                                                                                                                                                          |  |      |             |   |      |  
|LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                                                                     |  |      |             |   |      |  
|Liabilities:                                                                                                                                                              |  |      |             |   |      |  
|Accounts payable and other liabilities                                                                                                                                    |  | $    | 2,574,000   |   |      | $
|Accounts payable and other liabilities – Hotel                                                                                                                            |  |      | 11,616,000  |   |      |  
|Due to securities broker                                                                                                                                                  |  |      | 1,601,000   |   |      |  
|Obligations for securities sold                                                                                                                                           |  |      | 1,416,000   |   |      |  
|Other notes payable                                                                                                                                                       |  |      | 2,954,000   |   |      |  
|Finance leases                                                                                                                                                            |  |      | -           |   |      |  
|Deferred tax liability                                                                                                                                                    |  |      | 4,927,000   |   |      |  
|Mortgage notes payable - Hotel                                                                                                                                            |  |      | 107,117,000 |   |      |  
|Mortgage notes payable - real estate                                                                                                                                      |  |      | 84,757,000  |   |      |  
|Total liabilities                                                                                                                                                         |  |      | 216,962,000 |   |      |  
|                                                                                                                                                                          |  |      |             |   |      |  
|Commitments and contingencies - Note 17                                                                                                                                   |  |      |             |   |      |  
|                                                                                                                                                                          |  |      |             |   |      |  
|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; 2,205,927 and 2,236,180 outstanding as of June 30, 2023 and 2022, respectively |  |      | 33,000      |   |      |  
|Additional paid-in capital                                                                                                                                                |  |      | 2,445,000   |   |      |  
|Accumulated deficit                                                                                                                                                       |  |      | (52,835,000 | ) |      |  
|Treasury stock, at cost, 1,253,961 and 1,223,708 shares as of June 30, 2023 and 2022, respectively                                                                        |  |      | (20,794,000 | ) |      |  
|Total InterGroup shareholders’ deficit                                                                                                                                    |  |      | (71,151,000 | ) |      |  
|Non-controlling interest                                                                                                                                                  |  |      | (23,453,000 | ) |      |  
|Total shareholders’ deficit                                                                                                                                               |  |      | (94,604,000 | ) |      |  
|Total liabilities and shareholders’ deficit                                                                                                                               |  | $    | 122,358,000 |   |      | $



The
accompanying notes are an integral part of these consolidated financial statements.



35













THE
INTERGROUP CORPORATION

CONSOLIDATED
STATEMENTS OF OPERATIONS



|For the years ended June 30,                               |  | 2023 |             |   | 2022 |  
|---------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Revenues:                                                  |  |      |             |   |      |  
|Hotel                                                      |  | $    | 42,027,000  |   |      | $
|Real estate                                                |  |      | 15,580,000  |   |      |  
|Total revenues                                             |  |      | 57,607,000  |   |      |  
|Costs and operating expenses:                              |  |      |             |   |      |  
|Hotel operating expenses                                   |  |      | (34,457,000 | ) |      |  
|Real estate operating expenses                             |  |      | (10,017,000 | ) |      |  
|Depreciation and amortization expense                      |  |      | (5,464,000  | ) |      |  
|General and administrative expense                         |  |      | (3,333,000  | ) |      |  
|                                                           |  |      |             |   |      |  
|Total costs and operating expenses                         |  |      | (53,271,000 | ) |      |  
|                                                           |  |      |             |   |      |  
|Income from operations                                     |  |      | 4,336,000   |   |      |  
|                                                           |  |      |             |   |      |  
|Other (expense) income:                                    |  |      |             |   |      |  
|Interest expense - mortgages                               |  |      | (8,585,000  | ) |      |  
|Net realized (loss) gain on marketable securities          |  |      | (1,712,000  | ) |      |  
|Net realized loss on marketable securities - Comstock      |  |      | -           |   |      |  
|Net unrealized gain (loss) on marketable securities        |  |      | 2,838,000   |   |      |  
|Gain on debt forgiveness                                   |  |      | -           |   |      |  
|Loss on debt extinguishment                                |  |      | -           |   |      |  
|Gain on insurance recovery                                 |  |      | 2,692,000   |   |      |  
|Impairment loss on other investments                       |  |      | -           |   |      |  
|Dividend and interest income                               |  |      | 485,000     |   |      |  
|Trading and margin interest expense                        |  |      | (1,553,000  | ) |      |  
|Net other expense                                          |  |      | (5,835,000  | ) |      |  
|Loss before income taxes                                   |  |      | (1,499,000  | ) |      |  
|Income tax (expense) benefit                               |  |      | (8,433,000  | ) |      |  
|Net loss                                                   |  |      | (9,932,000  | ) |      |  
|Less: Net loss attributable to the noncontrolling interest |  |      | 3,213,000   |   |      |  
|Net loss attributable to InterGroup                        |  | $    | (6,719,000  | ) |      | $
|                                                           |  |      |             |   |      |  
|Net loss per share                                         |  |      |             |   |      |  
|Basic                                                      |  | $    | (4.77       | ) |      | $
|Diluted                                                    |  |      | N/A         |   |      |  
|Net loss per share attributable to InterGroup              |  |      |             |   |      |  
|Basic                                                      |  | $    | (3.92       | ) |      | $
|Diluted                                                    |  |      | N/A         |   |      |  
|                                                           |  |      |             |   |      |  
|Weighted average number of common shares outstanding       |  |      | 2,215,258   |   |      |  
|Weighted average number of diluted shares outstanding      |  |      | N/A         |   |      |  



The
accompanying notes are an integral part of these consolidated financial statements.



36









THE
INTERGROUP CORPORATION

CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ DEFICIT



|                                                               |  | Common Stock |           |  | Additional Paid-in |   |        | Accumulated |  |   | Treasury  |   |  | InterGroup Shareholders’ |             |   | Non-controlling |   |             | Total Shareholders’ | 
|-------------------------------------------------------------- |  | ------------ | --------- |  | ------------------ | - | ------ | ----------- |  | - | --------- | - |  | ------------------------ | ----------- | - | --------------- | - | ----------- | ------------------- | 
|                                                               |  | Shares       |           |  | Amount             |   |        | Capital     |  |   | Deficit   |   |  | Stock                    |             |   | Deficit         |   |             | Interest            | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Balance at July 1, 2021                                        |  |              | 3,404,982 |  |                    | $ | 33,000 |             |  | $ | 2,172,000 |   |  | $                        | (36,394,000 | ) |                 | $ | (17,370,000 | )                   | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Net Loss                                                       |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | (8,723,000  | ) |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Issuance of stock from exercise of stock options               |  |              | 54,906    |  |                    |   | -      |             |  |   | -         |   |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Stock options expense                                          |  |              | -         |  |                    |   | -      |             |  |   | 4,000     |   |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Distribution from Santa Fe                                     |  |              | -         |  |                    |   | -      |             |  |   | 1,159,000 |   |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Reclassify non-controlling interest due to purchase of Justice |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | (999,999    | ) |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Investment in Portsmouth                                       |  |              | -         |  |                    |   | -      |             |  |   | (58,000   | ) |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Purchase of Partnership interest                               |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Purchase of treasury stock                                     |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | -           |   |                 |   | (1,954,000  | )                   | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Balance at June 30, 2022                                       |  |              | 3,459,888 |  |                    | $ | 33,000 |             |  | $ | 3,277,000 |   |  | $                        | (46,116,000 | ) |                 | $ | (19,324,000 | )                   | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Net Loss                                                       |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | (6,719,000  | ) |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Investment in Portsmouth                                       |  |              | -         |  |                    |   | -      |             |  |   | (832,000  | ) |  |                          | -           |   |                 |   | -           |                     | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Purchase of treasury stock                                     |  |              | -         |  |                    |   | -      |             |  |   | -         |   |  |                          | -           |   |                 |   | (1,470,000  | )                   | 
|                                                               |  |              |           |  |                    |   |        |             |  |   |           |   |  |                          |             |   |                 |   |             |                     | 
|Balance at June 30, 2023                                       |  |              | 3,459,888 |  |                    | $ | 33,000 |             |  | $ | 2,445,000 |   |  | $                        | (52,835,000 | ) |                 | $ | (20,794,000 | )                   | 



The
accompanying notes are an integral part of these consolidated financial statements.



37









THE
INTERGROUP CORPORATION

CONSOLIDATED
STATEMENTS OF CASH FLOWS



|For the years ended June 30,                                                              |  | 2023 |             |   | 2022 |  
|----------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Cash flows from operating activities:                                                     |  |      |             |   |      |  
|Net loss                                                                                  |  | $    | (9,932,000  | ) |      | $
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |      |             |   |      |  
|Net unrealized (gain) loss on marketable securities                                       |  |      | (2,838,000  | ) |      |  
|Deferred taxes                                                                            |  |      | 8,539,000   |   |      |  
|Gain on insurance recovery                                                                |  |      | (2,692,000  | ) |      |  
|Gain from debt forgiveness                                                                |  |      | -           |   |      |  
|Impairment loss on other investments                                                      |  |      | -           |   |      |  
|Depreciation and amortization                                                             |  |      | 5,464,000   |   |      |  
|Amortization of loan cost                                                                 |  |      | 352,000     |   |      |  
|Amortization of other notes payable                                                       |  |      | (567,000    | ) |      |  
|Stock compensation expense                                                                |  |      | -           |   |      |  
|Changes in assets and liabilities:                                                        |  |      |             |   |      |  
|Investment in marketable securities                                                       |  |      | (4,458,000  | ) |      |  
|Other assets                                                                              |  |      | (20,000     | ) |      |  
|Accounts payable and other liabilities                                                    |  |      | (141,000    | ) |      |  
|Accounts payable and other liabilities – Hotel                                            |  |      | 4,108,000   |   |      |  
|Due to securities broker                                                                  |  |      | 1,111,000   |   |      |  
|Obligations for securities sold                                                           |  |      | 967,000     |   |      |  
|Net cash (used in) provided by operating activities                                       |  |      | (107,000    | ) |      |  
|                                                                                          |  |      |             |   |      |  
|Cash flows from investing activities:                                                     |  |      |             |   |      |  
|Capital expenditures for property and equipment - Hotel                                   |  |      | (5,866,000  | ) |      |  
|Capital expenditures for property and equipment - real estate                             |  |      | (2,314,000  | ) |      |  
|Distribution from Santa Fe                                                                |  |      | -           |   |      |  
|Investment in Portsmouth                                                                  |  |      | (198,000    | ) |      |  
|Investment in Justice                                                                     |  |      | -           |   |      |  
|Insurance proceeds for property damage claims                                             |  |      | 2,325,000   |   |      |  
|Net cash used in investing activities                                                     |  |      | (6,053,000  | ) |      |  
|                                                                                          |  |      |             |   |      |  
|Cash flows from financing activities:                                                     |  |      |             |   |      |  
|Payments of mortgage, finance leases and other notes payable                              |  |      | (8,205,000  | ) |      |  
|Proceeds from mortgage and other notes payable                                            |  |      | 5,360,000   |   |      |  
|Issuance cost from refinance of long-term debt                                            |  |      | -           |   |      |  
|Purchase of treasury stock                                                                |  |      | (1,470,000  | ) |      |  
|Net cash provided by (used in) financing activities                                       |  |      | (4,315,000  | ) |      |  
|                                                                                          |  |      |             |   |      |  
|Net (decrease) increase in cash, cash equivalents and restricted cash:                    |  |      | (10,475,000 | ) |      |  
|Cash, cash equivalents and restricted cash at the beginning of the year                   |  |      | 23,349,000  |   |      |  
|Cash, cash equivalents and restricted cash at the end of the year                         |  | $    | 12,874,000  |   |      | $
|Supplemental information:                                                                 |  |      |             |   |      |  
|Income taxes paid                                                                         |  | $    | 74,000      |   |      | $
|Interests paid                                                                            |  | $    | 7,708,000   |   |      | $



The
Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted
cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively.



The
accompanying notes are an integral part of these consolidated financial statements.



38











THE
INTERGROUP CORPORATION

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE
1 - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES



Description
of the Business



The
InterGroup Corporation, a Delaware corporation, (“InterGroup” or the “Company”) was formed to buy, develop, operate
and dispose of real property and to engage in various investment activities to benefit the Company and its shareholders.



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. In June 2022, InterGroup
received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously filed final
tax returns.As of June 30, 2023, 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 Justice, and 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 on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths
percent (1.70%) of total Hotel revenue. In addition to the Basic 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.



39







In
addition to the operations of the Hotel, the Company also generates income from the ownership of real estate and investments in marketable
securities. 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 of the Company’s residential rental properties are managed in-house.



Principles
of Consolidation



The
consolidated financial statements include the accounts of the Company and Portsmouth. All significant inter-company transactions and
balances have been eliminated.



Investment
in Hotel, Net



Property
and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from
3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to
7 years.



Repairs
and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over
the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired, and the related accumulated
depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses).



The
Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount
of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest,
the Company will recognize an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair
value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable
asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted
cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events
and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate
resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses
were recorded for the years ended June 30, 2023 and 2022.



Investment
in Real Estate, Net



Rental
properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method
based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs
and maintenance are charged to expense as incurred and major improvements are capitalized.



The
Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded
for the years ended June 30, 2023 and 2022.



The
fair value of the tangible assets of an acquired property, which includes land, building and improvements, is determined by valuing the
property as if they were vacant, and incorporates costs during the lease-up periods considering current market conditions and costs to
execute similar leases such lost rental revenue and tenant improvements. The value of tangible assets is depreciated using straight-line
method based upon the assets estimated useful lives.



40







Investment
in Marketable Securities



Marketable
securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable
securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded
through the consolidated statements of operations.



Other
Investments, Net



Other
investments include non-marketable securities (carried at cost, net of any impairments loss) and non-marketable debt instruments. The
Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic
basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These
factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which
fair value is less than cost, (iii) the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment
for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2023 and 2022, the
Company recorded impairment losses related to other investments of zero and $41,000, respectively.



Cash
and Cash Equivalents



Cash
equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at
cost, which approximates fair value. As of June 30, 2023 and 2022, the Company does not have any cash equivalents.



Restricted
Cash



Restricted
cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for
the Hotel.



Other
Assets



Other
assets include prepaid insurance, accounts receivable, prepaid expenses, and other miscellaneous assets.



Accounts
receivable from the Hotel and rental property customers are carried at cost less an allowance for doubtful accounts that is based on
management’s assessment of the collectability of accounts receivable. The Company had accounts receivable, net of $634,000 at July
1, 2022. As of June 30, 2023, and 2022, the allowance for doubtful accounts was $486,000 and $110,000, respectively. The Company extends
unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers.
The temporary eviction moratorium imposed by the federal and state governmental authorities had delayed evictions during fiscal years
2022 and 2023.



Due
to Securities Broker



The
Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage
firms. Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin
agreements. These advanced funds are recorded as a liability.



Obligation
for Securities Sold



Obligation
for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and
the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option
is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security.
Unrealized gains and losses from changes in the obligation are included in the statement of operations.



41







Accounts
Payable and Other Liabilities



Accounts
payable and other liabilities include trade payables, advanced customer deposits, accrued wages, accrued real estate taxes, and other
liabilities.



Treasury
Stock



The
Company records the acquisition of treasury stock under the cost method. During the years ended June 30, 2023 and 2022, the Company purchased
30,253 and 41,645 shares of treasury stock, respectively.



Fair
Value of Financial Instruments



Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”)
in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes
a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would
use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs
are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability
of inputs as follows:



Level
1–inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.



Level
2–inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.



Level
3–inputs to the valuation methodology are unobservable and significant to the fair value.



Revenue
Recognition



Performance
obligations



We
identified the following performance obligations for which revenue is recognized as the respective performance obligations are satisfied,
which results in recognizing the amount we expect to be entitled to for providing the goods or services:



| | ● | Cancelable
    room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which
    is generally when the room stay occurs.                                                                                 
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                            
| | ● | Non-cancelable
    room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time
    and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.
| |   |                                                                                                                                                                                                                                                                            
| | ● | Other
    ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered
    separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.      
| |   |                                                                                                                                                                                                                                                                            
| | ● | Components
    of package reservations for which each component could be sold separately to other hotel guests are considered separate performance
    obligations and are satisfied as set forth above.                                                                   



Hotel
revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package
reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied
or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are
provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the
estimated standalone selling prices of each component.



42







We
do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the
nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at
our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds
related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are
rendered. See Note 3 – Revenue.



Revenue
recognition from apartment rental commences when an apartment unit is placed in service and occupied by a rent-paying tenant. Apartment
units are leased on a short-term basis, with no lease extending beyond one year.



Advertising
Costs



Advertising
costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising
costs were $130,000 and $61,000 for the years ended June 30, 2023 and 2022, respectively.



Income
Taxes



Deferred
income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the
financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and
liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to
changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established
for certain deferred tax assets where realization is not likely.



$0
and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate
if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income
tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were
recorded.



Assets
and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions
are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions.



Earnings
Per Share



Basic
net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number
of common shares outstanding. The computation of diluted net income per share is similar to the computation of basic net income per share
except that the weighted-average number of common shares is increased to include the number of additional common shares that would have
been outstanding if potential dilutive common shares had been issued. The basic and diluted earnings per share are the same for the fiscal
year ended June 30, 2023 and 2022 because the Company had a net loss.



Use
of Estimates



The
preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions regarding certain types of
assets, liabilities, revenues, and expenses. Actual results may differ from those estimates. Management considers new evidence, both
positive and negative, that could affect its view of the future realization of deferred tax assets and when appropriate, records tax
valuation allowances based on that evidence and estimates. Such estimates primarily relate to the recording of allowance for doubtful
accounts which are based on management’s assessment of the collectability of accounts receivable as of the end of the fiscal year
As of June 30, 2023 based on taxable income that may be available under tax law the deferred taxed asset is not more likely than not
to be realized.



Reclassifications



Certain
line items on the balance sheet as of June 30, 2023, for the years ended June 30, 2023 and 2022 have been reclassified to conform to
the current period presentation. The related party relationship has been disclosed separately in the financial statements than the other
debt obligations the Company has.



43







Debt
Issuance Costs



Debt
issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the
carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense
in the consolidated statement of operations.



Recently
Issued and Adopted Accounting Pronouncements



As
of June 30, 2023, 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 consolidated financial statements.



Going
Concern



The
Hotel financial statements 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 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding
balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000. Both loans mature on January 1, 2024. In addition,
the Hotel has recurring losses and has an accumulated deficit of $105,727,000.



Due
to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment
gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement
issuance date.



The
Hotel is exploring the possibility of refinancing its senior mortgage and mezzanine debt with potential lenders. Alternatively, the Hotel
is also exploring the possibility of a loan modification or extension to the existing debt with the current lenders, however, the Hotel
may be unable to access further financing when needed. As such, there can be no assurance that the Company will be able to obtain additional
liquidity when needed or under acceptable terms, if at all. During 2021 and first part of calendar 2022, the Hotel took advantage of
the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of
the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed
the carpet and wall covering corridor installation. In November 2022, began guestroom renovation and had completed approximately 200
guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations
by the end March 2024. Once the Hotel completes its full renovation, management anticipates its high occupancy to continue and its average
daily rates to increase as it completes renovation up to the point of generating a positive cash flows.



The
financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be
necessary if the Hotel were unable to continue as a going concern.



NOTE
2 – LIQUIDITY



Historically,
our cash flows have been primarily generated from our Hotel and real estate operations. However, the dealings by federal, state, and
local civil authorities have a material detrimental impact on our liquidity. For the fiscal year ended June 30, 2023, our net cash flow
used by operations was $107,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing
strict cost management measures to eliminate non-essential expenses, renegotiating certain reoccurring expenses, and temporarily closing
certain hotel services and outlets. As the hospitality and travel environment continues to recover, the Company will continue to evaluate
what services the Company brings back. During the fiscal year ended June 30, 2023, the Company continued to make capital improvements
to the hotel in the amount of $5,866,000 and anticipates continuing its guest room upgrade program during the fiscal year 2024.



The
Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively. The Company had restricted
cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due
to securities brokers, of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively. These marketable securities are short-term
investments and liquid in nature.



44







On
December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup
as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. On July 7, 2021, the maturity date was extended
to July 31, 2022. Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in
the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased
Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000
and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31,
2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee
payable to InterGroup. All funds advanced to the Hotel have been eliminated in consolidated financial statements at June 30, 2023 and
2022.



On
May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating
monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and
$5,500 principal paydowns commencing in June 2024. During the fiscal year ending June 30, 2022, we refinanced six of our properties’
existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000.
We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need
arise, or should management consider the interest rate environment favorable.



On
February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice
received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll
costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions
applicable to loans administered by the U.S. Small Business Administration under the CARES Act. On November 19, 2021, the SBA Loan was
forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal
year ending June 30, 2022.



Our
known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management
and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness,
and repairs and maintenance at all of our properties.



Our
long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of
the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including
from the activities described above, and cash generated from our operations.  The objectives of our cash management policy are to maintain existing leverage
levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will
be successful with its plan.



45







The
following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest
payments.





|                                        |  |       |             |  | Year |   |             | Year |  |   | Year       |  |  | Year |           |  | Year |   |           |            | 
|--------------------------------------- |  | ----- | ----------- |  | ---- | - | ----------- | ---- |  | - | ---------- |  |  | ---- | --------- |  | ---- | - | --------- | ---------- | 
|                                        |  | Total |             |  | 2024 |   |             | 2025 |  |   | 2026       |  |  | 2027 |           |  | 2028 |   |           | Thereafter | 
|Mortgage and subordinated notes payable |  | $     | 192,870,000 |  |      | $ | 108,420,000 |      |  | $ | 9,318,000  |  |  | $    | 1,168,000 |  |      | $ | 3,299,000 |            | 
|Related party notes payable             |  |       | 2,956,000   |  |      |   | 567,000     |      |  |   | 567,000    |  |  |      | 567,000   |  |      |   | 463,000   |            | 
|Interest                                |  |       | 25,577,000  |  |      |   | 3,849,000   |      |  |   | 2,898,000  |  |  |      | 2,390,000 |  |      |   | 2,284,000 |            | 
|Total                                   |  | $     | 221,403,000 |  |      | $ | 112,836,000 |      |  | $ | 12,783,000 |  |  | $    | 4,125,000 |  |      | $ | 6,046,000 |            | 



NOTE
3 – REVENUE



Our
revenue from real estate is primarily rental income from residential and commercial property leases which is recorded when due from residents
and is recognized monthly as earned. The revenue recognition rules under ASC 606 specifically eliminates rental revenue from the accounting
standard.



The
following table presents our Hotel revenue disaggregated by revenue streams.



|For the year ended June 30, |  | 2023 |            |  | 2022 |  
|--------------------------- |  | ---- | ---------- |  | ---- | -
|Hotel revenues:             |  |      |            |  |      |  
|Hotel rooms                 |  | $    | 35,684,000 |  |      | $
|Food and beverage           |  |      | 2,625,000  |  |      |  
|Garage                      |  |      | 2,790,000  |  |      |  
|Other operating departments |  |      | 928,000    |  |      |  
|Total Hotel revenue         |  | $    | 42,027,000 |  |      | $



Contract
assets and liabilities



We
do not have any material contract assets as of June 30, 2023 and 2022, other than trade and other receivables, net on our consolidated
balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful
accounts that reflects our estimate of amounts that will not be collected.



We
record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within
accounts payable and other liabilities on our consolidated balance sheets and had a balance of $493,000 at July 1, 2022. During the year
ended June 30, 2023, the entire $493,000 was recognized as revenue. Contract liabilities decreased to $290,000 as of June 30, 2023. The
decrease as of June 30, 2023, was primarily driven by a decrease in advance deposits received from customers for services to be performed
after June 30, 2023.Contract liabilities increased to $493,000 as of June 30, 2022 from $161,000 as of June 30, 2021. The increase for
the twelve months ended June 30, 2022 was primarily driven by advance deposits received from customers for services to be performed after
June 30, 2022.



Contract
costs



We
consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense
these costs as incurred as our contracts with customers are less than one year.



46







NOTE
4 – INVESTMENT IN HOTEL, NET



Investment
in Hotel consisted of the following as of:



|                          |  |      |             |  | Accumulated  |   |             | Net Book | 
|------------------------- |  | ---- | ----------- |  | ------------ | - | ----------- | -------- | 
|June 30, 2023             |  | Cost |             |  | Depreciation |   |             | Value    | 
|                          |  |      |             |  |              |   |             |          | 
|Land                      |  | $    | 2,738,000   |  |              | $ | -           |          | 
|Finance lease ROU assets  |  |      | 1,805,000   |  |              |   | (1,239,000  | )        | 
|Furniture and equipment   |  |      | 38,727,000  |  |              |   | (29,682,000 | )        | 
|Building and improvements |  |      | 64,665,000  |  |              |   | (36,696,000 | )        | 
|Investment in Hotel, net  |  | $    | 107,935,000 |  |              | $ | (67,617,000 | )        | 



|                          |  |      |             |  | Accumulated  |   |             | Net Book | 
|------------------------- |  | ---- | ----------- |  | ------------ | - | ----------- | -------- | 
|June 30, 2022             |  | Cost |             |  | Depreciation |   |             | Value    | 
|                          |  |      |             |  |              |   |             |          | 
|Land                      |  | $    | 2,738,000   |  |              | $ | -           |          | 
|Finance lease ROU assets  |  |      | 1,805,000   |  |              |   | (922,000    | )        | 
|Furniture and equipment   |  |      | 32,860,000  |  |              |   | (28,567,000 | )        | 
|Building and improvements |  |      | 64,665,000  |  |              |   | (35,312,000 | )        | 
|Investment in Hotel, net  |  | $    | 102,068,000 |  |              | $ | (64,801,000 | )        | 



NOTE
5 - INVESTMENT IN REAL ESTATE, NET



At
June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States. These
properties include sixteen apartment complexes, three single-family houses as strategic investments, and one commercial real estate property.
The Company also owns unimproved land located in Maui, Hawaii.



47







Investment
in real estate included the following:



|As of June 30,                        |  | 2023 |             |   | 2022 |  
|------------------------------------- |  | ---- | ----------- | - | ---- | -
|Land                                  |  | $    | 22,998,000  |   |      | $
|Buildings, improvements and equipment |  |      | 73,151,000  |   |      |  
|Accumulated depreciation              |  |      | (50,022,000 | ) |      |  
|                                      |  |      | 46,127,000  |   |      |  
|Land held for development             |  |      | 1,930,000   |   |      |  
|Investment in real estate, net        |  | $    | 48,057,000  |   |      | $



NOTE
6 - INVESTMENT IN MARKETABLE SECURITIES



The
Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested
in corporate bonds and income producing securities, which may include interests in real estate-based companies and REITs, where financial
benefit could inure to its shareholders through income and/or capital gain.



At
June 30, 2023 and 2022, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized
gains and losses on these investments are included in earnings. Trading securities are summarized as follows:



|                    |  |      |            |  | Gross           |   |           | Gross           |  |   | Net                    |   |  |            |          
|------------------- |  | ---- | ---------- |  | --------------- | - | --------- | --------------- |  | - | ---------------------- | - |  | ---------- | ---------
|Investment          |  | Cost |            |  | Unrealized Gain |   |           | Unrealized Loss |  |   | Unrealized Gain (Loss) |   |  | Fair Value |          
|As of June 30, 2023 |  |      |            |  |                 |   |           |                 |  |   |                        |   |  |            |          
|Corporate Equities  |  | $    | 15,419,000 |  |                 | $ | 3,713,000 |                 |  | $ | (787,000               | ) |  | $          | 2,926,000
|                    |  |      |            |  |                 |   |           |                 |  |   |                        |   |  |            |          
|As of June 30, 2022 |  |      |            |  |                 |   |           |                 |  |   |                        |   |  |            |          
|Corporate Equities  |  | $    | 11,150,000 |  |                 | $ | 1,474,000 |                 |  | $ | (1,575,000             | ) |  | $          | (101,000 



Net
gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is
the composition of the two components for the years ended June 30, 2023 and 2022, respectively.



|For the year ended June 30,                                |  | 2023 |            |   | 2022 |  
|---------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Realized (loss) gain on marketable securities              |  | $    | (1,712,000 | ) |      | $
|Realized loss on marketable securities related to Comstock |  |      | -          |   |      |  
|Unrealized gain (loss) on marketable securities            |  |      | 2,838,000  |   |      |  
|Net gain (loss) on marketable securities                   |  | $    | 1,126,000  |   |      | $



NOTE
7 - FAIR VALUE MEASUREMENTS



The
carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate
fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities
broker and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).



48









The
assets measured at fair value on a recurring basis are as follows:



|As of June 30, 2023                  |  | Level 1 |           
|------------------------------------ |  | ------- | ----------
|Assets:                              |  |         |           
|Investment in marketable securities: |  |         |           
|REITs and real estate companies      |  | $       | 6,985,000 
|Technology                           |  |         | 2,779,000 
|T-Notes                              |  |         | 2,093,000 
|Financial services                   |  |         | 1,865,000 
|Consumer cyclical                    |  |         | 1,689,000 
|Basic materials                      |  |         | 1,047,000 
|Healthcare                           |  |         | 739,000   
|Communication services               |  |         | 566,000   
|Industrial                           |  |         | 485,000   
|Utilities                            |  |         | 97,000    
|                                     |  | $       | 18,345,000



|As of June 30, 2022                  |  | Level 1 |           
|------------------------------------ |  | ------- | ----------
|Assets:                              |  |         |           
|Investment in marketable securities: |  |         |           
|REITs and real estate companies      |  | $       | 3,289,000 
|Communication services               |  |         | 2,787,000 
|Financial services                   |  |         | 1,755,000 
|Technology                           |  |         | 815,000   
|Basic material                       |  |         | 769,000   
|Consumer cyclical                    |  |         | 693,000   
|Industrial                           |  |         | 385,000   
|Energy                               |  |         | 279,000   
|Other                                |  |         | 277,000   
|                                     |  | $       | 11,049,000



The
fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance
sheet date.



Financial
assets that are measured at fair value on a non-recurring basis and are not included in the tables above are “Other investments
in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment
or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt
instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as
follows:



|                                 |  |         |   |  |               |   |   | Net loss for the         | 
|-------------------------------- |  | ------- | - |  | ------------- | - | - | ------------------------ | 
|Assets                           |  | Level 3 |   |  | June 30, 2022 |   |   | year ended June 30, 2022 | 
|                                 |  |         |   |  |               |   |   |                          | 
|Other non-marketable investments |  | $       | - |  |               | $ | - |                          | 



49







For
fiscal years ended June 30, 2023 and 2022, we received distribution from other non-marketable investments of zero and $41,000, respectively.



Other
investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or
control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment.
When determining the fair value of these investments on a non-recurring basis, the Company uses valuation techniques such as the market
approach and the unobservable inputs include factors such as conversion ratios and the stock price of the underlying convertible instruments.
The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to:
(i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii)
the financial condition and near-term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient
to allow for any anticipated recovery in fair value.



NOTE
8 – OTHER ASSETS



Other
assets consist of the following as of June 30:



|                         |  | 2023 |           |  | 2022 |  
|------------------------ |  | ---- | --------- |  | ---- | -
|Accounts receivable, net |  | $    | 631,000   |  |      | $
|Prepaid expenses         |  |      | 648,000   |  |      |  
|Miscellaneous assets     |  |      | 681,000   |  |      |  
|Prepaid taxes            |  |      | 697,000   |  |      |  
|Total other assets       |  | $    | 2,657,000 |  |      | $



NOTE
9 –OTHER FINANCING TRANSACTIONS



The
following summarizes the balances of other notes payable as of June 30, 2023 and 2022, respectively.



|As of June 30,            |  | 2023 |           |  | 2022 |  
|------------------------- |  | ---- | --------- |  | ---- | -
|                          |  |      |           |  |      |  
|Note payable – Hilton     |  | $    | 2,058,000 |  |      | $
|Note payable – Aimbridge  |  |      | 896,000   |  |      |  
|Total other notes payable |  | $    | 2,954,000 |  |      | $



Note
payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $317,000
annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.



On
February 1, 2017, Operating entered an HMA with Ambridge to manage the Hotel with an effective takeover date of February 3, 2017. The
term of the management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an
additional year not to exceed five years in aggregate subject to certain conditions. The HMA also provides for Ambridge to advance a
key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described
in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period
commencing on the second anniversary of the takeover date. During the first quarter of fiscal year 2021, the Hotel obtained approval
from Ambridge to use the key money for hotel operations and the funds were exhausted by December 31, 2020. The unamortized portion of
the key money in the amount of $896,000 and $1,146,000 are included in other notes payable in the consolidated balance sheets at June
30, 2023 and 2022, respectively.



50







On
April 9, 2020, Justice entered into a loan agreement (“SBA Loan – Justice”) with CIBC Bank USA under the CARES Act
administered by the U.S. Small Business Administration (the “SBA”). On February 3, 2021, Justice entered into a loan agreement
(“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. Justice
used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00%
interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration
under the CARES Act. On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment
on the consolidated statement of operations for the fiscal year ended June 30, 2022.



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



|For the year ending June 30, |  |   |          
|---------------------------- |  | - | ---------
|2024                         |  | $ | 567,000  
|2025                         |  |   | 567,000  
|2026                         |  |   | 567,000  
|2027                         |  |   | 463,000  
|2028                         |  |   | 317,000  
|Thereafter                   |  |   | 475,000  
|                             |  | $ | 2,956,000



To
fund the redemption of limited partnership interests and to repay the prior mortgage of $42,940,000, Justice obtained a $97,000,000 mortgage
loan and a $20,000,000 mezzanine loan in December 2013. The mortgage loan is secured by the Partnership’s principal asset, the
Hotel. The mortgage loan bears an interest rate of 5.275% per annum with interest only payments due through January 2017. Beginning in
February 2017, the loan began to amortize over a thirty-year period through its maturity date of January 2024. Outstanding principal
balance on the loan was $89,114,000 and $90,745,000 as of June 30, 2023 and 2022, respectively. As additional security for the mortgage
loan, there is a limited guaranty executed by Portsmouth in favor of the mortgage lender. The mezzanine loan is secured by the Operating
membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan had an interest rate
of 9.75% per annum and a maturity date of January 1, 2024. As additional security for the mezzanine loan, there is a limited guaranty
executed by Portsmouth in favor of the mezzanine lender. On July 31, 2019, Mezzanine refinanced the mezzanine loan by entering into a
new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The
prior Mezzanine Loan which had a 9.75% per annum interest rate was paid off. Interest rate on the new mezzanine loan is 7.25% and the
loan matures on January 1, 2024. Interest only payments are due monthly.



Effective
May 11, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental
indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to
the agreement, InterGroup is required to maintain certain net worth and liquidity. As of June 30, 2023, InterGroup is in compliance with
both requirements. Justice Operating Company, LLC has not been meeting certain of its loan covenants such as the Debt Service Coverage
Ratio (“DSCR”) which would trigger the creation of a lockbox by the Lender for all cash collected by the Hotel. However,
such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.



51







On
July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed
interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any
time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan
modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution
of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000.
On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing
from InterGroup as needed up to $16,000,000. As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net
of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing
amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.



As
disclosed in its Definitive Information Statement on Schedule 14C, filed with the SEC on January 25, 2021, Santa Fe received shareholder
approval to distribute its assets, as described and subsequently dissolve, all as set forth in the Information Statement. As InterGroup
formerly owned 83.7% of the outstanding common stock of Santa Fe, the Company received cash of $5,013,000 and 422,998 shares of Portsmouth
common stock in March 2021 as a result of the liquidation of Santa Fe. As a former 3.7% shareholder of Santa Fe, the Company’s
President, Chairman of the Board and Chief Executive Officer, John Winfield, received cash of $221,000 and 18,641 shares of Portsmouth
common stock in March 2021 as a result of the liquidation of Santa Fe. On April 12, 2021, Santa Fe received a filed stamped copy of its
Articles of Dissolution from the State of Nevada, and Santa Fe is effectively fully dissolved and no longer in legal existence. In June
2022, InterGroup received distribution of $1,159,000 of from Santa Fe as the entity received federal and state tax refunds from previously
filed final tax returns.



Four
of the Portsmouth directors serve as directors of InterGroup. The Company’s Vice President Real Estate was elected President of
Portsmouth in May 2021. The Company’s director and Chairman of the Audit Committee, William J. Nance, serves as Comstock’s
director and Chairman of the Audit and Finance, Compensation and Nominating and Governance Committees of Comstock.



As
Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive
Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted
by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the
investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position
until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive
Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests
of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the
resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf
of the Company.



52







NOTE
10 – MORTGAGE NOTES PAYABLE



On
December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a
loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine
Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan
Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender
LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership was the sole member
of Mezzanine until its dissolution in December 2021 when Portsmouth replaced the Partnership as the sole member of Mezzanine. Mezzanine
is the sole member of Operating.



The
Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used
to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.



The
Mortgage Loan is secured by Operating’s principal asset, the Hilton San Francisco-Financial District (the “Property”).
The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is 10 years with interest
only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization
schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves.
As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in
favor of the Mortgage Lender.



The
Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine
Loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. Interest only payments were due monthly. On July
31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”)
with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan
is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. As additional security for the new mezzanine
loan, there is a limited guaranty executed by Portsmouth in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and,
together with the Mortgage Guaranty, the “Guaranties”).



The
Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations;
(ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation
proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including
failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy
of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring
debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership
was required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional
guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for the $97,000,000 mortgage loan
and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity.
As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements. Justice Operating Company, LLC is not meeting certain
of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and
cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to
replace its hotel management company. The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter
of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox
has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not
missed any of its debt service payments and does not anticipate missing any debt obligations for at least the next twelve months and
beyond. Additionally, Operating’s DSCR for the fourth quarter of fiscal year 2023 was 0.23 for the Mortgage Loan and 0.19 for the
Mezzanine Loan.



53







Each
of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants
and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations
of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under
certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions
set forth in the Loan Agreements.



In
July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages
totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing. Interest rate on the three
new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained an $830,000
mortgage note payable on one of its unencumbered California properties and received net proceeds of $826,000. The interest rate on the
mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.



On
October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and
obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance.
The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year
amortization thereafter. The mortgage loan matures in November 2031.



On
June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California
and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $522,000 as a result of the refinance.
The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in
July 2052.



On
May 31, 2023, the Company refinanced its St. Louis, Missouri $4,823,000 mortgage with a two-year $5,360,000 mortgage with a floating
monthly rate of the 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10%, interest-only payments are due for the first 12 months and
$5,500 principal paydowns commencing in June 2024.



54







Each
mortgage notes payable is secured by real estate or the Hotel. As of June 30, 2023 and 2022, the mortgage notes payables are summarized
as follows:



|              |  | As of June 30, 2023 |           |  |                  |                                            |               |                |             |  
|------------- |  | ------------------- | --------- |  | ---------------- | ------------------------------------------ | ------------- | -------------- | ----------- | -
|              |  | Number              |           |  | Note             |                                            | Note          |                | Mortgage    |  
|Property      |  | of Units            |           |  | Origination Date |                                            | Maturity Date |                | Balance     |  
|              |  |                     |           |  |                  |                                            |               |                |             |  
|SF Hotel      |  |                     | 544 rooms |  |                  | December 2013                              |               | January 2024   |             | $
|SF Hotel      |  |                     | 544 rooms |  |                  | July 2019                                  |               | January 2024   |             |  
|              |  |                     |           |  |                  | Mortgage notes payable – Hotel             |               |                | 107,240,000 |  
|              |  |                     |           |  |                  | Debt issuance costs                        |               |                |             |  
|              |  |                     |           |  |                  | Total mortgage notes payable – Hotel       |               | $              | 107,117,000 |  
|              |  |                     |           |  |                  |                                            |               |                |             |  
|Florence      |  |                     | 157       |  |                  | March 2015                                 |               | April 2025     |             | $
|Las Colinas   |  |                     | 358       |  |                  | October 2021                               |               | November 2031  |             |  
|Morris County |  |                     | 151       |  |                  | April 2020                                 |               | May 2030       |             |  
|St. Louis     |  |                     | 264       |  |                  | May 2023                                   |               | May 2025       |             |  
|Los Angeles   |  |                     | 4         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 2         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 1         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 31        |  |                  | October 2020                               |               | November 2030  |             |  
|Los Angeles   |  |                     | 30        |  |                  | June 2022                                  |               | July 2052      |             |  
|Los Angeles   |  |                     | 14        |  |                  | January 2021                               |               | February 2031  |             |  
|Los Angeles   |  |                     | 12        |  |                  | June 2016                                  |               | June 2026      |             |  
|Los Angeles   |  |                     | 9         |  |                  | June 2020                                  |               | July 2030      |             |  
|Los Angeles   |  |                     | 9         |  |                  | November 2020                              |               | December 2030  |             |  
|Los Angeles   |  |                     | 8         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 7         |  |                  | August 2012                                |               | September 2042 |             |  
|Los Angeles   |  |                     | 4         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 1         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 4         |  |                  | July 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 1         |  |                  | September 2018                             |               | October 2048   |             |  
|              |  |                     |           |  |                  | Mortgage notes payable – real estate       |               |                | 85,629,000  |  
|              |  |                     |           |  |                  | Debt issuance costs                        |               |                |             |  
|              |  |                     |           |  |                  | Total mortgage notes payable – real estate |               | $              | 84,757,000  |  



55







|              |  | As of June 30, 2022 |           |  |                  |                                            |               |                |             |  
|------------- |  | ------------------- | --------- |  | ---------------- | ------------------------------------------ | ------------- | -------------- | ----------- | -
|              |  | Number              |           |  | Note             |                                            | Note          |                | Mortgage    |  
|Property      |  | of Units            |           |  | Origination Date |                                            | Maturity Date |                | Balance     |  
|              |  |                     |           |  |                  |                                            |               |                |             |  
|SF Hotel      |  |                     | 544 rooms |  |                  | December 2013                              |               | January 2024   |             | $
|SF Hotel      |  |                     | 544 rooms |  |                  | July 2019                                  |               | January 2024   |             |  
|              |  |                     |           |  |                  | Mortgage notes payable – Hotel             |               |                | 109,114,000 |  
|              |  |                     |           |  |                  | Debt issuance costs                        |               |                |             |  
|              |  |                     |           |  |                  | Total mortgage notes payable – Hotel       |               | $              | 108,747,000 |  
|              |  |                     |           |  |                  |                                            |               |                |             |  
|Florence      |  |                     | 157       |  |                  | March 2015                                 |               | April 2025     |             | $
|Las Colinas   |  |                     | 358       |  |                  | October 2021                               |               | November 2031  |             |  
|Morris County |  |                     | 151       |  |                  | April 2020                                 |               | May 2030       |             |  
|St. Louis     |  |                     | 264       |  |                  | May 2013                                   |               | May 2023       |             |  
|Los Angeles   |  |                     | 4         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 2         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 1         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 31        |  |                  | October 2020                               |               | November 2030  |             |  
|Los Angeles   |  |                     | 30        |  |                  | June 2022                                  |               | July 2052      |             |  
|Los Angeles   |  |                     | 14        |  |                  | January 2021                               |               | February 2031  |             |  
|Los Angeles   |  |                     | 12        |  |                  | June 2016                                  |               | June 2026      |             |  
|Los Angeles   |  |                     | 9         |  |                  | June 2020                                  |               | July 2030      |             |  
|Los Angeles   |  |                     | 9         |  |                  | November 2020                              |               | December 2030  |             |  
|Los Angeles   |  |                     | 8         |  |                  | July 2021                                  |               | July 2051      |             |  
|Los Angeles   |  |                     | 7         |  |                  | August 2012                                |               | September 2042 |             |  
|Los Angeles   |  |                     | 4         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 1         |  |                  | June 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 4         |  |                  | July 2021                                  |               | August 2051    |             |  
|Los Angeles   |  |                     | 1         |  |                  | September 2018                             |               | October 2048   |             |  
|              |  |                     |           |  |                  | Mortgage notes payable – real estate       |               |                | 86,287,000  |  
|              |  |                     |           |  |                  | Debt issuance costs                        |               |                |             |  
|              |  |                     |           |  |                  | Total mortgage notes payable – real estate |               | $              | 85,437,000  |  



Future
minimum payments for all mortgage notes payable are as follows:



|For the year ending June 30, |  |   |            
|---------------------------- |  | - | -----------
|2024                         |  | $ | 108,420,000
|2025                         |  |   | 9,318,000  
|2026                         |  |   | 1,168,000  
|2027                         |  |   | 3,299,000  
|2028                         |  |   | 1,771,000  
|Thereafter                   |  |   | 68,894,000 
|                             |  | $ | 192,870,000



56







NOTE
11 – MANAGEMENT AGREEMENTS



Operating
entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel,
along with its five-level parking garage, with an effective date of February 3, 2017. 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, not
to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee (“Basic Fee”)
payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue. In addition to the Basic 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.



For
the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000,
respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated
statements of operations. As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary,
Kearny Street Parking LLC, manages the parking garage in-house.



NOTE
12 – CONCENTRATION OF CREDIT RISK



As
of June 30, 2023 and 2022, receivables related to Hotel customers were $419,000 and $377,000, respectively. Usually, credit extended
to the Company’s tenants at its rental properties is of low risk as leases do not extend beyond one year and if tenants become
delinquent, local eviction laws are used to evict tenants. However, as of June 30, 2023 and 2022 accounts receivable from the Company’s
rental properties was $698,000 and $366,000, respectively and allowance for doubtful accounts was $486,000 and $110,000, respectively.
This unusual large gross receivable amounts from our rental properties was due to temporary eviction moratorium imposed by the federal
and state governmental authorities since the beginning of the COVID19 pandemic. Under the eviction moratorium, the Company was not allowed
to evict tenants for non-payment of rent. In the State of California, the “Los Angeles County’s COVID-19 Tenant Protection
Resolution” expired on March 31, 2023, thereby lifting the eviction moratorium but allowing the tenants additional time to for
their past due rent. For tenants that owe rent from March 1, 2020 through September 30, 2021, tenants must pay by August 1, 2023; for
tenants that owe rent from October 1, 2021 through January 31, 2023, tenants must pay by February 1, 2024. The Company will continue
to pursue its collections to the full extent allowed by the various governmental housing authorities around the country.



The
Company maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly
for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”)
or other federally insured limits. Any loss incurred or a lack of access to such funds could have significant adverse impact on the Company’s
financial condition, results of operations, and cash flows.



NOTE
13 – INCOME TAXES



The
provision for the Company’s income tax (expense) benefit is comprised of the following:



|For the years ended June 30, |  | 2023 |            |   | 2022 |  
|---------------------------- |  | ---- | ---------- | - | ---- | -
|                             |  |      |            |   |      |  
|Federal                      |  |      |            |   |      |  
|Current tax                  |  | $    | (116,000   | ) |      | $
|Deferred tax                 |  |      | 6,420,000  |   |      |  
|                             |  |      | 6,304,000  |   |      |  
|                             |  |      |            |   |      |  
|State                        |  |      |            |   |      |  
|Current tax                  |  |      | 9,000      |   |      |  
|Deferred tax                 |  |      | 2,121,000  |   |      |  
|                             |  |      | 2,130,000  |   |      |  
|                             |  |      |            |   |      |  
|Income Tax (expense) benefit |  | $    | (8,434,000 | ) |      | $



57







The
provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income
before taxes as a result of the following differences:



|For the years ended June 30,                                   |  | 2023 |            |   | 2022 |  
|-------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                               |  |      |            |   |      |  
|Statutory federal tax rate                                     |  | $    | (315,000   | ) |      | $
|State income taxes, net of federal tax benefit                 |  |      | (375,000   | ) |      |  
|Dividend received deduction                                    |  |      | (18,000    | ) |      |  
|PPP Loan forgiveness                                           |  |      | -          |   |      |  
|Provision to return adjustment                                 |  |      | (334,000   | ) |      |  
|Deferral true up – Justice difference in basis of fixed assets |  |      | -          |   |      |  
|Net operating loss true up                                     |  |      | (275,000   | ) |      |  
|Valuation allowance                                            |  |      | 10,232,000 |   |      |  
|Payable true up                                                |  |      | (249,000   | ) |      |  
|State rate change impact                                       |  |      | (352,000   | ) |      |  
|Other                                                          |  |      | 120,000    |   |      |  
|                                                               |  | $    | (8,434,000 | ) |      | $



The
components of the deferred tax asset and liabilities are as follows:



|                                                    |  | June 30, 2023 |             |   | June 30, 2022 |  
|--------------------------------------------------- |  | ------------- | ----------- | - | ------------- | -
|Deferred tax assets:                                |  |               |             |   |               |  
|Net operating loss carryforwards                    |  | $             | 13,187,000  |   |               | $
|Deferred gains on real estate sale and depreciation |  |               | 15,054,000  |   |               |  
|Capital loss carryforwards                          |  |               | 1,919,000   |   |               |  
|Accruals and reserves                               |  |               | 843,000     |   |               |  
|Interest expense                                    |  |               | 3,185,000   |   |               |  
|Tax credits                                         |  |               | 566,000     |   |               |  
|State taxes                                         |  |               | 139,000     |   |               |  
|Other                                               |  |               | 204,000     |   |               |  
|Deferred Tax Asset before Valuation Allowance       |  |               | 35,097,000  |   |               |  
|Valuation Allowance                                 |  |               | (33,784,000 | ) |               |  
|Deferred Tax Asset after Valuation Allowance        |  |               | 1,313,000   |   |               |  
|Deferred tax liabilities:                           |  |               |             |   |               |  
|Deferred gains on real estate sale and depreciation |  |               | (4,796,000  | ) |               |  
|Unrealized gain on marketable securities            |  |               | (746,000    | ) |               |  
|Gain on insurance claim                             |  |               | (696,000    | ) |               |  
|Other                                               |  |               | -           |   |               |  
|State taxes                                         |  |               | -           |   |               |  
|Deferred Tax Liability                              |  |               | (6,238,000  | ) |               |  
|Net deferred tax (liability) asset                  |  | $             | (4,925,000  | ) |               | $



Management
considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of
June 30, 2023, it has been determined that it is more likely than not that the deferred tax asset will not be recognized. Thus, there
is a valuation allowance of $33,784,000 as of June 30, 2023. This was an increase of $11,009,000 from June 30, 2022.



As
of June 30, 2023, the Company had net operating loss carryforwards (“NOL”) available for carryforward of approximately $41,835,000
and $51,289,000 for federal and state purposes, respectively. Of the $41,835,000 federal NOL carryforwards, $14,707,000 expire in varying
amounts through 2037 and $27,128,000 of post-2017 NOLs can be carried forward indefinitely. Note that the post-2017 NOLs may only offset
80% of future taxable income. The Company had capital loss carryforwards of $6,936,000 for federal and state purposes. The capital losses
begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of $524,000 which expire
in various years.



Below
is the breakdown of the net operating losses for Intergroup and Portsmouth.



|           |  | Federal |            |  | State |  
|---------- |  | ------- | ---------- |  | ----- | -
|InterGroup |  | $       | -          |  |       | $
|Portsmouth |  |         | 41,835,000 |  |       |  
|           |  | $       | 41,835,000 |  |       | $



58







As
of June 30, 2022, the Company had net operating loss (“NOL”) carryforwards of approximately $35,483,000 and $41,238,000 for
federal and state purposes, respectively. Of the $35,483,000 federal NOL’s carryforwards, $14,697,000 expire in varying amount
through 2037 and $20,786,000 of post 2017 NOL’s can be carried forward indefinitely. Note that the post 2017 NOL’s may only
offset 80% of future taxable income. The Company had federal and state capital loss carryforwards of $3,985,000 and $5,547,000, respectively.
The capital losses begin to expire in 2024 for both federal and state purposes. There are immaterial California state tax credits of
$524,000 which expire in various years.



Utilization
of certain tax attributes may be subject a substantial annual limitation if it should be determined that there has been a change in the
ownership of more than 50 percent of the value of the Company’s stock, pursuant to Section 382 of the Internal Revenue Code of
1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.



The
corporation files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by
federal, state, and local jurisdictions, where applicable.



As
of June 30, 2023, tax years beginning in fiscal 2019 and 2018 remain open to examination by the federal and state tax jurisdictions,
respectively, and are subject to the statute of limitations.



Uncertain
Tax Positions



The
Company regularly evaluates the likelihood of realizing the benefit from income tax positions that it has taken in various federal, state,
and foreign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more
likely than not that the position will be sustained, a benefit will be recognized at the largest amount that it believes is cumulatively
greater than 50% likely to be realized. The following table summarizes changes in the amount of the Company’s unrecognized tax
benefits for uncertain tax positions:



|Unrecognized Tax Benefits at June 30, 2022 |  | $ | -         | 
|------------------------------------------ |  | - | --------- | 
|Increase in tax positions taken            |  |   | 1,665,000 | 
|Decrease in tax positions taken            |  |   | -         | 
|Unrecognized Tax Benefits at June 30, 2023 |  | $ | 1,665,000 | 



$0
and $1,665,000 of unrecognized tax benefits as of June 30, 2022 and June 30, 2023, respectively, would impact the effective tax rate
if recognized. The unrecognized tax benefit is not expected to reverse in the next 12 months. Interest and penalties related to income
tax matters are classified as a component of income tax expense. As of June 30, 2022 and June 30, 2023, no interest and penalties were
recorded.



NOTE
14 – SEGMENT INFORMATION



The
Company operates in three reportable segments, the operation of the Hotel (“Hotel Operations”), the operation of its multi-family
residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments
(“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management
internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.



Information
below represents reported segments for the years ended June 30, 2023 and 2022. Segment income from Hotel operations consists of the operation
of the Hotel and operation of the garage. Segment income from real estate operations consists of the operation of the rental properties.
Loss from investments consists of net investment gain (loss), dividend and interest income and investment related expenses.



59









|As of and for the year ended          |  | Hotel      |             |   | Real Estate |   |             | Investment   |  |   |            |  |  |       |            
|------------------------------------- |  | ---------- | ----------- | - | ----------- | - | ----------- | ------------ |  | - | ---------- |  |  | ----- | -----------
|June 30, 2023                         |  | Operations |             |   | Operations  |   |             | Transactions |  |   | Other      |  |  | Total |            
|Revenues                              |  | $          | 42,027,000  |   |             | $ | 15,580,000  |              |  | $ | -          |  |  | $     | -          
|Segment operating expenses            |  |            | (34,457,000 | ) |             |   | (10,017,000 | )            |  |   | -          |  |  |       | (3,333,000 
|Segment income (loss) from operations |  |            | 7,570,000   |   |             |   | 5,563,000   |              |  |   | -          |  |  |       | (3,333,000 
|Interest expense - mortgages          |  |            | (6,467,000  | ) |             |   | (2,118,000  | )            |  |   | -          |  |  |       | -          
|Gain on insurance recovery            |  |            | -           |   |             |   | 2,692,000   |              |  |   | -          |  |  |       | -          
|Depreciation and amortization expense |  |            | (2,815,000  | ) |             |   | (2,649,000  | )            |  |   | -          |  |  |       | -          
|Gain from investments                 |  |            | -           |   |             |   | -           |              |  |   | 58,000     |  |  |       | -          
|Income tax expense                    |  |            | -           |   |             |   | -           |              |  |   | -          |  |  |       | (8,433,000 
|Net income (loss)                     |  | $          | (1,712,000  | ) |             | $ | 3,488,000   |              |  | $ | 58,000     |  |  | $     | (11,766,000
|Total assets                          |  | $          | 46,393,000  |   |             | $ | 48,057,000  |              |  | $ | 18,345,000 |  |  | $     | 9,563,000  



|As of and for the year ended          |  | Hotel      |             |   | Real Estate |   |            | Investment   |  |   |            |   |  |       |           
|------------------------------------- |  | ---------- | ----------- | - | ----------- | - | ---------- | ------------ |  | - | ---------- | - |  | ----- | ----------
|June 30, 2022                         |  | Operations |             |   | Operations  |   |            | Transactions |  |   | Other      |   |  | Total |           
|Revenues                              |  | $          | 31,534,000  |   |             | $ | 15,685,000 |              |  | $ | -          |   |  | $     | -         
|Segment operating expenses            |  |            | (27,451,000 | ) |             |   | (8,694,000 | )            |  |   | -          |   |  |       | (2,651,000
|Segment income (loss) from operations |  |            | 4,083,000   |   |             |   | 6,991,000  |              |  |   | -          |   |  |       | (2,651,000
|Interest expense - mortgage           |  |            | (6,549,000  | ) |             |   | (2,332,000 | )            |  |   | -          |   |  |       | -         
|Gain on debt forgiveness              |  |            | 2,000,000   |   |             |   | (335,000   | )            |  |   | -          |   |  |       | -         
|Depreciation and amortization expense |  |            | (2,310,000  | ) |             |   | (2,444,000 | )            |  |   | -          |   |  |       | -         
|Loss from investments                 |  |            | -           |   |             |   | -          |              |  |   | (8,101,000 | ) |  |       | -         
|Income tax benefit                    |  |            | -           |   |             |   | -          |              |  |   | -          |   |  |       | 1,030,000 
|Net income (loss)                     |  | $          | (2,776,000  | ) |             | $ | 1,880,000  |              |  | $ | (8,101,000 | ) |  | $     | (1,621,000
|Total assets                          |  | $          | 46,847,000  |   |             | $ | 48,025,000 |              |  | $ | 11,049,000 |   |  | $     | 21,125,000



NOTE
15 – STOCK-BASED COMPENSATION PLANS



The
Company follows the Statement of Financial Accounting Standards 123 (Revised), “Share-Based Payments” (“SFAS No. 123R”),
which was primarily codified into ASC Topic 718 “Compensation – Stock Compensation”, which addresses accounting for
equity-based compensation arrangements, including employee stock options and restricted stock units.



The
Company currently has one equity compensation plan, which is the Intergroup 2010 Omnibus Employee Incentive Plan. The plan has been approved
by the Company’s stockholders and are described below. Any outstanding options issued under the Key Employee Plan or the Non-Employee
Director Plan remain effective in accordance with their terms.



As
of June 30, 2023 and 2022, there were no RSUs outstanding.



60







Intergroup
Corporation 2010 Omnibus Employee Incentive Plan



On
February 24, 2010, the shareholders of the Company approved The Intergroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010
Incentive Plan”), which was formally adopted by the Board of Directors following the annual meeting of shareholders. The Company
believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted
with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest
based on 5 years of continuous service. Certain option and share awards provide for accelerated vesting if there is a change in control,
as defined in the 2010 Incentive Plan. The 2010 Incentive plan as modified in December 2013, authorizes a total of up to 400,000 shares
of common stock to be issued as equity compensation to officers and employees of the Company in an amount and in a manner to be determined
by the Compensation Committee in accordance with the terms of the 2010 Incentive Plan. The 2010 Incentive Plan authorizes the awards
of several types of equity compensation including stock options, stock appreciation rights, performance awards and other stock-based
compensation. The 2010 Incentive Plan had an original expiration date of February 23, 2020, if not terminated sooner by the Board of
Directors upon recommendation of the Compensation Committee. Any awards issued under the 2010 Incentive Plan will expire under the terms
of the grant agreement.



The
shares of common stock to be issued under the 2010 Incentive Plan have been registered under the Securities Act, pursuant to a registration
statement filed on Form S-8 by the Company on June 16, 2010. Once received, shares of common stock issued under the Plan will be freely
transferable subject to any requirements of Section 16 (b) of the Exchange Act.



On
March 16, 2010, the Compensation Committee authorized the grant of 100,000 stock options to the Company’s Chairman, President and
Chief Executive, John V. Winfield to purchase up to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive
Plan. The exercise price of the options is $10.30, which is 100% of the fair market value of the Company’s Common Stock as determined
by reference to the closing price of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the
date of grant. The options had an original expiration date ten years from the date of grant, unless terminated earlier in accordance
with the terms of the 2010 Incentive Plan. The options shall be subject to both time and market-based vesting requirements, each of which
must be satisfied before options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options
vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market
vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the
Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade
at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2022, all the market vesting
requirements have been met.



On
December 28, 2019, the Compensation Committee of the Board of Directors recommended to the Board amendments to the 2010 Incentive Plan
which would amend Section 1.3 to extend the term from ten years to sixteen years, and Section 6.4 to change “tenth (10th) anniversary
date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to twenty years
(expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The
purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable
term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years
to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s
contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.



61







In
February 2012, the Compensation Committee awarded 90,000 stock options to the Company’s Chairman, President and Chief Executive,
John V. Winfield to purchase up to 90,000 shares of common stock. The per share exercise price of the options is $19.77 which is the
fair value of the Company’s Common Stock as reported on NASDAQ on February 28, 2012. The options expire ten years from the date
of grant. The options are subject to both time and market-based vesting requirements, each of which must be satisfied before the options
are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years,
with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options
vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above
the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period
of at least ten trading days during any one quarter. On January 21, 2022, Mr. Winfield exercised 90,000 of his vested stock options by
surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance
to him of 54,906 shares. No additional compensation expense was recorded related to the issuance. This intrinsic value of the cashless
exercise of 54,906 stock options was approximately $2,784,000 at January 21, 2022 when the Company’s stock closing stock price
was $50.70.



On
December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock
options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer,
John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant
to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and
have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are
for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance
with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of
the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the
NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting
annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive
stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting
in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.



In
March 2017, the Compensation Committee awarded 18,000 stock options to the Company’s Chief Operating Officer, David C. Gonzalez,
to purchase up to 18,000 shares of common stock. The per share exercise price of the options is $27.30 which is the fair value of the
Company’s Common Stock as reported on NASDAQ Capital Market on March 2, 2017. The options expire ten years from the date of grant.
Pursuant to the time vesting requirements, the options vest over a period of five years, with 3,600 options vesting upon each one-year
anniversary of the date of grant. All 18,000 shares are vested as of June 30, 2022.



During
the years ended June 30, 2023 and 2022, the Company recorded stock option compensation expense of zero and $4,000, respectively, related
to stock options previously issued. As of June 30, 2023, all compensation related to stock options has been fully amortized.



Option-pricing
models require the input of various subjective assumptions, including the option’s expected life, estimated forfeiture rates and
the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price
history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based
on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included
as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.



62







The
following table summarizes the stock options activity from July 1, 2021 through June 30, 2023:



|                    |  |               |  | Number of |         |   | Weighted Average |   |       | Weighted Average |  |  | Aggregate       | 
|------------------- |  | ------------- |  | --------- | ------- | - | ---------------- | - | ----- | ---------------- |  |  | --------------- | 
|                    |  |               |  | Shares    |         |   | Exercise Price   |   |       | Remaining Life   |  |  | Intrinsic Value | 
|                    |  |               |  |           |         |   |                  |   |       |                  |  |  |                 | 
|Outstanding at      |  | July 1, 2021  |  |           | 341,195 |   |                  | $ | 16.95 |                  |  |  | 2.83 years      | 
|Granted             |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Exercised           |  |               |  |           | (90,000 | ) |                  |   | 19.77 |                  |  |  | -               | 
|Forfeited           |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Exchanged           |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Outstanding at      |  | June 30, 2022 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 2.60 years      | 
|Exercisable at      |  | June 30, 2022 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 2.60 years      | 
|Vested at           |  | June 30, 2022 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 2.60 years      | 
|Outstanding at      |  | July 1, 2022  |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 2.60 years      | 
|Granted             |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Exercised           |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Forfeited           |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Exchanged           |  |               |  |           | -       |   |                  |   | -     |                  |  |  | -               | 
|Outstanding at      |  | June 30, 2023 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 1.60 years      | 
|Exercisable at      |  | June 30, 2023 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 1.60 years      | 
|Vested and expected |  |               |  |           |         |   |                  |   |       |                  |  |  |                 | 
|to vest at          |  | June 30, 2023 |  |           | 251,195 |   |                  | $ | 15.95 |                  |  |  | 1.60 years      | 



NOTE
16 – RELATED PARTY TRANSACTIONS



As
discussed in Note 9 – Related Party and Other Financing Transactions, upon the dissolution of Justice in December 2021, Portsmouth
assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered
into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. As of June
30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, respectively, net of loan amortization costs of zero, respectively,
and are eliminated in the consolidated balance sheets of InterGroup. In July 2023, the note maturity date was extended to July 31, 2025
and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable
to InterGroup.



63







As
of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s
President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares
of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.



As
Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive
Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted
by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the
investment activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position
until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive
Officer and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests
of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the
resources of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf
of the Company.



NOTE
17 – COMMITMENTS AND CONTINGENCIES



Cash
Management Agreement



As
part of the Hotel refinancing effective December 18, 2013, Operating entered into a Cash Management Agreement with Bank of America, N.A.
(“Lender”) and Wells Fargo Bank, N.A. (“Cash Management Bank”) whereby all cash received by Operating is to be
deposited into a business checking account controlled by the Cash Management Bank up to the loan maturity date. Additionally, other terms
of the Cash Management Agreement provide that effective February 2019 or upon a Property Improvement Plan (“PIP”) requirement
by Hilton (“Franchisor”) deemed the “Cash Sweep Period” during which all excess cash generated by Operating beyond
the monthly budgeted expenses and debt services including principal and interest, insurance reserves, real estate taxes reserve, Furniture,
fixtures, and equipment (“FF&E”) reserves, for the senior and mezzanine loans, will be held by the Cash Management Bank
for future hotel improvements as required by the date or a PIP. Currently, any and all funds are being controlled by the Cash Management
Bank according to the Cash Management Agreement.



64







Franchise
Agreements



The
Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding
LLC (“Hilton”) on December 10, 2004. The term of the License agreement was for an initial period of 15 years commencing on
the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject
to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement which amongst other things
extended the License Agreement through 2030, and also provided the Partnership certain key money cash incentives to be earned through
2030.



Since
the opening of the Hotel as a full brand Hilton in January 2006, Justice has incurred monthly royalties, program fees and information
technology recapture charges equal to a percentage of the Hotel’s gross room revenue. Fees for such services during fiscal year
2023 and 2022 totaled approximately $3,029,000 and $2,107,000, respectively.



Employees



The
Company’s corporate office and multifamily operations had 32 employees and the hotel operations had 187 employees as of June 30,
2023. On February 3, 2017, Aimbridge assumed all labor union agreements and provides all funding for all payroll and related costs. As
of June 30, 2023, approximately 90% of those employees were represented by one of three labor unions, and their terms of employment were
determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel
and Restaurant Employees) expired on August 13, 2022 and a new Memorandum of Understanding (“MOU”) was signed June 26, 2023.
CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed on April 26, 2023.
CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.



Negotiation
of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees,
is a regular and expected course of business operations for the Company and Aimbridge. The Company expects and anticipates that the terms
of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life
of each CBA and incorporates these principles into its operating and budgetary practices.



Legal
Matters



Portsmouth
Square, Inc., through its operating company Justice Investors Operating Company, LLC, a Delaware limited liability company (the “Company”),
is the owner of the real property located at 750 Kearny Street in San Francisco, currently improved with a 27 – story building
which houses a Hilton Hotel (the “Property”). The Property was purchased and improved pursuant to the terms of a series of
agreements with the City and County of San Francisco (the “City”) in the early 1970’s. The terms of the agreements
and subsequent approvals and permits included a condition by which the Company was required to construct an ornamental overhead pedestrian
bridge across Kearny Street, connecting the Property to a nearby City park and underground parking garage known as Portsmouth Square
(the “Bridge”). Included in the approval process was the City’s issuance of a Major Encroachment Permit (“Permit”)
allowing the Bridge to span over Kearney Street. As of May 24, 2022, the City has purported to revoke the Permit and on June 13, 2022,
has directed the Company to submit a general bridge removal and restoration plan (the “Plan”) at the Company’s expense.
The Company disputes the legality of the purported revocation of the Permit. The Company further disputes the existence of any legal
or contractual obligation to remove the Bridge at its expense. In particular, representatives of the Company participated in meetings
with the City on and at various times after August 1, 2019, to discuss a collaborative process for the possible removal of the Bridge.
Until the purported revocation of the Permit in 2022, the City representatives repeatedly and consistently promised and agreed that the
City will pay for the associated costs of any Bridge removal. Nevertheless, without waiving any rights, in an effort to understand all
of the available options, and to provide a response to the City’s directives, the Company has engaged a Project Manager, a structural
engineering firm and an architect to advise on the development of a Plan for the Bridge removal, as well as the reconstruction of the
front of the Hilton Hotel. The Company has been working cooperatively with the City on the process for removal of the Bridge and its
related physical encroachments, including obtaining regulatory approvals and permits. A final Plan is currently not expected to be completed
until late calendar year of 2023, and permits are unlikely to be obtained until mid-2024 at the earliest. The Company is currently in
discussion with the City regarding both the process and financial responsibility for the implementation of the Plan and reconstruction
of the impacted portions of the Hotel. Those discussions are expected to continue through the Autumn of 2023.



The
Company may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend
itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on
the financial conditions or result of operations when resolved.



NOTE
18 – SUBSEQUENT EVENTS



The
Company evaluated subsequent events through the date that the accompanying financial statements were issued, and has determined that
no material subsequent events exist through the date of this filing.



65







Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



There
were no disagreements on any matter of accounting principles or practices, financial statement disclosure, nor auditing scope or procedure.



Item
9A. Controls and Procedures.



EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES



Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and
forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to
our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding
required disclosure.



As
of June 30, 2023, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officer and principal financial
and accounting officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.
Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective because of a material weakness in our internal
control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control
around the interpretation and accounting for the deferred tax asset valuation allowance was not effectively designed or maintained. In
light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared
in accordance with GAAP. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K present
fairly in all material respects our financial position, results of operations and cash flows for the period presented.



MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING



As
required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for
external reporting purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures
that:



1.
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of our company,



2.
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors,
and



3.
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated
financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2023. In making these assessments,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated
Framework (2013). Based on our assessments and those criteria, management determined that our internal controls over financial reporting
were not effective as of June 30, 2023.



CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING



Other
than the material weakness identified above, there were no changes in our internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.



Item
9B. Other Information.



None.



66







PART
III



Item
10. Directors, Executive Officers and Corporate Governance



The
following table sets forth certain information with respect to the Directors and Executive Officers of the Company as of June 30, 2023:



|Name                             |  | Position
    with the Company                                                                                                            |  | Age |  | Term
    to Expire            
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | --- |  | ------------------------------
|Class
    A Directors:           |  |                                                                                                                                          |  |     |  |                               
|                                 |  |                                                                                                                                          |  |     |  |                               
|John
    V. Winfield (4)         |  | Chairman
    of the Board; President and Chief Executive Officer                                                                         |  | 76  |  | Fiscal
    2023 Annual Meeting
|                                 |  |                                                                                                                                          |  |     |  |                               
|Steve
    Grunwald (3) (5)       |  | Director                                                                                                                                 |  | 41  |  | Fiscal
    2024               
|                                 |  |                                                                                                                                          |  |     |  |                               
|                                 |  |                                                                                                                                          |  |     |  |                               
|Class
    B Directors:           |  |                                                                                                                                          |  |     |  |                               
|                                 |  |                                                                                                                                          |  |     |  |                               
|Yvonne
    L. Murphy (1) (2) (4) |  | Director                                                                                                                                 |  | 66  |  | Fiscal
    2025 Annual Meeting
|                                 |  |                                                                                                                                          |  |     |  |                               
|William
    J. Nance (2) (3) (4) |  | Director                                                                                                                                 |  | 79  |  | Fiscal
    2025 Annual Meeting
|                                 |  |                                                                                                                                          |  |     |  |                               
|Class
    C Director:            |  |                                                                                                                                          |  |     |  |                               
|                                 |  |                                                                                                                                          |  |     |  |                               
|John
    C. Love (1) (2) (3)     |  | Director                                                                                                                                 |  | 83  |  | Fiscal
    2023 Annual Meeting
|                                 |  |                                                                                                                                          |  |     |  |                               
|Executive
    Officers:          |  |                                                                                                                                          |  |     |  |                               
|                                 |  |                                                                                                                                          |  |     |  |                               
|David
    C. Gonzalez (4)        |  | Chief
    Operating Officer, Advisor of Executive Strategic Real Estate and Securities Investment Committee, and President of Portsmouth |  | 56  |  | N/A                           
|                                 |  |                                                                                                                                          |  |     |  |                               
|Jolie
    Kahn                   |  | Secretary                                                                                                                                |  | 58  |  | N/A                           
|                                 |  |                                                                                                                                          |  |     |  |                               
|Ann
    Marie Blair              |  | Treasurer,
    Controller (Principal Financial Officer). Ms. Blair appointed effective July 6, 2023                                      |  | 36  |  | N/A                           
|                                 |  |                                                                                                                                          |  |     |  |                               
|Danfeng
    Xu                   |  | Treasurer,
    Controller (Principal Financial Officer), and Secretary Resigned effective August 31, 2022                                |  | 35  |  | N/A                           



|(1) | Member
    of the Nominating Committee                                               
|--- | -------------------------------------------------------------------------------------
|(2) | Member
    of the Compensation Committee                                             
|(3) | Member
    of the Audit Committee                                                    
|(4) | Member
    of the Executive Strategic Real Estate and Securities Investment Committee



67







Business
Experience:



The
principal occupation and business experience during the last five years for each of the Directors and Executive Officers of the Company
are as follows:



John
V. Winfield — Mr. Winfield was first appointed to the Board in 1982. He currently serves as the Company’s Chairman of
the Board, President and Chief Executive Officer, having first been appointed as such in 1987. Mr. Winfield also serves as Chairman and
Chief Executive Officer of the Company’s subsidiary Portsmouth, a public company. Effective June 2016, Mr. Winfield became the
Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. On May 24, 2021, Mr. Winfield
resigned effective immediately as President of Portsmouth. Mr. Winfield’s extensive experience as an entrepreneur and investor,
as well as his managerial and leadership experience from serving as a chief executive officer and director of public companies, led to
the Board’s conclusion that he should serve as a director of the Company.



Yvonne
L. Murphy — Mrs. Murphy was elected to the Board of InterGroup in February 2014 and to the Board of Portsmouth, a subsidiary
of the Company, in February 2019. She resigned from the Board of Portsmouth in December 2019. Mrs. Murphy was elected to the Board of
Portsmouth in October 2022 and served as a director at Portsmouth from March to December 2019. Mrs. Murphy took the place of Director
Babin upon his passing in October 2022. Mrs. Murphy has impressive experiences in corporate management, legal research, and legislative
lobbying for over 30 years. She was a member of Governor Kenny C. Guinn’s executive staff in Nevada, and was employed for years
by the prestigious Jones Vargas law firm in Reno, Nevada. She served in nine legislative sessions during the most challenging years in
Nevada’s history. Prior to starting her own lobbying firm, Ms. Murphy worked for RR Partners in its corporate office in Las Vegas,
Nevada and in the Government Affairs Division in Reno. She has a Doctorate and a Master’s in Business Administration from the California
Pacific University. Mrs. Murphy’s impressive experience in corporate management, legal research and legislative lobbying led to
the Board’s conclusion that she should serve as a director of the Company.



William
J. Nance — Mr. Nance is a Certified Public Accountant and private consultant to the real estate and banking industries. He
is also President of Century Plaza Printers Inc. Mr. Nance was first elected to the Board in 1984. He served as the Company’s Chief
Financial Officer from 1987 to 1990 and as Treasurer from 1987 to June 2002. Mr. Nance is also a Director of Santa Fe and Portsmouth.
Mr. Nance also serves as a director of Comstock Mining, Inc. Mr. Nance’s extensive experience as a CPA and in numerous phases of
the real estate industry, his business and management experience gained in running his own businesses, his service as a director and
audit committee member for other public companies and his knowledge and understanding of finance and financial reporting, led to the
Board’s conclusion that he should serve as a director of the Company.



John
C. Love — Mr. Love was appointed to the Board in 1998. Mr. Love is an international hospitality and tourism consultant. He
is a retired partner in the national CPA and consulting firm of Pannell Kerr Forster and, for the last 30 years, a lecturer in hospitality
industry management control systems and competition & strategy at Golden Gate University and San Francisco State University. He is
Chairman Emeritus of the Board of Trustees of Golden Gate University and the Executive Secretary of the Hotel and Restaurant Foundation.
Mr. Love is also a Director of Portsmouth and served on the Board of Santa Fe from March 1998 to December 2019. Mr. Love’s extensive
experience as a CPA and in the hospitality industry, including teaching at the university level for the last 30 years in management control
systems, and his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion that he should serve
as a director of the Company.



Jerold
R. Babin — Mr. Babin was first appointed as a director of the Company in February 1996. Mr. Babin is also a director of Portsmouth’s
parent company, InterGroup. Mr. Babin was a retail securities broker. From 1974 to 1989, he worked at Drexel Burnham, and from 1989 to
2010, he worked for Prudential Securities (later Wachovia Securities and now Wells Fargo Advisors), where he held the title of First
Vice President. Mr. Babin retired from his position at Wells Fargo advisors in June 2010. Mr. Babin had also served as an arbitrator
for FINRA (formerly NASD) for over 20 years. Mr. Babin’s extensive experience in the securities and financial markets, as well
as his involvement in the securities and public company regulatory industry, led to the Board’s conclusion that he should serve
as a director of the Company. Mr. Babin served as a Board Member up to the time of his passing in October 2022.



68







David
C. Gonzalez — Mr. Gonzalez was appointed Chief Operating Officer of the Company on May 31, 2023 and previously was the Vice
President Real Estate of the Company since January 31, 2001. Since 1989, Mr. Gonzalez has served in numerous capacities with the Company,
including Controller and Director of Real Estate. Mr. Gonzalez was appointed advisor of the Executive Strategic Real Estate and Securities
Investment Committee of the Company and Portsmouth in February 2020. The Board of Directors of Portsmouth Square, Inc. elected Mr. Gonzalez
as President of Portsmouth Square Inc. effective May 24, 2021.



Ann
Marie Blair– Ms. Blair was appointed as Treasurer and Controller of the Company on July 6, 2023. Ms. Blair also serves as
Treasurer and Controller of InterGroup, having been appointed to the position on July 6, 2023. Prior to joining the Company, she had
served as Chief Financial Officer in the advertising technology industry. She obtained her Bachelor of Science degree in Accounting and
her Master of Business Administration from Cumberland University.



Danfeng
Xu– Ms. Xu was appointed as Treasurer and Controller of the Company on October 16, 2017. Ms. Xu also serves as Treasurer and
Controller of Portsmouth and Santa Fe, having been appointed to those positions on October 16, 2017. On June 1, 2018, she was appointed
Secretary of the Company, Portsmouth and Santa Fe. Prior to joining the Company, she had served as Controller and worked in other positions
at the Hotel from July 2010 to February 2017. She obtained her Bachelor of Science degree in Business Administration, Accounting and
Finance from The Ohio State University and her Master of Professional Accounting, with a concentration in Audit and Assurance from University
of Washington. Ms. Xu resigned effective August 31, 2022.



Family
Relationships:There are no family relationships among directors, executive officers, or persons nominated or chosen by the Company
to become directors or executive officers.



Involvement
in Certain Legal Proceedings:No director or executive officer, or person nominated or chosen to become a director or executive officer,
was involved in any legal proceeding requiring disclosure.



Compliance
with Section 16(a) of the Securities Exchange Act of 1934



Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and each beneficial owner of more than
ten percent of the Common Stock of the Company, to file reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.



Based
solely on its review of the copies of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year
and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, or written representations from
certain reporting persons that no Forms 5 were required for those persons, the Company believes that during fiscal year 2023 all filing
requirements applicable to its officers, directors, and greater than ten-percent beneficial owners were complied with.



Code
of Ethics.



The
Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, including its Board of Directors. A copy of the Code of Ethics is posted
on the Company’s website at www.intgla.com. The Company will provide to any person without charge, upon request, a copy
of its Code of Ethics by sending such request to: The InterGroup Corporation, Attn: Treasurer, 1516 S. Bundy Drive, Suite 200, Los Angeles,
California 90025. The Company will promptly disclose any amendments or waivers to its Code of Ethics on Form 8-K and will post such information
on its website.



BOARD
AND COMMITTEE INFORMATION



InterGroup’s
common stock is listed on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC (“NASDAQ”). InterGroup is a Smaller
Reporting Company under the rules and regulations of the Securities and Exchange Commission (“SEC”). With the exception of
the Company’s President and CEO, John V. Winfield, all of InterGroup’s Board of Directors consists of “independent”
directors as independence is defined by the applicable rules of the SEC and NASDAQ.



69







Nominating
Committee



The
Company’s Nominating Committee is comprised of two “independent” directors as independence is defined by the applicable
rules of the SEC and NASDAQ. Directors Love and Murphy serve as the current members of the Nominating Committee. The Company has not
established a charter for the Nominating Committee, and the Committee has no policy with regard to consideration of any director candidates
recommended by security holders. As a smaller reporting company whose directors own in excess of sixty percent of the voting shares of
the Company, InterGroup has not deemed it appropriate to institute such a policy. There have not been any material changes to the procedures
by which security holders may recommend nominees to the Company’s board of directors.



Audit
Committee and Audit Committee Financial Expert



The
Company is a Smaller Reporting Company under SEC rules and regulations. The Company’s Audit Committee is currently comprised of
three members: Directors Nance (Chairperson), Babin and Love, each of whom meets the independence requirements of the SEC and NASDAQ
as modified or supplemented from time to time. The Company’s Board of Directors has determined that Directors Nance and Love also
meet the Audit Committee Financial Expert requirement as defined by the SEC and NASDAQ based on their qualifications and business experience
discussed above in this Item 10.



Compensation
Committee



The
Company’s Compensation Committee (the “Compensation Committee”) is comprised of three “independent” members
of the Board of Directors as independence is defined by the applicable rules of the SEC and NASDAQ. Mr. Nance serves as Chairman of the
Compensation Committee. The Company has not established a charter for the Compensation Committee. The Compensation Committee reviews
and recommends to the Board of Directors the compensation for the Company’s Chief Executive Officer and other executive officers,
including equity or performance-based compensation and plans. The Compensation Committee seeks to design and set compensation to attract
and retain highly qualified executive officers and to align their interests with those of long-term owners of the Company. The Compensation
Committee may also make recommendations to the Board of Directors as to the amount and form of director compensation. The Compensation
Committee has not engaged any compensation consultants in determining the amount or form of executive of director compensation but does
review and monitor published compensation surveys and studies. The Compensation Committee may delegate to the Company’s Chief Executive
Officer the authority to determine the compensation of certain executive officers. The Compensation Committee also oversees the Company’s
2010 Incentive Plan.



Item
11. Executive Compensation



The
following table provides certain summary information concerning compensation awarded to, earned by, or paid to the Company’s principal
executive officer and other named executive officers of the Company whose total compensation exceeded $100,000 for all services rendered
to the Company and its subsidiaries for each of the Company’s last two completed fiscal years ended June 30, 2023 and 2022. There
was no non-equity incentive plan compensation or nonqualified deferred compensation earnings. There are currently no employment contracts
with the executive officers.



70















SUMMARY
COMPENSATION TABLE



|Name and Position                                   |  | Fiscal Year |      |  | Salary |   |         | Bonus |  |   | Other  Compensation |  |  | Total |       
|--------------------------------------------------- |  | ----------- | ---- |  | ------ | - | ------- | ----- |  | - | ------------------- |  |  | ----- | ------
|                                                    |  |             |      |  |        |   |         |       |  |   |                     |  |  |       |       
|John V. Winfield                                    |  |             | 2023 |  |        | $ | 838,000 | (1)   |  | $ | 600,000             |  |  | $     | 59,000
|Chairman, President and                             |  |             | 2022 |  |        | $ | 838,000 | (1)   |  | $ | -                   |  |  | $     | 59,000
|Chief Executive Officer                             |  |             |      |  |        |   |         |       |  |   |                     |  |  |       |       
|                                                    |  |             |      |  |        |   |         |       |  |   |                     |  |  |       |       
|David C. Gonzalez                                   |  |             | 2023 |  |        | $ | 444,000 |       |  | $ | 600,000             |  |  | $     | -     
|Chief Operating Officer                             |  |             | 2022 |  |        | $ | 409,000 |       |  | $ | -                   |  |  | $     | -     
|                                                    |  |             |      |  |        |   |         |       |  |   |                     |  |  |       |       
|Danfeng Xu                                          |  |             | 2023 |  |        | $ | 39,000  |       |  | $ | -                   |  |  | $     | -     
|Treasurer and Controller                            |  |             | 2022 |  |        | $ | 171,000 |       |  | $ | 10,000              |  |  | $     | -     
|(Principal Financial Officer, resigned August 2022) |  |             |      |  |        |   |         |       |  |   |                     |  |  |       |       



|(1) | Mr.
    Winfield also serves as Chairman of the Board of Portsmouth. During fiscal year 2023, Mr. Winfield received salary of $433,000 from
    Portsmouth. The amounts include director’s fees totaling $6,000 and $6,000 for the fiscal years 2023 and 2022, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                             
|(2) | Compensation
    for a portion of the salary of an assistant to Mr. Winfield.                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                             
|(3) | Compensation
    is allocated approximately 50% to the Company and 50% to Portsmouth.                                                                                                                                                                                       
|(4) | Mr.
    Gonzalez also serves as the President of Portsmouth. Compensation is allocated 67% to the company and 33% to Portsmouth.                                                                                                                                            



Outstanding
Equity Awards at Fiscal Year Ended June 30, 2023



The
following table sets forth information concerning option awards and stock awards for each named executive officer that were outstanding
as of the end of the Company’s last completed fiscal year ended June 30, 2023. There were no other equity incentive plan awards
that were outstanding.



|                      |  | Option
    Awards |         |     |                 | 
|--------------------- |  | ----------------- | ------- | --- | --------------- | 
|                      |  | Number
    of     |         |     | Number
    of   | 
|                      |  | securities        |         |     | securities      | 
|                      |  | underlying        |         |     | underlying      | 
|                      |  | unexercised       |         |     | unexercised     | 
|                      |  | options
    (#)   |         |     | options
    (#) | 
|Name                  |  | exercisable       |         |     | Un-exercisable  | 
|                      |  |                   |         |     |                 | 
|John
    V. Winfield  |  |                   | 100,000 | (1) |                 | 
|John
    V. Winfield  |  |                   | 133,195 | (2) |                 | 
|David
    C. Gonzalez |  |                   | 18,000  | (3) |                 | 



|(1) | Stock
    options issued to Mr. Winfield pursuant to the Company’s 2010 Incentive Plan are subject to both time and performance-based
    vesting requirements, each of which must be satisfied before the options are fully vested and eligible to be exercised. Pursuant
    to the time vesting requirements, the options vest over a period of five years, with 20,000 options vesting upon each one-year anniversary
    of the date of grant, March 16, 2010. Pursuant to the performance vesting requirements, the options vest in increments of 20,000
    shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise price ($10.30)
    of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of at least ten trading
    days during any one quarter. As of June 30, 2023, the performance vesting requirements of the options were satisfied.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



71









|(2) | On
    December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive
    stock options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive
    Officer, John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was
    made pursuant to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for
    133,195 shares and have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive
    stock options are for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52
    per share. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively,
    of the fair market value of the Company’s common stock as determined by reference to the closing price of the Company’s
    common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements,
    with 20% of the options vesting annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised
    the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment
    of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related
    to the issuance.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Mr.
    Gonzalez’s stock options vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the
    date of grant, March 2, 2017.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



Internal
Revenue Code Limitations



Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), provides that, in the case of a publicly held corporation,
the corporation is not generally allowed to deduct remuneration paid to its chief executive officer and certain other highly compensated
officers to the extent that such remuneration exceeds $1,000,000 for the taxable year. Certain remuneration, however, is not subject
to disallowance, including compensation paid on a commission basis and, if certain requirements prescribed by the Code are satisfied,
other performance-based compensation. Since InterGroup and Portsmouth are both public companies, the $1,000,000 limitation applies separately
to the compensation paid by each entity. Stock option expenses are also amortized over a several years. For fiscal years 2023 and 2022,
no compensation paid by the Company to its CEO or other executive officers was subject the deduction disallowance prescribed by Section
162(m) of the Code.



EQUITY
COMPENSATION PLANS



The
Company currently has one equity compensation plan, which has been approved by the Company’s stockholders. However, any outstanding
stock options issued under the Company’s prior equity compensation plans remain effective in accordance with their terms.



The
purpose of the Company’s equity compensation plans is to provide a means whereby officers, directors and key employees of the Company
develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage
them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders.
A further purpose of these plans is to provide a means through which the Company may attract able individuals to become employees or
serve as directors of the Company and to provide a means for such individuals to acquire and maintain stock ownership in the Company,
thereby strengthening their concern for the welfare of the Company.



The
InterGroup Corporation 2010 Omnibus Employee Incentive Plan



On
February 24, 2010, the shareholders of the Company approved The InterGroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010
Incentive Plan”), which was formally adopted by the Board of Directors following the annual meeting of shareholders. The 2010 Incentive
Plan as modified in December 2013, authorizes a total of up to 400,000 shares of common stock to be issued as equity compensation to
officers and employees of the Company in an amount and in a manner to be determined by the Compensation Committee in accordance with
the terms of the Plan. The 2010 Incentive Plan authorizes the awards of several types of equity compensation including stock options,
stock appreciation rights, performance awards and other stock-based compensation. The 2010 Incentive Plan had an original expiration
date of February 23, 2020, if not terminated sooner by the Board of Directors upon recommendation of the Compensation Committee. Any
awards issued under the Plan will expire under the terms of the grant agreement.



72









The
shares of common stock to be issued under the 2010 Incentive Plan have been registered under the Securities Act, pursuant to a registration
statement filed on Form S-8 by the Company on June 16, 2010. Once received, shares of common stock issued under the Plan will be freely
transferable subject to any requirements of Section 16(b) of the Exchange Act.



On
March 16, 2010, the Compensation Committee authorized the grant of 100,000 stock options to the Company’s Chairman, President and
Chief Executive, John V. Winfield to purchase up to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive
Plan. The exercise price of the options is $10.30, which is 100% of the fair market value of the Company’s Common Stock as determined
by reference to the closing price of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the
date of grant. The options had an original expiration date ten years from the date of grant, unless terminated earlier in accordance
with the terms of the 2010 Incentive Plan. The options shall be subject to both time and market-based vesting requirements, each of which
must be satisfied before options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options
vest over a period of five years, with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market
vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the
Company’s common stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade
at that increased level for a period of at least ten trading days during any one quarter. As of June 30, 2023, all the market vesting
requirements have been met.



On
December 28, 2019, the Compensation Committee of the Board of Directors recommended to the Board amendments to the 2010 Incentive Plan
which would amend Section 1.3 to extend the term from ten years to sixteen years, and Section 6.4 to change “tenth (10th) anniversary
date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to twenty years
(expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The
purpose of the amendment to the term is to extend its existence as our only incentive plan. The purpose of amendment of the allowable
term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years
to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s
contributions to and leadership of our Company. The recommended amendments were approved by shareholders on February 25, 2020.



In
February 2012, the Compensation Committee awarded 90,000 stock options to the Company’s Chairman, President and Chief Executive,
John V. Winfield to purchase up to 90,000 shares of common stock. The per share exercise price of the options is $19.77 which is the
fair value of the Company’s Common Stock as reported on NASDAQ on February 28, 2012. The options expire ten years from the date
of grant. The options are subject to both time and market-based vesting requirements, each of which must be satisfied before the options
are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years,
with 18,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options
vest in increments of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above
the exercise price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period
of at least ten trading days during any one quarter. On January 21, 2022, Mr. Winfield exercised 90,000 of his vested stock options by
surrendering 35,094 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance
to him of 54,906 shares. No additional compensation expense was recorded related to the issuance.



On
December 26, 2013, the Compensation Committee authorized, subject to shareholder approval, a grant of non-qualified and incentive stock
options for an aggregate of 160,000 shares (the “Option Grant”) to the Company’s President and Chief Executive Officer,
John V. Winfield. The stock option grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant
to, and consistent with, the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and
have a term of ten years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are
for 26,805 shares and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. In accordance
with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%, respectively, of the fair market value of
the Company’s common stock as determined by reference to the closing price of the Company’s common stock as reported on the
NASDAQ Capital Market on the date of grant. The stock options are subject to time vesting requirements, with 20% of the options vesting
annually commencing on the first anniversary of the grant date. In December 2018, Mr. Winfield exercised the 26,805 vested incentive
stock options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting
in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.



73











In
March 2017, the Compensation Committee awarded 18,000 stock options to the Company’s Vice President of Real Estate, David C. Gonzalez,
to purchase up to 18,000 shares of common stock. The per share exercise price of the options is $27.30 which is the fair value of the
Company’s Common Stock as reported on NASDAQ Capital Market on March 2, 2017. The options expire ten years from the date of grant.
Pursuant to the time vesting requirements, the options vest over a period of five years, with 3,600 options vesting upon each one-year
anniversary of the date of grant.



Compensation
of Directors



Effective
as of fiscal year ended June 30, 2011, annual cash compensation payable to non-employee directors has been $12,000. With the exception
of members of the Audit Committee, non-employee directors do not receive any additional fees for attending Board or Committee meetings
but are entitled to reimbursement of their reasonable expenses to attend such meetings. Members of the Audit Committee are paid a fee
of $1,000 per quarter, with the Chair of that Committee to receive $1,500 per quarter. As an executive officer, the Company’s Chairman
has elected to forego his annual board fees.



The
following table sets forth the compensation paid to directors during the fiscal year ended June 30, 2023:



DIRECTOR
COMPENSATION



|                         |  | Fees
    Earned or |        |     |                  |  |   | All
    Other |  |  |       | 
|------------------------ |  | ------------------ | ------ | --- | ---------------- |  | - | ------------- |  |  | ----- | 
|Name                     |  | Paid
    in Cash*  |        |     | Stock
    Awards |  |   | Compensation  |  |  | Total | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|John
    C. Love         |  | $                  | 46,000 | (1) |                  |  | - |               |  |  | -     | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|William
    J. Nance     |  | $                  | 48,000 | (2) |                  |  | - |               |  |  | -     | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|Steve
    Grunwald       |  | $                  | 18,000 |     |                  |  | - |               |  |  | -     | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|Jerold
    R. Babin      |  | $                  | 44,000 | (3) |                  |  | - |               |  |  | -     | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|Yvonne
    L. Murphy     |  | $                  | 34,000 |     |                  |  | - |               |  |  | -     | 
|                         |  |                    |        |     |                  |  |   |               |  |  |       | 
|John
    V. Winfield (4) |  |                    | -      |     |                  |  | - |               |  |  | -     | 



|*   | Amounts
    shown include board retainer fees, committee fees and meeting fees.                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                           
|(1) | Mr.
    Love also serves as director of the Company’s subsidiary, Portsmouth. Amounts shown include $8,000 in regular board and audit
    committee fees paid by Portsmouth.                                                                              
|    |                                                                                                                                                                                                                                                           
|(2) | Mr.
    Nance also serves as a director of the Company’s subsidiary, Portsmouth. Amounts shown include $8,000 in regular board and
    audit committee fees paid by Portsmouth.                                                                           
|    |                                                                                                                                                                                                                                                           
|(3) | Mr.
    Babin also served as a director of Portsmouth up to his passing away in October 2022. Amounts shown include $6,000 in regular board
    fees paid by Portsmouth.                                                                                  
|    |                                                                                                                                                                                                                                                           
|(4) | As
    Chief Executive Officer, the Company’s Chairman, John V. Winfield, was not paid any board, committee or meetings fees. Mr.
    Winfield received $6,000 in regular board fees from Portsmouth, which is reported on the Summary Compensation Table.



74









Change
in Control or Other Arrangements



Except
for the foregoing, there are no other arrangements for compensation of Directors and there are no employment contracts between the Company
and its Directors or any change in control arrangements.



Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



Security
Ownership of Certain Beneficial Owners.



The
following table sets forth, as of August 21, 2023, certain information with respect to the beneficial ownership of Common Stock of the
Company owned by those persons or groups known by the Company to own more than five percent of the outstanding shares of Common Stock.



|Name and Address of Beneficial Owner                         |  | Amount and Nature of Beneficial Ownership (1) |           |     | Percent of Class (2) | 
|------------------------------------------------------------ |  | --------------------------------------------- | --------- | --- | -------------------- | 
|                                                             |  |                                               |           |     |                      | 
|John V. Winfield                                             |  |                                               | 1,686,374 | (3) |                      | 
|1516 S. Bundy Drive, Suite 200 Los Angeles, California 90025 |  |                                               |           |     |                      | 



|(1) | Unless
    otherwise indicated and subject to applicable community property laws, each person has sole voting and investment power with respect
    to the shares beneficially owned.                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                     
|(2) | Percentages
    are calculated on the basis of 2,205,527 shares of Common Stock outstanding as of August 21, 2023, plus any securities that person
    has the right to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
|    |                                                                                                                                                                                                                                                                     
|(3) | Includes
    233,195 shares that Mr. Winfield has a right to acquire pursuant to vested stock options.                                                                                                                                                              



Security
Ownership of Management.



The
following table sets forth, as of August 21, 2023, certain information with respect to the beneficial ownership of Common Stock of the
Company owned by (i) each Director and each of the named Executive Officers, and (ii) all Directors and Executive Officers as a group.



|Name
    of Beneficial Owner                                    |  | Amount
    and Nature of Beneficial Ownership (1) |           |     | Percent
    of Class (2) | 
|--------------------------------------------------------------- |  | ------------------------------------------------- | --------- | --- | ------------------------ | 
|                                                                |  |                                                   |           |     |                          | 
|John
    V. Winfield                                            |  |                                                   | 1,686,374 | (3) |                          | 
|                                                                |  |                                                   |           |     |                          | 
|William
    J. Nance                                            |  |                                                   | 47,946    |     |                          | 
|                                                                |  |                                                   |           |     |                          | 
|John
    C. Love                                                |  |                                                   | 8,561     |     |                          | 
|                                                                |  |                                                   |           |     |                          | 
|David
    C. Gonzalez                                           |  |                                                   | 44,769    | (4) |                          | 
|                                                                |  |                                                   |           |     |                          | 
|Yvonne
    L. Murphy                                            |  |                                                   | 2,282     |     |                          | 
|                                                                |  |                                                   |           |     |                          | 
|All
    Directors and Executive Officers as a Group (5 persons) |  |                                                   | 1,789,932 |     |                          | 



|* | Ownership
    does not exceed 1%.
|- | ---------------------------------



|(1) | Unless
    otherwise indicated and subject to applicable community property laws, each person has sole voting and investment power with respect
    to the shares beneficially owned.                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                  
|(2) | Percentages
    are calculated on the basis of 2,205,527 shares of Common Stock outstanding at August 21, 2023, plus any securities that person has
    the right to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
|    |                                                                                                                                                                                                                                                                  
|(3) | Includes
    233,195 shares that Mr. Winfield has a right to acquire pursuant to vested stock options.                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                  
|(4) | Includes
    18,000 shares that Mr. Gonzalez has a right to acquire pursuant to vested stock options.                                                                                                                                                            



Changes
in Control.



There
are no arrangements that may result in a change in control of the Company.



75









SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.



The
following table sets forth information as of June 30, 2023 with respect to compensation plans (including individual compensation arrangements)
under which equity securities of the Company are authorized for issuance, aggregated as follows:



|Plan category                                              |  | Number of  securities to be issued upon exercise of outstanding options, warrants and rights |         |  | Weighted average exercise price of outstanding options warrants and rights |   |       | Remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|---------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- | ------- |  | -------------------------------------------------------------------------- | - | ----- | ----------------------------------------------------------------------------------------------------------------------
|                                                           |  | (a)                                                                                          |         |  | (b)                                                                        |   |       | (c)                                                                                                                   
|Equity compensation plans approved by security holders     |  |                                                                                              | 251,195 |  |                                                                            | $ | 15.95 |                                                                                                                       
|                                                           |  |                                                                                              |         |  |                                                                            |   |       |                                                                                                                       
|Equity compensation plans not approved by security holders |  |                                                                                              | None    |  |                                                                            |   | N/A   |                                                                                                                       
|                                                           |  |                                                                                              |         |  |                                                                            |   |       |                                                                                                                       
|Total                                                      |  |                                                                                              | 251,195 |  |                                                                            | $ | 15.95 |                                                                                                                       



(a)
There were 251,195 stock options outstanding as of June 30, 2023.



(b)
Reflects the weighted average exercise price of all outstanding options.



Item
13. Certain Relationships and Related Transactions, and Director Independence.



Mr.
Winfield owns 2.5% of Portsmouth. Director William Nance is a director and Chairman of the Audit Committee of Comstock Mining, Inc.,
since 2005.



Two
general partners provided services to the Partnership through December 17, 2013. On December 18, 2013, the Partnership redeemed Evon’s
partnership interest and Portsmouth Square became the sole general partner. The Partnership’s obligation to pay Evon, Justice’s
former general partner, terminated as of December 18, 2013. Under the terms of the Justice Partnership Agreement, its general partner,
Portsmouth, received annual compensation of one percent of Hotel Revenue up to the dissolution of the Partnership in December 2021. During
each of the years ended June 30, 2023 and 2022, total compensation earned by Portsmouth under the new and previous agreements were $130,000
and $146,000, respectively. Amounts earned by Portsmouth are eliminated in consolidation. Effective with the dissolution of the Partnership,
the compensation to Portsmouth from the hotel was terminated.



As
Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive
Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted
by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth, and oversees the investment
activity of Portsmouth. Effective June 2016, Mr. Winfield became the Managing Director of Justice and served in that position until the
dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer
and Portsmouth may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the
Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources
of Portsmouth, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the
Company.



76









Director
Independence



InterGroup’s
common stock is listed on the NASDAQ Capital Market tier of the NASDAQ Stock Market LLC. InterGroup is a Smaller Reporting Company under
the rules and regulations of the SEC. The Board of Directors of InterGroup currently consists of five members. With the exception of
the Company’s President and CEO, John V. Winfield, all of InterGroup’s Board of Directors consists of “independent”
directors as independence is defined by the applicable rules of the SEC and NASDAQ. There are no members of the Company’s compensation,
nominating or audit committees that do not meet those independence standards.



Item
14. Principal Accounting Fees and Services



On
January 31, 2022, the Audit Committee retained WithumSmith+Brown, PC, PCAOB ID: 100 (“Withum”) as the Company’s new
independent registered public accounting firm upon the resignation of Moss Adams LLP, Irvine CA, PCAOB ID: 659 (“Moss Adams”)
in December 2021. The aggregate fees billed for each of the last two fiscal years ended June 30, 2023 and 2022 for professional services
rendered by Withum and Moss Adams are set forth in the table below. These fees were billed for audit of the Company’s annual financial
statements, review of financial statements included in the Company’s Form 10-Q reports, and services provided in connection with
statutory and regulatory filings and engagements for those fiscal years.



|                        |  | Fiscal Year |        
|----------------------- |  | ----------- | -------
|                        |  | 2023        |        
|Audit fees – Withum     |  | $           | 215,000
|Tax fees – Withum       |  |             | 131,000
|Audit fees – Moss Adams |  |             | -      
|Tax fees – Moss Adams   |  |             | -      
|TOTAL:                  |  | $           | 346,000



Audit
Committee Pre-Approval Policies



The
Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be
performed for the Company by its independent registered public accounting firm, subject to any de minimis exceptions that may be set
for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion
of the audit. The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including
the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full Committee at its next scheduled meeting. All of the services described herein were approved
by the Audit Committee pursuant to its pre-approval policies.



None
of the hours expended on the independent registered public accounting firms’ engagement to audit the Company’s financial
statements for the most recent fiscal year were attributed to work performed by persons other than the independent registered public
accounting firm’s full-time permanent employees.



77









PART
IV



Item
15. Exhibits, Financial Statement Schedules.



(a)(1)
Financial Statements



The
following financial statements of the Company are included in Part II, Item 8 of this Report at pages 32 through 64:



|Report of Independent Registered Public Accounting Firm                                
|---------------------------------------------------------------------------------------
|                                                                                       
|Consolidated Balance Sheets - June 30, 2023 and 2022                                   
|                                                                                       
|Consolidated Statements of Operations for Years Ended June 30, 2023 and 2022           
|                                                                                       
|Consolidated Statements of Shareholders’ Deficit for Years Ended June 30, 2023 and 2022
|                                                                                       
|Consolidated Statements of Cash Flows for Years Ended June 30, 2023 and 2022           
|                                                                                       
|Notes to the Consolidated Financial Statements                                         



(a)(2)
Financial Statement Schedules



All
other schedules for which provision is made in Regulation S-X have been omitted because they are not required or are not applicable or
the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.



(a)(3)
Exhibits



Set
forth below is an index of applicable exhibits filed with this report according to exhibit table number.







|Exhibit
    Number |  | Description                                                                                                                                                                                                                                                                                       
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                                                                                                                                                                                                   
|3.(i)              |  | Articles
    of Incorporation:                                                                                                                                                                                                                                                                    
|                   |  |                                                                                                                                                                                                                                                                                                   
|3.1                |  | Certificate
    of Incorporation, dated September 11, 1985, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement
    on Form S-4, filed on September 6, 1985 (Registration No. 33-00126) and Amendment 1 to that Registration Statement filed on October
    23, 1985.
|                   |  |                                                                                                                                                                                                                                                                                                   
|3.2                |  | Restated Certificate of Incorporation, dated March 9, 1998, incorporated by reference to Exhibit 3 of the Company’s Amended Quarterly Report on Form 10-QSB/A for the period ended March 31, 1998, as filed on May 19, 1998.                                                                      
|                   |  |                                                                                                                                                                                                                                                                                                   
|3.3                |  | Certificate of Amendment to Certificate of Incorporation, dated October 2, 1998, incorporated by reference to Exhibit 3 of the Company’s Quarterly report on Form 10-QSB for the period ended September 30, 1998, as filed on November 13, 1998.                                                  



78











|3.4    |  | Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on August 6, 2007, incorporated by reference to Exhibit 3.4 of the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2007 as filed on September 28, 2007.                                      
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                                                                                     
|3.(ii) |  | Amended and Restated By-Laws of The InterGroup Corporation, effective as of December 10, 2007, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed on December 12, 2007.                                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                     
|4.     |  | Instruments
    defining the rights of security holders including indentures*                                                                                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                     
|9.     |  | Voting Trust Agreement: Voting Trust Agreement dated June 30, 1998 between John V. Winfield and The InterGroup Corporation is incorporated by reference to the Company’s Annual Report on Form 10-KSB filed with the Commission on September 28, 1998.                                                              
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.    |  | Material
    Contracts:                                                                                                                                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.1   |  | 1998 Stock Option Plan for Non-Employee Directors approved by the Board of Directors on December 8, 1998 and ratified by the shareholders on January 27, 1999 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on December 21, 1998).                          
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.2   |  | 1998 Stock Option Plan for Selected Key Officers, Employees and Consultants approved by the Board of Directors on December 8, 1998 and ratified by the shareholders on January 27, 1999 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on December 21, 1998).
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.3   |  | The InterGroup Corporation 2007 Stock Compensation Plan for Non-Employee Directors (incorporated by reference to the Company’s Proxy Statement on Schedule 14A filed with the Commission on January 26, 2007).                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.4   |  | Amended and Restated Agreement of Limited Partnership of Justice Investors, effective November 30, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q Report for the quarterly period ended December 31, 2010, filed with the Commission on February 11, 2011).                             
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.5   |  | General Partner Compensation Agreement, dated December 1, 2008 (incorporated by reference to Exhibit 10.2 to Company’s Form 10-Q Report for the quarterly period ended December 31, 2008, filed with the Commission on February 13, 2009).                                                                          
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.6   |  | The InterGroup Corporation 2008 Restricted Stock Unit Plan, adopted by the Board of Directors on December 3, 2008, and ratified by the shareholders on February 18, 2009 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A, filed with the Commission on January 21, 2009).               
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.7   |  | Restricted Stock Unit Agreement, dated February 18, 2009, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009, as filed with the Commission on October 13, 2009).                
|       |  |                                                                                                                                                                                                                                                                                                                     
|10.8   |  | The InterGroup Corporation 2010 Omnibus Employee Incentive Plan, approved by the shareholders and adopted by the Board of Directors on February 24, 2010 (incorporated by reference to the Company’s Proxy Statement on Schedule 14A, filed with the Commission on January 27, 2010).                               



79









|10.9    |  | Employee Stock Option Agreement, dated March 16, 2010, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.9 of the Company’s report on Form 10-K for the fiscal year ended June 30, 2010, as filed with the Commission on September 27, 2010).           
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                                                                                        
|10.10   |  | Franchise License Agreement, dated December 10, 2004, between Justice Investors and Hilton Hotels (incorporated by reference to Exhibit 10.10 of the Company’s amended report on Form 10-K/A for the fiscal year ended June 30, 2011, as filed with the Commission on August 24, 2012).                
|        |  |                                                                                                                                                                                                                                                                                                        
|10.13   |  | Employee Stock Option Agreement, dated February 28, 2012, between The InterGroup Corporation and John V. Winfield (incorporated by reference to Exhibit 10.13 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2014, as filed with the Commission on September 20, 2012).
|        |  |                                                                                                                                                                                                                                                                                                        
|10.16   |  | Management Agreement, dated February 1, 2017, between Justice Operating Company, LLC and Aimbridge Management Company, LLC. (incorporated by reference to Exhibit 10.5 of the Company’s Form 10-K Report for the fiscal year ended June 30, 2017, as filed with the Commission on October 13, 2017). * 
|        |  |                                                                                                                                                                                                                                                                                                        
|14      |  | Code of Ethics (filed herewith).                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                        
|21      |  | Subsidiaries (filed herewith).                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                        
|23.1    |  | Consent of Independent Registered Public Accounting Firm Withum Smith+Brown, PC                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                        
|31.1    |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbones-Oxley Act of 2002                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                        
|31.2    |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbones-Oxley Act of 2002                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                        
|32.1    |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                        
|32.2    |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                        
|101.INS |  | Inline
    XBRL Instance Document                                                                                                                                                                                                                                                                      
|101.SCH |  | Inline
    XBRL Taxonomy Extension Schema Document                                                                                                                                                                                                                                                     
|101.CAL |  | Inline
    XBRL Taxonomy Extension Calculation Linkbase Document                                                                                                                                                                                                                                       
|101.DFE |  | Inline
    XBRL Taxonomy Extension definition Linkbase Document                                                                                                                                                                                                                                        
|101.LAB |  | Inline
    XBRL Taxonomy Extension Label Linkbase Document                                                                                                                                                                                                                                             
|101.PRE |  | Inline
    XBRL Taxonomy Extension Presentation Linkbase Document                                                                                                                                                                                                                                      
|104     |  | Cover
    Page Interactive Data File (embedded within the Inline XBRL document)                                                                                                                                                                                                                        



|* | All
    Exhibits marked by one asterisk are incorporated herein by reference to the Trust’s Registration Statement on Form S-4 as filed
    with the Securities and Exchange Commission on September 6, 1985, Amendment No. 1 to Form S-4 as filed with the Securities and Exchange
    Commission on October 23, 1985, Exhibit 14 to Form 8 Amendment No. 1 to Form 8 filed with the Securities & Exchange Commission
    November 1987 and Form 8 Amendment No. 1 Item 4 filed with the Securities & Exchange Commission October 1988.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





80







SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|      |                      |  | THE
    INTERGROUP CORPORATION
|----- | -------------------- |  | ------------------------------
|      |                      |  | (Registrant)                  
|      |                      |  |                               
|Date: | October
    13, 2023 |  | by                            
|      |                      |  |                               
|      |                      |  |                               
|      |                      |  |                               
|      |                      |  |                               
|Date: | October
    13, 2023 |  | by                            
|      |                      |  |                               



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



|Signatures                |  | Title
    and Position                                  |  | Date                
|------------------------- |  | ------------------------------------------------------- |  | --------------------
|                          |  |                                                         |  |                     
|/s/
    John V Winfield   |  | President,
    Chief Executive Officer and              |  | October
    13, 2023
|John
    V. Winfield      |  | Chairman
    of the Board (Principal Executive Officer) |  |                     
|                          |  |                                                         |  |                     
|/s/
    David C. Gonzalez |  | Chief
    Operating Officer                             |  | October
    13, 2023
|David
    C. Gonzalez     |  |                                                         |  |                     
|                          |  |                                                         |  |                     
|/s/
    John C. Love      |  | Director                                                |  | October
    13, 2023
|John
    C. Love          |  |                                                         |  |                     
|                          |  |                                                         |  |                     
|/s/
    Steve Grunwald    |  | Director                                                |  | October
    13, 2023
|Steve
    Grunwald        |  |                                                         |  |                     
|                          |  |                                                         |  |                     
|/s/
    Yvonne L. Murphy  |  | Director                                                |  | October
    13, 2023
|Yvonne
    L. Murphy      |  |                                                         |  |                     
|                          |  |                                                         |  |                     
|/s/
    William J. Nance  |  | Director                                                |  | October
    13, 2023
|William
    J. Nance      |  |                                                         |  |                     



81