UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

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

For the quarterly period ended March 31, ~~2020~~2021

[ ]	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 0-4057

PORTSMOUTH SQUARE, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA		94-1674111
~~(State~~(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

~~12121 Wilshire Boulevard,~~1516 S. Bundy Dr., Suite ~~610,~~200, Los Angeles, California 90025

(Address of principal executive offices) (Zip Code)

(310) 889-2500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[X] Yes [ ] No

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

Large accelerated filer [ ]		Accelerated filer [ ]

Non-accelerated filer ~~[ ]~~	[X]	Smaller reporting company [X]

	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 [X] No

The number of shares outstanding of registrant’s Common Stock, as of ~~June 18, 2020~~May 21, 2021 was ~~734,183.~~734,187.

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
NONE		NONE		NONE

TABLE OF CONTENTS

Page

		~~Page~~

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and June 30, ~~2019~~2020 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three Months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Nine Months ended March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	5
	Condensed Consolidated Statements of Shareholders’ Deficit for the Nine Months ended March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	7
	Notes to the Condensed Consolidated Financial Statements	~~8-18~~8-20

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~19-25~~21-28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2628

Item 4.	Controls and Procedures	2628

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	26 29

Item 1A.	Risk Factors	2629

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2729

Item 3.	Defaults Upon Senior Securities	2729

Item 4.	Mine Safety Disclosures	2729

Item 5.	Other Information	2729

Item 6.	Exhibits	2829

Signatures		2930

~~-2-~~

- 2 -

PART 1

FINANCIAL INFORMATION

Item 1 – Condensed Consolidated Financial Statements

PORTSMOUTH SQUARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of	March 31, 2020			June 30, 2019			March 31, 2021			June 30, 2020
ASSETS
Investment in hotel, net	$	32,935,000		$	33,352,000		$	31,435,000		$	32,481,000
Investment in real estate, net		980,000			977,000
Investment in real estate								-			980,000
Investment in marketable securities		331,000			1,425,000			1,603,000			565,000
Other investments, net		129,000			196,000			20,000			87,000
Cash and cash equivalents		5,907,000			9,789,000			3,298,000			4,710,000
Restricted cash		11,550,000			11,027,000			5,785,000			11,675,000
Accounts receivable - hotel, net		183,000			848,000			122,000			251,000
Other assets, net		1,108,000			886,000			873,000			831,000
Deferred tax assets		4,028,000			4,054,000			8,969,000			5,974,000

Total assets	$	57,151,000		$	62,554,000		$	52,105,000		$	57,554,000

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities - Justice	$	8,116,000		$	11,298,000		$	6,476,000		$	7,588,000
Accounts payable and other liabilities		233,000			182,000			269,000			255,000
Accounts payable to related party		2,243,000			2,122,000			2,991,000			2,385,000
Due to securities broker		-			151,000
Obligations for securities sold		-			325,000
Related party and other notes payable		7,796,000			8,221,000
Related party notes payable								10,145,000			7,604,000
Other note payable								6,719,000			4,719,000
Finance Leases		1,206,000			1,486,000			783,000			1,098,000
Mortgage notes payable - hotel, net		111,729,000			113,087,000			110,465,000			111,446,000

Total liabilities		131,323,000			136,872,000			137,848,000			135,095,000

Shareholders’ deficit:
Common stock, no par value: Authorized shares - 750,000;
734,183 shares issued and outstanding shares as of March 31, 2020 and June 30, 2019		2,092,000			2,092,000
Common stock, no par value: Authorized shares - 750,000; 734,183 shares issued and outstanding shares as of March 31, 2021 and June 30, 2020								2,092,000			2,092,000
Accumulated deficit		(70,792,000	)		(70,876,000	)		(85,438,000	)		(73,809,000	)
Total Portsmouth shareholders’ deficit		(68,700,000	)		(68,784,000	)		(83,346,000	)		(71,717,000	)
Noncontrolling interest		(5,472,000	)		(5,534,000	)		(2,397,000	)		(5,824,000	)
Total shareholders’ deficit		(74,172,000	)		(74,318,000	)		(85,743,000	)		(77,541,000	)

Total liabilities and shareholders’ deficit	$	57,151,000		$	62,554,000		$	52,105,000		$	57,554,000

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

~~-3-~~

- 3 -

~~PORTSMOUTH SQUARE, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

PORTSMOUTH SQUARE, INC.							PORTSMOUTH SQUARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS							CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)							(Unaudited)

For the three months ended March 31,	2020			2019					2021			2020

Revenue - Hotel	$	11,259,000		$	15,469,000			$	2,902,000		$	11,259,000

Costs and operating expenses
Hotel operating expenses		(10,060,000	)		(11,378,000	)			(3,990,000	)		(10,060,000	)
Hotel depreciation and amortization expense		(547,000	)		(561,000	)			(503,000	)		(547,000	)
General and administrative expense		(167,000	)		(274,000	)			(201,000	)		(167,000	)

Total costs and operating expenses		(10,774,000	)		(12,213,000	)			(4,694,000	)		(10,774,000	)

Income from operations		485,000			3,256,000
(Loss) income from operations									(1,792,000	)		485,000

Other income (expense)
Interest expense - mortgage		(1,703,000	)		(1,852,000	)			(1,675,000	)		(1,703,000	)
Interest expense - related party		(90,000	)		(89,000	)			(158,000	)		(90,000	)
Loss on asset disposal		-			(398,000	)
Net (loss) gain on marketable securities		(294,000	)		7,000
Net (loss) gain on marketable securities - Comstock		(13,000	)		137,000
Net loss on marketable securities									(15,000	)		(294,000	)
Net gain (loss) on marketable securities - Comstock									1,283,000			(13,000	)
Impairment loss on other investments		(38,000	)		(36,000	)			(15,000	)		(38,000	)
Dividend and interest income		41,000			105,000				1,000			41,000
Trading and margin interest expense		(33,000	)		(41,000	)			(35,000	)		(33,000	)

Total other expense, net		(2,130,000	)		(2,167,000	)			(614,000	)		(2,130,000	)

(Loss) income before income taxes		(1,645,000	)		1,089,000
Income tax benefit (expense)		440,000			(280,000	)
Loss before income taxes									(2,406,000	)		(1,645,000	)
Income tax benefit									669,000			440,000

Net (loss) income		(1,205,000	)		809,000
Less: Net loss (income) attributable to noncontrolling interest		82,000			(78,000	)
Net loss									(1,737,000	)		(1,205,000	)
Less:Net (gain) loss attributable to noncontrolling interest									(223,000	)		82,000

Net (loss) income attributable to Portsmouth	$	(1,123,000	)	$	731,000
Net loss attributable to Portsmouth								$	(1,960,000	)	$	(1,123,000	)

Basic and diluted net (loss) income per share attributable to Portsmouth	$	(1.53	)	$	1.00
Basic and diluted net loss per share attributable to Portsmouth								$	(2.67	)	$	(1.53	)

Weighted average number of common shares outstanding - basic and diluted		734,183			734,183				734,183			734,183

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

~~-4-~~

- 4 -

~~PORTSMOUTH SQUARE, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

PORTSMOUTH SQUARE, INC.							PORTSMOUTH SQUARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS							CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)							(Unaudited)

For the nine months ended March 31,	2020			2019				2021			2020

Revenue - Hotel	$	41,589,000		$	45,276,000			$	9,436,000		$	41,589,000

Costs and operating expenses
Hotel operating expenses		(33,138,000	)		(33,424,000	)			(14,156,000	)		(33,138,000	)
Hotel depreciation and amortization expense		(1,653,000	)		(1,748,000	)			(1,566,000	)		(1,653,000	)
General and administrative expense		(553,000	)		(596,000	)			(561,000	)		(553,000	)

Total costs and operating expenses		(35,344,000	)		(35,768,000	)			(16,283,000	)		(35,344,000	)

Income from operations		6,245,000			9,508,000
(Loss) income from operations									(6,847,000	)		6,245,000

Other income (expense)
Interest expense - mortgage		(5,270,000	)		(5,463,000	)			(5,076,000	)		(5,270,000	)
Interest expense - related party		(271,000	)		(270,000	)			(339,000	)		(271,000	)
Loss on asset disposal		-			(398,000	)
Net loss on marketable securities		(327,000	)		(220,000	)
Net loss on marketable securities - Comstock		(194,000	)		(89,000	)
Net gain (loss) on marketable securities									69,000			(327,000	)
Net gain (loss) on marketable securities - Comstock									1,315,000			(194,000	)
Impairment loss on other investments		(38,000	)		(36,000	)			(38,000	)		(38,000	)
Dividend and interest income		129,000			125,000				16,000			129,000
Trading and margin interest expense		(103,000	)		(136,000	)			(91,000	)		(103,000	)

Total other expense, net		(6,074,000	)		(6,487,000	)			(4,144,000	)		(6,074,000	)

Income before income taxes		171,000			3,021,000
Income tax expense		(25,000	)		(769,000	)
(Loss) income before income taxes									(10,991,000	)		171,000
Income tax benefit (expense)									2,995,000			(25,000	)

Net income		146,000			2,252,000
Less: Net income attributable to the noncontrolling interest		(62,000	)		(248,000	)
Net (loss) income									(7,996,000	)		146,000
Less:Net loss (income) attributable to the noncontrolling interest									300,000			(62,000	)

Net income attributable to Portsmouth	$	84,000		$	2,004,000
Net (loss) income attributable to Portsmouth								$	(7,696,000	)	$	84,000

Basic and diluted net income per share attributable to Portsmouth	$	0.11		$	2.73
Basic and diluted net (loss) income per share attributable to Portsmouth								$	(10.48	)	$	0.11

Weighted average number of common shares outstanding - basic and diluted		734,183			734,183				734,183			734,183

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

~~-5-~~

- 5 -

PORTSMOUTH SQUARE, INC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

Retained Total
Earnings Portsmouth Total
Common Stock (Accumulated Shareholders’ Noncontrolling Shareholders’
Shares Amount Deficit) Deficit Interest Deficit

Balance at July 1, 2019 734,183 $ 2,092,000 $ (70,876,000 ) $ (68,784,000 ) $ (5,534,000 ) $ (74,318,000 )

Net income - - 826,000 826,000 99,000 925,000

Balance at September 30, 2019 734,183 2,092,000 (70,050,000 ) (67,958,000 ) (5,435,000 ) (73,393,000 )

Net income - - 381,000 381,000 45,000 426,000

Balance at December 31, 2019 734,183 2,092,000 (69,669,000 ) (67,577,000 ) (5,390,000 ) (72,967,000 )

Net loss (1,123,000 ) (1,123,000 ) (82,000 ) (1,205,000 )

Balance at March 31, 2020 734,183 $ 2,092,000 $ (70,792,000 ) $ (68,700,000 ) $ (5,472,000 ) $ (74,172,000 )

								Total
								Portsmouth						Total
	Common Stock				Accumulated			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Deficit			Deficit			Interest			Deficit

Balance at July 1, 2020		734,183	$	2,092,000	$	(73,809,000	)	$	(71,717,000	)	$	(5,824,000	)	$	(77,541,000	)

Net loss		-		-		(2,751,000	)		(2,751,000	)		(264,000	)		(3,015,000	)

Balance at September 30, 2020		734,183		2,092,000		(76,560,000	)		(74,468,000	)		(6,088,000	)		(80,556,000	)

Net loss		-		-		(2,985,000	)		(2,985,000	)		(259,000	)		(3,244,000	)

Balance at December 31, 2020		734,183		2,092,000		(79,545,000	)		(77,453,000	)		(6,347,000	)		(83,800,000	)

Net (loss) gain		-		-		(1,960,000	)		(1,960,000	)		223,000			(1,737,000	)

Reclassify Justice NCI		-		-		(3,933,000	)		(3,933,000	)		3,933,000			-

Investment in Justice		-		-		-			-			(206,000	)		(206,000	)

Shares Issued		4		-		-			-			-			-

Balance at March 31, 2021		734,187	$	2,092,000	$	(85,438,000	)	$	(83,346,000	)	$	(2,397,000	)	$	(85,743,000	)

Retained Total
Earnings Portsmouth Total
Common Stock (Accumulated Shareholders’ Noncontrolling Shareholders’
Shares Amount Deficit) Deficit Interest Deficit

Balance at July 1, 2018 734,183 $ 2,092,000 $ (73,475,000 ) $ (71,383,000 ) $ (5,699,000 ) $ (77,082,000 )

Net income - - 1,321,000 1,321,000 161,000 1,482,000

Balance at September 30, 2018 734,183 2,092,000 (72,154,000 ) (70,062,000 ) (5,538,000 ) (75,600,000 )

Net income (loss) - - (48,000 ) (48,000 ) 9,000 (39,000 )

Balance at December 31, 2018 734,183 2,092,000 (72,202,000 ) (70,110,000 ) (5,529,000 ) (75,639,000 )

Net income 731,000 731,000 78,000 809,000

Balance at March 31, 2019 734,183 $ 2,092,000 $ (71,471,000 ) $ (69,379,000 ) $ (5,451,000 ) $ (74,830,000 )

								Total
								Portsmouth						Total
	Common Stock				Accumulated			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Deficit			Deficit			Interest			Deficit

Balance at July 1, 2019		734,183	$	2,092,000	$	(70,876,000	)	$	(68,784,000	)	$	(5,534,000	)	$	(74,318,000	)

Net income		-		-		826,000			826,000			99,000			925,000

Balance at September 30, 2019		734,183		2,092,000		(70,050,000	)		(67,958,000	)		(5,435,000	)		(73,393,000	)

Net income		-		-		381,000			381,000			45,000			426,000

Balance at December 31, 2019		734,183		2,092,000		(69,669,000	)		(67,577,000	)		(5,390,000	)		(72,967,000	)

Net loss		-		-		(1,123,000	)		(1,123,000	)		(82,000	)		(1,205,000	)

Balance at March 31, 2020		734,183	$	2,092,000	$	(70,792,000	)	$	(68,700,000	)	$	(5,472,000	)	$	(74,172,000	)

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

~~-6-~~

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PORTSMOUTH SQUARE, INC.

CONDENDSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the nine months ended March 31,	2020			2019			2021			2020
Cash flows from operating activities:
Net income	$	146,000		$	2,252,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net unrealized loss on marketable securities		346,000			377,000
Loss on disposal of assets		-			398,000
Net (loss) income							$	(7,996,000	)	$	146,000
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
Net unrealized (gain) loss on marketable securities								(1,644,000	)		346,000
Deferred taxes		26,000			769,000			(2,995,000	)		26,000
Impairment loss on other investments		38,000			36,000			38,000			38,000
Depreciation and amortization		1,519,000			1,604,000			1,388,000			1,519,000
Changes in operating assets and liabilities:
Investment in marketable securities		748,000			253,000			606,000			748,000
Accounts receivable		665,000			1,187,000			129,000			665,000
Other assets		(222,000	)		(161,000	)		(42,000	)		(222,000	)
Accounts payable and other liabilities - Justice		(3,182,000	)		(2,130,000	)		(1,112,000	)		(3,182,000	)
Accounts payable and other liabilities		51,000			23,000			14,000			51,000
Accounts payable related party		121,000			170,000			606,000			121,000
Due to securities broker		(151,000	)		(44,000	)		-			(151,000	)
Obligations for securities sold		(325,000	)		(268,000	)		-			(325,000	)
Net cash (used in) provided by operating activities		(220,000	)		4,466,000
Net cash used in operating activities								(11,008,000	)		(220,000	)

Cash flows from investing activities:
Payments for hotel furniture, equipment and building improvements		(1,206,000	)		(983,000	)		(490,000	)		(1,206,000	)
Proceeds from other investments		29,000			35,000			29,000			29,000
Payments for real estate investments		(3,000	)		-
Net cash used in investing activities		(1,180,000	)		(948,000	)
Proceeds from (payments for) real estate investments								980,000			(3,000	)
Investment in Justice								(206,000	)		-
Net cash provided by (used in) investing activities								313,000			(1,180,000	)

Cash flows from financing activities:
Proceeds from other note payable - related party								2,950,000			-
Proceeds from other note payable - SBA Loan								2,000,000			-
Payments of mortgage and other notes payable		(1,959,000	)		(1,138,000	)		(1,507,000	)		(1,399,000	)
Net cash used in financing activities		(1,959,000	)		(1,138,000	)
Issuance cost from refinance of mortgage note payable								-			(480,000	)
Issuance cost from refinance of related party note payable								(50,000	)		(80,000	)
Net cash provided by (used in) financing activities								3,393,000			(1,959,000	)

Net (decrease) increase in cash, cash equivalents, and restricted cash		(3,359,000	)		2,380,000
Net decrease in cash, cash equivalents, and restricted cash								(7,302,000	)		(3,359,000	)
Cash, cash equivalents, and restricted cash at the beginning of the period		20,816,000			14,683,000			16,385,000			20,816,000
Cash, cash equivalents, and restricted cash at the end of the period	$	17,457,000		$	17,063,000		$	9,083,000		$	17,457,000

Supplemental information:
Interest paid	$	5,560,000		$	5,770,000		$	5,415,000		$	5,560,000
Taxes paid	$	2,000		$	68,000		$	22,000		$	2,000

Non-cash transaction:
Additions to Hotel equipment through capital lease	$	30,000		$	71,000		$	30,000		$	30,000

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

~~-7-~~

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PORTSMOUTH SQUARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements included herein have been prepared by Portsmouth Square, Inc. (“Portsmouth” or the “Company”), without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair statement of the financial position, cash flows and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements of Portsmouth and the notes therein included in the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2019.~~2020. The March 31, ~~2020~~2021 condensed consolidated balance sheet was derived from the consolidated balance sheet as included in the Company’s Form 10-K for the year ended June 30, ~~2019.~~2020.

The results of operations for the nine months ended March 31, ~~2020~~2021 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, ~~2020.~~2021.

Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). As of March 31, 2021, Portsmouth has a ~~93.3%~~97.5% limited partnership interest in Justice and is the sole general partner. The financial statements of Justice are consolidated with those of the Company.

~~As of March 31, 2020,~~Effective February 19, 2021, Santa Fe Financial Corporation (“Santa Fe”), a public company, was liquidated and all of its assets including its 68.8% interest in Portsmouth was distributed to its shareholders in exchange for their Santa Fe common stock. As a result, as of March 31, 2021, the InterGroup Corporation (“InterGroup”), a public company, owns approximately ~~68.8%~~71.3% of the outstanding common shares of Portsmouth. ~~Santa Fe is an 87.3%-owned subsidiary~~As of ~~The InterGroup Corporation (“InterGroup”), a public company. This percentage includes~~March 31, 2021, the ~~power to vote an approximately 3.7% interest in~~Company’s President, Chairman of the ~~common stock in Santa Fe owned by InterGroup’s Chairman~~Board and ~~President pursuant to a voting trust agreement entered into on June 30, 1998. InterGroup also directly~~Chief Executive Officer, John Winfield, owns approximately ~~13.5%~~2.5% of the outstanding common ~~stock~~shares of ~~Portsmouth.~~the Company. Mr. Winfield also serves as the President, Chairman of the Board and Chief Executive Officer of InterGroup.

Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”) owns and operates 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. Mezzanine is a wholly owned subsidiary of the Partnership; Operating is a wholly owned subsidiary 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 operated by the partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.

Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover 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 payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America’s largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality (“Aimbridge”) name in the Americas.

- 8 -

Due to Securities Broker

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.

~~-8-~~

Obligations 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 condensed consolidated statements of operations.

Income Tax

The Company consolidates Justice (“Hotel”) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax ~~expense~~benefit (expense) during the nine months ended March 31, ~~2020~~2021 and ~~2019~~2020 represent the income tax effect on the Company’s pretax (loss) income which includes its share in the net (loss) income of the Hotel.

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of March 31, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no material effect on the March 31, 2020 tax provision. We will continue to evaluate the income tax provisions of the CARES Act and monitor the tax law changes that could have income tax accounting and disclosure implications.

~~Financial Condition and Liquidity~~

Historically, our cash flows have been primarily generated from our Hotel operations. However, management expects that the ongoing length and severity of the economic downturn, resulting from the continuing and uncertain impact of the COVID-19 pandemic, will have a material adverse impact on our business, financial condition, liquidity and financial results. As a result of our Hotel’s material decrease in occupancy and average daily rate, we expect our cash flow from operations to continue to be significantly lower than historical rates for the foreseeable future, until the pandemic resolves, and hotel occupancies return to historical rates.

We have taken several steps to preserve capital and increase liquidity, including the implementation of various cost saving initiatives at our Hotel. For further discussion, see “Item 2 - Negative Effects of COVID-19 on our Business” included in this Quarterly Report. We may also receive cash generated from the investment of our cash and marketable securities, other investments, and other sources, including financing from our parent companies, Santa Fe and InterGroup. Subsequent to March 31, 2020, in order to increase its liquidity positions and take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey, generating net proceeds of approximately $6,814,000. InterGroup is also currently refinancing two of its California properties scheduled to close in June and July 2020, and it could refinance additional multifamily properties should the need arise; however, InterGroup does not deem it necessary at this time. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) of which $5,000,000 is available to be drawn down as of June 18, 2020, should additional liquidity be necessary.

As of March 31, 2020, we had cash, cash equivalents, and restricted cash of $17,457,000 which included $11,550,000 of restricted cash held by our Hotel senior lender Wells Fargo Bank, N.A. (“Lender”). Of the total restricted cash, $7,977,000 was held for furniture, fixtures and equipment (“FF&E”) reserves and $2,432,000 was held for a possible future property improvement plan (“PIP”) request by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. Therefore, Justice is currently in discussions with the Lender to release the PIP deposits to the Hotel and to allow the Hotel to utilize some or all of its FF&E reserves to fund operating expenses as well as debt service. Additionally, Justice has requested to temporarily pay interest only on the senior mortgage and the suspension of the monthly FF&E reserve installment, for a combined monthly savings in cash flow of approximately $321,000. Justice anticipates a resolution with the Lender in regard to the aforementioned requests before June 30, 2020.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice will use the proceeds from the SBA Loan primarily for payroll costs. The SBA Loan is scheduled to mature on April 9, 2022 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. The loan may be forgiven if the funds are used for payroll and other qualified expenses. New guidance on the criteria for forgiveness continues to be released.

~~-9-~~

We may also have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup to meets our obligations during the next twelve months and beyond, should the need arise.

We cannot presently estimate the full financial impact of the unprecedented COVID-19 pandemic on our business or predict the related federal, state and local civil authority actions, which are highly dependent on the severity and duration of the pandemic, but we expect that the COVID-19 closures and other imposed restrictions will continue to have a significant adverse impact on our results of operations. Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect the hospitality industry, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

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. The Company has invested in short-term, income-producing instruments and in equity and debt securities when deemed appropriate. The Company’s marketable securities are classified as trading with unrealized gains and losses recorded through the consolidated statements of operations.

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 position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy 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. We believe that our cash on hand, cash provided by the SBA loan, along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.

~~The following table provides a summary as of March 31, 2020, the Company’s material financial obligations which also including interest payments:~~

3 Months Year Year Year Year
Total 2020 2021 2022 2023 2024 Thereafter
Mortgage notes payable $ 112,656,000 $ 364,000 $ 1,547,000 $ 1,632,000 $ 1,721,000 $ 107,392,000 $ -
Related party and other notes payable 9,002,000 250,000 1,016,000 4,033,000 750,000 567,000 2,386,000
Interest 24,403,000 2,123,000 6,756,000 6,283,000 6,172,000 3,069,000 -
Total $ 146,061,000 $ 2,737,000 $ 9,319,000 $ 11,948,000 $ 8,643,000 $ 111,028,000 $ 2,386,000

Recently Issued and Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02,Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11,Leases (Topic 842): Targeted ~~Improvements~~.Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which allowed us to not recognize leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are immaterial relative to our total assets and liabilities as of June 30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 34 and Note 1011 for balances of finance lease ROU assets and liabilities, respectively.

~~On June 16, 2016,~~In August 2018, the FASB issued ~~ASU 2016-13, “~~Accounting Standard Update No. 2018-13, ~~Financial Instruments - Credit Losses~~Changes to Disclosure Requirements for Fair Value Measurements (Topic ~~326): Measurement~~820) (ASU 2018-13), which improved the effectiveness of ~~Credit Losses~~disclosure requirements for recurring and nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on ~~Financial Instruments.” This ASU modifies~~changes in unrealized gains and losses, the ~~impairment model~~range and weighted average of significant unobservable inputs used to ~~utilize an expected loss methodology~~develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in ~~place~~the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the ~~currently used incurred loss methodology, which will result in the timelier recognition of losses. ASU No. 2016-13 will be~~additional disclosures until their effective ~~for us as of January 1, 2023.~~date. The Company ~~is currently reviewing~~has adopted the ~~effect~~new standard effective July 1, 2020 and the adoption of ~~ASU No. 2016-13.~~this guidance does not have a material impact on its condensed consolidated financial statements.

~~-10-~~

- 9 -

NOTE 2 - LIQUIDITY

Historically, our cash flows have been primarily generated from our Hotel operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the nine months ended March 31, 2021, our net cash flow used in operations was $11,008,000. For the nine months ended March 31, 2020, our net cash flow used in operations was $220,000. 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, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

The Company had cash and cash equivalents of $3,298,000 and $4,710,000 as of March 31, 2021 and June 30, 2020, respectively. In addition, the Hotel had $5,785,000 and $10,666,000 of restricted cash held by its senior lender Wells Fargo Bank, N.A. (“Lender”) as of March 31, 2021 and June 30, 2020, respectively. Of the $10,666,000 restricted cash held as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) requested by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. On August 19, 2020, Lender released PIP deposits in the amount of $2,379,000 to the Hotel. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice has used the proceeds from the SBA Loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan in qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. Repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. On December 29, 2020, Justice submitted its application for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan.

On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.

In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. During the nine months ended March 31, 2021, InterGroup completed refinancing on three of its California properties and generated net proceeds of $5,384,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of March 31, 2021 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.

- 10 -

As the sole general partner of Justice that controls approximately 97.5% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup to meet any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup passed resolution to provide funding to Portsmouth if necessary. 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. Since December 2020, InterGroup has advanced $2,950,000 to Justice per the aforementioned loan modification agreement. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

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 position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low RevPAR 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. We believe that our cash on hand, along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.

The following table provides a summary as of March 31, 2021, the Company’s material financial obligations which also including interest payments:

			3 Months		Year		Year		Year		Year
	Total		2021		2022		2023		2024		2025		Thereafter
Mortgage notes payable	$	111,130,000	$	385,000	$	1,632,000	$	1,721,000	$	107,392,000	$	-	$	-
SBA loans and other notes payable		7,502,000		119,000		5,200,000		183,000		-		-		2,000,000
Related party notes payable		10,178,000		379,000		6,517,000		567,000		567,000		567,000		1,581,000
Interest		17,290,000		1,365,000		6,291,000		6,180,000		3,454,000		-		-
Total	$	146,100,000	$	2,248,000	$	19,640,000	$	8,651,000	$	111,413,000	$	567,000	$	3,581,000

- 11 -

NOTE 3 – REVENUE

The following table present our revenues disaggregated by revenue streams.

For the three months ended March 31,	2020		2019		2021		2020
Hotel revenues:
Hotel rooms	$	9,642,000	$	13,521,000	$	2,368,000	$	9,642,000
Food and beverage		874,000		1,218,000		17,000		874,000
Garage		650,000		652,000		479,000		650,000
Other operating departments		93,000		78,000		38,000		93,000
Total hotel revenue	$	11,259,000	$	15,469,000	$	2,902,000	$	11,259,000

For the nine months ended March 31,	2020		2019		2021		2020
Hotel revenues:
Hotel rooms	$	35,453,000	$	38,608,000	$	7,842,000	$	35,453,000
Food and beverage		3,521,000		4,232,000		130,000		3,521,000
Garage		2,162,000		2,160,000		1,373,000		2,162,000
Other operating departments		453,000		276,000		91,000		453,000
Total hotel revenue	$	41,589,000	$	45,276,000	$	9,436,000	$	41,589,000

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.

	●	Noncancelable 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.

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.

~~-11-~~

Contract assets and liabilities

We do not have any material contract assets as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, other than trade and other receivables, net on our condensed 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.

- 12 -

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 condensed consolidated balance sheets. Contract liabilities decreased to ~~$404,000~~$173,000 as of March 31, ~~2020,~~2021, from ~~$1,215,000~~$375,000 as of June 30, ~~2019.~~2020. The decrease for the nine months ended March 31, ~~2020~~2021 was primarily driven by ~~$811,000~~$202,000 of revenue recognized ~~that was included in~~and refunds issued to guests as a result of the ~~advanced deposits balance as of June 30, 2019.~~COVID-19 outbreak.

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.

NOTE 34 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated			Net Book				Accumulated			Net Book
March 31, 2020	Cost		Depreciation			Value
March 31, 2021								Cost		Depreciation			Value

Land	$	1,124,000	$	-		$	1,124,000	$	1,124,000	$	-		$	1,124,000
Finance lease ROU assets		1,746,000		(213,000	)		1,533,000		1,805,000		(527,000	)		1,278,000
Furniture and equipment		30,472,000		(27,358,000	)		3,114,000		30,438,000		(27,857,000	)		2,581,000
Building and improvements		55,614,000		(28,450,000	)		27,164,000		56,194,000		(29,742,000	)		26,452,000
Investment in Hotel, net	$	88,956,000	$	(56,021,000	)	$	32,935,000	$	89,561,000	$	(58,126,000	)	$	31,435,000

			Accumulated			Net Book				Accumulated			Net Book
June 30, 2019	Cost		Depreciation			Value
June 30, 2020								Cost		Depreciation			Value

Land	$	1,124,000	$	-		$	1,124,000	$	1,124,000	$	-		$	1,124,000
Finance lease ROU assets		521,000		(35,000	)		486,000		1,775,000		(291,000	)		1,484,000
Furniture and equipment		30,585,000		(26,840,000	)		3,745,000		30,528,000		(27,498,000	)		3,030,000
Building and improvements		55,488,000		(27,491,000	)		27,997,000		55,614,000		(28,771,000	)		26,843,000
Investment in Hotel, net	$	87,718,000	$	(54,366,000	)	$	33,352,000	$	89,041,000	$	(56,560,000	)	$	32,481,000

NOTE 45 – INVESTMENT IN REAL ESTATE

In August 2007, the Company agreed to acquire 50% interest in InterGroup Uluniu, Inc. (“Uluniu”), a Hawaiian corporation and a 100% owned subsidiary of InterGroup, for $973,000, which represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of approximately two acres of unimproved land held for development located in Maui, Hawaii. In March 2021, in an effort to make both companies more efficient, InterGroup purchased back the 50% interest of Uluniu from Portsmouth for $980,000, which represents Portsmouth’s carrying cost of the investment. No gains or losses were realized as a result of the transaction since it was a related-party transaction. As a related-party transaction, the fairness of the financial terms of the ~~transaction~~transactions were reviewed and approved by the independent director of the Company.

~~-12-~~

NOTE 56 - INVESTMENT IN MARKETABLE SECURITIES, NET

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 transfer to its shareholders through income and/or capital gain.

- 13 -

On March 31, ~~2020,~~2021, and June 30, ~~2019,~~2020, 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			Fair					Gross		Gross			Net
Investment	Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Value			Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Fair Value

As of March 31, 2020
As of March 31, 2021													As of March 31, 2021
Corporate
Equities	$	3,921,000	$	50,000	$	(3,640,000	)	$	(3,590,000	)	$	331,000		$	3,348,000	$	206,000	$	(1,951,000	)	$	(1,745,000	)	$	1,603,000

As of June 30, 2019
As of June 30, 2020													As of June 30, 2020
Corporate
Equities	$	6,923,000	$	240,000	$	(5,738,000	)	$	(5,498,000	)	$	1,425,000		$	3,955,000	$	66,000	$	(3,456,000	)	$	(3,390,000	)	$	565,000

As ofMarch 31, ~~2020,~~2021, and June 30, ~~2019,~~2020, approximately ~~43%~~77% and ~~24%, respectively,~~60% of the investment marketable securities balance above is comprised of the common stock of Comstock Mining, Inc. (“Comstock” - NYSE AMERICAN: LODE)., respectively.

As ofMarch 31, ~~2020,~~2021, and June 30, ~~2019,~~2020, the Company had ~~$3,631,000~~$1,946,000 and ~~$5,697,000,~~$3,448,000, respectively, of unrealized losses related to securities held for over one ~~year. As~~year; of ~~March 31, 2020,~~which $1,845,000 and ~~June 30, 2019, unrealized losses~~$3,400,000 are related to ~~the Company’s~~its investment in Comstock, ~~were $3,594,000 and $5,666,000,~~ respectively. For the nine months ended March 31, 2020, the decrease in unrealized losses is a result of reclassing $2,266,000 net unrealized gain related to Comstock that was included in the cost basis as of June 30, 2019.

Net gains (losses) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of net gain (loss) on marketable securities for the three and nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

For the three months ended March 31, 2020 2019
Realized loss on marketable securities, net $ (192,000 ) $ (80,000 )
Unrealized (loss) gain on marketable securities, net (102,000 ) 87,000
Unrealized (loss) gain on marketable securities related to LODE (13,000 ) 137,000
Net (loss) gain on marketable securities $ (307,000 ) $ 144,000

For the three months ended March 31,	2021			2020
Realized loss on marketable securities, net	$	(11,000	)	$	(192,000	)
Realized loss on marketable securities related to LODE		(250,000	)		-
Unrealized gain (loss) on marketable securities, net		80,000			(102,000	)
Unrealized gain (loss) on marketable securities related to LODE		1,565,000			(13,000	)
Net gain (loss) on marketable securities	$	1,384,000		$	(307,000	)

For the nine months ended March 31, 2020 2019
Realized (loss) gain on marketable securities, net $ (175,000 ) $ 68,000
Unrealized loss on marketable securities, net (152,000 ) (288,000 )
Unrealized loss on marketable securities related to LODE (194,000 ) (89,000 )
Net loss on marketable securities $ (521,000 ) $ (309,000 )

~~-13-~~

For the nine months ended March 31,	2021			2020
Realized loss on marketable securities, net	$	-		$	(175,000	)
Realized loss on marketable securities related to LODE		(250,000	)		-
Unrealized loss on marketable securities, net		(15,000	)		(152,000	)
Unrealized gain (loss) on marketable securities related to LODE		1,533,000			(194,000	)
Net gain (loss) on marketable securities	$	1,268,000		$	(346,000	)

NOTE 67 – OTHER INVESTMENTS, NET

The Company may also invest, with the approval of the ~~securities investment committee~~Executive Strategic Real Estate and Securities Investment Committee and other Company guidelines, in private investment equity funds and other unlisted securities, such as convertible notes through private placements. Those investments in non-marketable securities are carried at cost on the Company’s consolidated balance sheet as part of other investments, net of other than temporary impairment losses.

- 14 -

Other investments, net consist of the following:

Type	March 31, 2020		June 30, 2019		March 31, 2021		June 30, 2020

Private equity hedge fund, at cost	$	99,000	$	137,000	$	20,000	$	57,000
Other preferred stock		30,000		59,000		-		30,000
	$	129,000	$	196,000	$	20,000	$	87,000

NOTE 78 - 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) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

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

As of					March 31, 2021		June 30, 2020
	3/31/2020		6/30/2019		Total - Level 1		Total - Level 1
As of	Total - Level 1		Total - Level 1
Assets:
Investment in marketable securities:
Basic materials	$	170,000	$	351,000	$	1,265,000	$	377,000
REITs and real estate companies		158,000		451,000		276,000		162,000
Industrials						62,000		-
Energy		-		98,000		-		26,000
Financial Services		-		165,000
Consumer cyclical		3,000		318,000
Other		-		42,000
	$	331,000	$	1,425,000	$	1,603,000	$	565,000

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

~~-14-~~

Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above include “Other investments, net (non-marketable securities),” that were initially measured at cost and have been written down to fair value as a result of impairment. 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 nine months
Assets	Level 3		March 31, 2020		Net loss for the nine months ended March 31, 2020			Level 3		March 31, 2021		ended March 31, 2021

Other non-marketable investments	$	129,000	$	129,000	$	(38,000	)	$	20,000	$	20,000	$	(38,000	)

												Net loss for the nine months
Assets	Level 3		June 30, 2019		Net loss for the nine months ended March 31, 2019			Level 3		June 30, 2020		ended March 31, 2020

Other non-marketable investments	$	196,000	$	196,000	$	(36,000	)	$	87,000	$	87,000	$	(38,000	)

For the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, we received distribution from other non-marketable investments of $29,000 and ~~$35,000,~~$29,000, 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 and holds less than 20% ownership in each of the 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~~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.

- 15 -

NOTE 89 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows:

As of	3/31/2020		6/30/2019		March 31, 2021		June 30, 2020

Cash and cash equivalents	$	5,907,000	$	9,789,000	$	3,298,000	$	4,710,000
Restricted cash		11,550,000		11,027,000		5,785,000		11,675,000
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$	17,457,000	$	20,816,000	$	9,083,000	$	16,385,000

Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel. ItAs of June 30, 2020, restricted cash also includes key money received from Interstate that is restricted for capital improvements for the Hotel. As of March 31, 2021, the key money balance was zero as Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021.

NOTE 910 - SEGMENT INFORMATION

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

Information below represents reporting segments for the three and nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Operating (loss) income from Hotel operations consists of the operation of the hotel and operation of the garage. Income (loss) from investment transactions consist of net investment gain (loss), impairment loss on other investments, net unrealized gain (loss) on other investments, dividend and interest income and trading and margin interest expense. The other segment consists of corporate general and administrative expenses and the income tax (expense) benefit for the entire Company.

~~-15-~~

- 16 -

As of and for the three months Hotel Investment
ended March 31, 2020 Operations Transactions Corporate Total
Revenues $ 11,259,000 $ - $ - $ 11,259,000
Segment operating expenses (10,060,000 ) - (167,000 ) (10,227,000 )
Segment income (loss) 1,199,000 - (167,000 ) 1,032,000
Interest expense - mortgage and related party (1,793,000 ) - - (1,793,000 )
Depreciation and amortization expense (547,000 ) - - (547,000 )
Loss from investments - (337,000 ) - (337,000 )
Income tax benefit - - 440,000 440,000
Net income (loss) $ (1,141,000 ) $ (337,000 ) $ 273,000 $ (1,205,000 )
Total assets $ 51,372,000 $ 460,000 $ 5,319,000 $ 57,151,000

For the three months	Hotel			Investment
ended March 31, 2019	Operations			Transactions		Corporate			Total
As of and for the three months												Hotel			Investment
ended March 31, 2021												Operations			Transactions		Corporate			Total
Revenues	$	15,469,000		$	-	$	-		$	15,469,000		$	2,902,000		$	-	$	-		$	2,902,000
Segment operating expenses		(11,378,000	)		-		(274,000	)		(11,652,000	)		(3,990,000	)		-		(201,000	)		(4,191,000	)
Segment income (loss)		4,091,000			-		(274,000	)		3,817,000
Segment loss													(1,088,000	)		-		(201,000	)		(1,289,000	)
Interest expense - mortgage and related party		(1,941,000	)		-		-			(1,941,000	)		(1,833,000	)		-		-			(1,833,000	)
Loss on disposal of assets		(398,000	)							(398,000	)
Depreciation and amortization expense		(561,000	)		-		-			(561,000	)		(503,000	)		-		-			(503,000	)
Gain from investments		-			172,000		-			172,000			-			1,219,000		-			1,219,000
Income tax expense		-			-		(280,000	)		(280,000	)
Income tax benefit													-			-		669,000			669,000
Net income (loss)	$	1,191,000		$	172,000	$	(554,000	)	$	809,000		$	(3,424,000	)	$	1,219,000	$	468,000		$	(1,737,000	)
Total assets												$	40,152,000		$	1,623,000	$	10,330,000		$	52,105,000

As of and for the nine months	Hotel			Investment
For the three months													Hotel			Investment
ended March 31, 2020	Operations			Transactions			Corporate			Total			Operations			Transactions			Corporate			Total
Revenues	$	41,589,000		$	-		$	-		$	41,589,000		$	11,259,000		$	-		$	-		$	11,259,000
Segment operating expenses		(33,138,000	)		-			(553,000	)		(33,691,000	)		(10,060,000	)		-			(167,000	)		(10,227,000	)
Segment income (loss)		8,451,000			-			(553,000	)		7,898,000			1,199,000			-			(167,000	)		1,032,000
Interest expense - mortgage and related party		(5,541,000	)		-			-			(5,541,000	)		(1,793,000	)		-			-			(1,793,000	)
Depreciation and amortization expense		(1,653,000	)		-			-			(1,653,000	)		(547,000	)		-			-			(547,000	)
Loss from investments		-			(533,000	)		-			(533,000	)		-			(337,000	)		-			(337,000	)
Income tax expense		-			-			(25,000	)		(25,000	)
Income tax benefit														-			-			440,000			440,000
Net income (loss)	$	1,257,000		$	(533,000	)	$	(578,000	)	$	146,000		$	(1,141,000	)	$	(337,000	)	$	273,000		$	(1,205,000	)
Total assets	$	51,372,000		$	460,000		$	5,319,000		$	57,151,000

For the nine months Hotel Investment
ended March 31, 2019 Operations Transactions Corporate Total
Revenues $ 45,276,000 $ - $ - $ 45,276,000
Segment operating expenses (33,424,000 ) - (596,000 ) (34,020,000 )
Segment income (loss) 11,852,000 - (596,000 ) 11,256,000
Interest expense - mortgage and related party (5,733,000 ) - - (5,733,000 )
Loss on disposal of assets (398,000 ) - - (398,000 )
Depreciation and amortization expense (1,748,000 ) - - (1,748,000 )
Loss from investments - (356,000 ) - (356,000 )
Income tax expense - - (769,000 ) (769,000 )
Net income (loss) $ 3,973,000 $ (356,000 ) $ (1,365,000 ) $ 2,252,000

As of and for the nine months	Hotel			Investment
ended March 31, 2021	Operations			Transactions		Corporate			Total
Revenues	$	9,436,000		$	-	$	-		$	9,436,000
Segment operating expenses		(14,156,000	)		-		(561,000	)		(14,717,000	)
Segment loss		(4,720,000	)		-		(561,000	)		(5,281,000	)
Interest expense - mortgage and related party		(5,415,000	)		-		-			(5,415,000	)
Depreciation and amortization expense		(1,566,000	)		-		-			(1,566,000	)
Gain from investments		-			1,271,000		-			1,271,000
Income tax benefit		-			-		2,995,000			2,995,000
Net income (loss)	$	(11,701,000	)	$	1,271,000	$	2,434,000		$	(7,996,000	)
Total assets	$	40,152,000		$	1,623,000	$	10,330,000		$	52,105,000

For the nine months	Hotel			Investment
ended March 31, 2020	Operations			Transactions			Corporate			Total
Revenues	$	41,589,000		$	-		$	-		$	41,589,000
Segment operating expenses		(33,138,000	)		-			(553,000	)		(33,691,000	)
Segment income (loss)		8,451,000			-			(553,000	)		7,898,000
Interest expense - mortgage and related party		(5,541,000	)		-			-			(5,541,000	)
Depreciation and amortization expense		(1,653,000	)		-			-			(1,653,000	)
Loss from investments		-			(533,000	)		-			(533,000	)
Income tax expense		-			-			(25,000	)		(25,000	)
Net income (loss)	$	1,257,000		$	(533,000	)	$	(578,000	)	$	146,000

~~-16-~~

- 17 -

NOTE 1011 - RELATED PARTY AND OTHER FINANCING TRANSACTIONS

The following summarizes the balances of related party and other notes payable as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

As of	3/31/2020		6/30/2019		March 31, 2021		June 30, 2020

Note payable - InterGroup	$	3,000,000	$	3,000,000	$	5,950,000	$	3,000,000
Note payable - Hilton		3,088,000		3,325,000		2,771,000		3,008,000
Note payable - Interstate		1,708,000		1,896,000		1,458,000		1,646,000
SBA Loans - Justice						6,719,000		4,719,000
Total related party and other notes payable	$	7,796,000	$	8,221,000	$	16,898,000	$	12,373,000

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 1, 2021. 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. Since December 2020, InterGroup has advanced $2,950,000 to Justice per the aforementioned agreement. As of March 31, 2021, the Partnership has a loan due to InterGroup in the principal amount of $5,950,000.

Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.

On February 1, 2017, Justice entered into an HMA with Interstate 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 Interstate 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 (2^nd) anniversary of the takeover date. As of March 31, ~~2020, and~~2021, the key money balance was zero as Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021. As of June 30, ~~2019,~~2020, balance of the key money plus accrued interest is ~~$1,008,000 and $2,049,000, respectively,~~$1,009,000 and is included in restricted cash in the condensed consolidated balance ~~sheets.~~sheet. Unamortized portion of the key money is included in the related party notes payable in the condensed consolidated balance sheets.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, the Company used proceeds from the SBA Loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan in qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. Repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. On December 29, 2020, Justice submitted its application for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan.

- 18 -

As of March 31, ~~2020,~~2021, the Company had finance lease obligations outstanding of ~~$1,206,000.~~$783,000. These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum. Minimum future lease payments for assets under finance leases as of March 31, ~~2020~~2021 are as follows:

For the year ending June 30,
2020	$	126,000
2021		503,000		$	130,000
2022		492,000			508,000
2023		188,000			188,000
Total minimum lease payments		1,309,000			826,000
Less interest on finance lease		(103,000	)		(43,000	)
Present value of future minimum lease payments	$	1,206,000		$	783,000

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

For the year ending June 30,
2020 $ 250,000
2021 1,016,000
2022 4,033,000
2023 750,000
2024 567,000
Thereafter 2,386,000
$ 9,002,000

~~-17-~~

For the year ending June 30,
2021	$	498,000
2022		11,717,000
2023		750,000
2024		567,000
2025		567,000
Thereafter		3,581,000
	$	17,680,000

As of March 31, ~~2020,~~2021, and June 30, ~~2019,~~2020, the Company had accounts payable to related party of ~~$2,243,000~~$2,991,000 and ~~$2,122,000,~~$2,385,000, respectively. These are amounts due to InterGroup and represent certain shared costs and expenses, primarily general and administrative expenses, rent, insurance and other ~~expenses that are allocated among the Company, Santa Fe and InterGroup.~~expenses.

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 ~~$92,656,000~~$91,130,000 and ~~$93,746,000~~$92,292,000 as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, 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. ~~As a result of the refinance, Justice has generated $500,000 in annual interest expense savings.~~

- 19 -

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 March 31, ~~2020,~~2021, InterGroup is in compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the Hotel’s cash flow, Justice Operating Company, LLC may not meet certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lock-box 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. ~~Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations even during these uncertain times for at least the next twelve months and beyond.~~

The Company’s Board of Directors is currently comprised of directors John V. Winfield, William J. Nance, John C. Love, Jerold R. Babin, and Steve Grunwald. All of the Company’s directors also serve as directors of InterGroup except for Mr. Grunwald. ~~Messrs. Winfield and Nance also serve on the Board of Santa Fe.~~

John V. Winfield serves as Chief Executive Officer and Chairman of the Company ~~Santa Fe,~~ and InterGroup. Effective June 2016, Mr. Winfield became the Managing Director of Justice. Depending on certain market conditions and various risk factors, the Chief Executive Officer ~~Santa Fe~~ and InterGroup may, at times, invest in the same companies in which the Company invests. The Company encourages such investments because it places personal resources of the Chief Executive Officer and the resources of ~~Santa Fe and~~ InterGroup, at risk in connection with investment decisions made on behalf of the Company.

NOTE 1112 – ACCOUNTS PAYABLE AND OTHER LIABILITIES - JUSTICE

The following summarizes the balances of accounts payable and other liabilities -Justice as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

As of	3/31/2020		6/30/2019		March 31, 2021		June 30, 2020

Trade payable	$	3,041,000	$	1,792,000	$	2,085,000	$	3,032,000
Advance deposits		404,000		1,215,000		173,000		375,000
Property tax payable		31,000		1,046,000		14,000		523,000
Payroll and related accruals		1,768,000		2,584,000		2,484,000		1,969,000
Interest payable		421,000		412,000
Mortgage interest payable						414,000		527,000
Withholding and other taxes payable		1,144,000		1,831,000		581,000		370,000
Security deposit		52,000		52,000		52,000		52,000
Other payables		1,255,000		2,366,000		942,000		740,000
Total accounts payable and other liabilities - Justice	$	8,116,000	$	11,298,000	$	6,745,000	$	7,588,000

NOTE 1213 – SUBSEQUENT EVENTS

None.

~~-18-~~

- 20 -

Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “could,” “might” and similar expressions, are intended to identify forward-looking statements.

Such statements are subject to certain risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: national and worldwide economic conditions, including the impact of recessionary conditions on tourism, travel and the lodging industry; the impact of terrorism and war on the national and international economies, including tourism, securities markets, energy and fuel costs; natural disasters; general economic conditions and competition in the hotel industry in the San Francisco area; seasonality, labor relations and labor disruptions; actual and threatened pandemics such as swine flu or the outbreak of COVID-19 or similar outbreaks; partnership distributions; the ability to obtain financing at favorable interest rates and terms; securities markets, regulatory factors, litigation and other factors discussed below in this Report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020. These risks and uncertainties could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

On March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 194, the Securities and Exchange Commission issued Order Release No. 34-88465 (the “Order”) granting exemptions to registrants subject to the reporting requirements of the Exchange Act Section 13(a) or 15(d) due to circumstances related to the coronavirus disease 2019 (“COVID-19”). Due to the circumstances related to COVID-19, the Company has relied on the Order with respect to this Quarterly Report on Form 10-Q (“Form 10-Q”) for the period ended March 31, 2020. Absent the Order, the Form 10-Q was due on May 15, 2020. The Company was unable to file the Form 10-Q on a timely basis due to delays in the preparation and final review of the Form 10-Q by the relevant parties within the Company, due in part by the attention and resources the Company has focused on addressing the severe impacts of the COVID-19 pandemic on our business and operations.

~~Negative Effects of COVID-19 on our Business~~NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS

On February 25, 2020, the City of San Francisco issued the proclamation by the Mayor declaring the existence of a local emergency. The negative effects of the civil authority actions related to the novel strain of coronavirus (“COVID-19”) on our business have been significant. In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies and financial markets globally. It has also disrupted the normal operations of many businesses, including ours. To mitigate the harm from the pandemic, on March 16, 2020, the City and County of San Francisco, along with a group of five other Bay Area counties and the City of Berkeley, issued parallel health officer orders imposing shelter in place limitations across the Bay Area, requiring everyone to stay safe at home except for certain essential needs. Since February 2020, several unfavorable events and civil authority actions have unfolded causing demand for our hotel rooms to suffer including cancellations of all citywide conventions, reduction of flights in and out of the Bay Area and decline in both leisure and business travel.

In December 2020, due to the surge in COVID-19 cases and hospitalizations, the Health Officer of the City and County of San Francisco has suspended or restricted certain activities. Health Order C19-07q (the “Order”) incorporates suspensions, reductions in capacity limits, and other restrictions contained in the Regional Stay At Home Order issued by the California Department of Public Health on December 3, 2020. Effective December 17, 2020, the Bay Area Region, including San Francisco, is required to comply with the State’s December 3, 2020 Regional Stay-at-Home Order. The Order strongly discourages anyone in the County from travelling for leisure, recreation, business or other purposes that can be postponed until after the current surge. With limited exceptions, this Order imposed a mandatory quarantine on anyone traveling, moving, or returning to the County from anywhere outside the Bay Area. Effective January 20, 2021, Health Order C19-07r revised and replaced the previous Order; it continues to temporarily prohibit certain businesses and activities from resuming but allows certain other businesses, activities, travel and governmental functions to occur subject to specified health and safety restrictions, limitations, and conditions to limit the transmission of COVID-19. Quarantine and isolation requirements and recommendations upon moving to, traveling to, or returning to the County have not changed from the previous Order.

On March 24, 2021, the City and County of San Francisco announced it moved into the orange tier which removed the suggested Shelter in Place for guests travelling to San Francisco. This was a very positive step for the hotel community. This tier opens up activities in the city including expanded restaurant capacities, museums and attractions. For the hotel it allows for guests to gather in public spaces and for outlets and amenities to open up at limited capacities including fitness centers. It does not change the very stringent cleaning and sanitation requirements set forth by the Health Officer of the City and County of San Francisco which proves to be a costly measure to maintain. Effective May 6, 2021, the City and County of San Francisco moved into the yellow tier guidelines.

In response to the decrease in demand, we have since furloughed all managers at the Hotel except for members of the executive team and continue to limit hourly staff to a minimum. AsBy the end of ~~the date of this Quarterly Report,~~March 2020, we ~~have~~had temporarily closed all of our food and beverage ~~outlets.~~outlets, valet parking, concierge and bell services, fitness center, as well as the executive lounge facility. We continue to implement social distancing standards and cleaning processes designed by Interstate and Hilton to keep employees and guests safe. The full impact and duration of the COVID-19 outbreak continues to evolve as of the date of this ~~Quarterly Report.~~report. The pandemic effectively eliminated our ability to generate any profits, due to the drastic decline in both leisure and business travel. As a result, management believes the ongoing length and severity of the economic downturn caused by the pandemic will have a material adverse impact on our future business, financial condition, liquidity and financial ~~results for the fiscal year ending June 30, 2020.~~results. We are also assessing the potential impact on the impairment analysis of our long-lived assets and the realization of our deferred tax assets. As of the date of this report, the effects of the pandemic continue to affect our economy, business and leisure travel, and our needs to continue to curtail certain revenue generating activities at the Hotel. We expect that the effects will have a material adverse effect on our business until the pandemic ends.

- 21 -

As a result of the ~~Coronavirus Aid, Relief, and Economic Security~~CARES 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. ~~We are currently evaluating the impact of the provisions of the CARES Act.~~ 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. ~~As described in Note 12 – Subsequent Events, on~~On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the CARES Act. ~~The Company~~Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, ~~the Company will use~~Justice has used proceeds from the SBA Loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan in qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. Repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. On December 29, 2020, Justice submitted its application for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan.

On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. Justice will use proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA Loan is scheduled to mature on February 3, 2026 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until either: (a) if the SBA approves the forgiveness amount, the date the forgiveness amount is remitted by the SBA to CIBC; or (b) if Justice does not apply for forgiveness within 10 months after the last day of the covered period specified in the loan agreement or if the forgiveness amount is not approved, the date that is 10 months after the last day of the covered period. The loan may be forgiven if the funds are used for payroll and other qualified expenses. ~~New guidance on~~All unforgiven portion of the ~~criteria for forgiveness continues to~~principal and accrued interest will be ~~released.~~ due at maturity. As of March 31, 2021, unused portion of the Second SBA Loan was $350,000.

~~-19-~~

RESULTS OF OPERATIONS

The Company’s principal source of revenue continues to be derived from its general and limited partnership interest in the Justice Investors Limited Partnership (“Justice” or the “Partnership”) inclusive of hotel room revenue, food and beverage revenue, garage revenue, and revenue from other operating departments. Justice owns the Hotel and related facilities, including a five-level underground parking garage. The financial statements of Justice have been consolidated with those of the Company.

The Hotel is operated by the Partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement (the “License Agreement”) with Hilton. The Partnership entered into the License Agreement on December 10, 2004. The term of the License Agreement was for an initial period of 15 years commencing on the opening date, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, the Partnership and Hilton entered into an amended franchise agreement which extended the License Agreement through 2030, modified the monthly royalty rate, extended geographic protection to the Partnership and also provided the Partnership certain key money cash incentives to be earned through 2030. The key money cash incentives were received on July 1, 2015.

On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel and related facilities with an effective takeover date of February 3, 2017. The term of HMA is for an initial period of ten 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 Interstate 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.

- 22 -

Three Months Ended March 31, ~~2020~~2021 Compared to Three Months Ended March 31, ~~2019~~2020

The Company had net loss of $1,737,000 for the three months ended March 31, 2021 compared to net loss of $1,205,000 for the three months ended March 31, ~~2020 compared~~2020. The change is primarily attributable to the decrease in Hotel revenue.

Hotel Operations

The Company had net ~~income~~loss from Hotel operations of ~~$809,000~~$3,424,000 for the three months ended March 31, ~~2019.~~2021 compared to net loss of $1,141,000 for the three months ended March 31, 2020. The change is primarily attributable to the decrease in Hotel revenue.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

For the three months ended March 31,	2020			2019			2021			2020
Hotel revenues:
Hotel rooms	$	9,642,000		$	13,521,000		$	2,368,000		$	9,642,000
Food and beverage		874,000			1,218,000			17,000			874,000
Garage		650,000			652,000			479,000			650,000
Other operating departments		93,000			78,000			38,000			93,000
Total hotel revenues		11,259,000			15,469,000			2,902,000			11,259,000
Operating expenses excluding depreciation and amortization		(10,060,000	)		(11,378,000	)		(3,990,000	)		(10,060,000	)
Operating income before interest, depreciation and amortization		1,199,000			4,091,000
Loss on disposal of assets		-			(398,000	)
Operating (loss) income before interest, depreciation and amortization								(1,088,000	)		1,199,000
Interest expense - mortgage		(1,793,000	)		(1,941,000	)		(1,833,000	)		(1,793,000	)
Depreciation and amortization expense		(547,000	)		(561,000	)		(503,000	)		(547,000	)
Net (loss) income from Hotel operations	$	(1,141,000	)	$	1,191,000
Net loss from Hotel operations							$	(3,424,000	)	$	(1,141,000	)

For the three months ended March 31, ~~2020,~~2021, the Hotel had operating loss of $1,088,000 before interest expense, depreciation and amortization on total operating revenues of $2,902,000 compared to operating income of $1,199,000 before interest expense, depreciation and amortization on total operating revenues of $11,259,000 ~~compared to operating income of $4,091,000 before interest expense, depreciation and amortization on total operating revenues of $15,469,000~~ for the three months ended March 31, ~~2019.~~2020. For the three months ended March 31, ~~2020,~~2021, room revenues decreased by ~~$3,879,000, and~~$7,274,000, food and beverage revenue decreased by ~~$344,000,~~$857,000, and garage revenue decreased by $171,000, compared to the three months ended March 31, ~~2019.~~2020. The year over year decline in ~~both~~all areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak insince March 2020. ~~Revenue from garage and other operating departments increased mainly due to increase in cancellation revenue.~~

~~-20-~~

Total operating expenses decreased by ~~$1,318,000~~$6,070,000 due to decrease in salaries and wages, rooms commission, credit card fees, management fees, ~~franchise fees,~~ and ~~legal~~franchise fees.

The following table sets forth the average daily room rate, average occupancy percentage and RevPAR of the Hotel for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

Three Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPAR		Average Daily Rate		Average Occupancy %				RevPAR

2021								$	103		47	%		$	48
2020	$	242		76%	$	184	$	242		76	%		$	184
2019	$	290		95%	$	276

The Hotel’s revenues decreased by ~~27%~~74% this quarter as compared to the previous comparable quarter. Average daily rate decreased by ~~$48,~~$139, average occupancy dropped ~~19%~~29%, and RevPAR decreased by ~~$92~~$136 for the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019.~~2020.

- 23 -

Investment Transactions

The Company had a net gain on marketable securities of $1,268,000 for the three months ended March 31, 2021 compared to a net loss on marketable securities of $307,000 for the three months ended March 31, ~~2020 compared to a net gain on marketable securities of $144,000 for~~2020. For the three months ended March 31, ~~2019.~~2021, the Company had a net realized loss of $250,000 and a net unrealized gain of $1,518,000. For the three months ended March 31, 2020, the Company had a net realized loss of $192,000 and a net unrealized loss of $115,000. ~~For the three months ended March 31, 2019, the Company had a net realized loss of $80,000 and a net unrealized gain of $224,000.~~ 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.

The Company consolidates Justice (Hotel) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax ~~(expense)~~ benefit during the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 represents the income tax effect on the Company’s pretax income (loss) which includes its share in the net ~~income (loss)~~loss of the Hotel.

Nine Months Ended March 31, ~~2020~~2021 Compared to Nine Months Ended March 31, ~~2019~~2020

The Company had net loss of $7,996,000 for the nine months ended March 31, 2021 compared to net income of $146,000 for the nine months ended March 31, ~~2020 compared to net income of $2,252,000 for the nine months ended March 31, 2019.~~2020. The change is primarily attributable to the decrease in Hotel revenue.

Hotel Operations

~~Net income~~The Company had net loss from Hotel operations ~~was~~of $11,701,000 for the nine months ended March 31, 2021 compared to net income of $1,257,000 for the nine months ended March 31, ~~2020 compared~~2020. The change is primarily attributable to ~~net income of $3,973,000 for~~ the ~~nine months ended March 31, 2019. The~~ decrease in ~~net income is primarily due to decrease in~~Hotel revenue.

~~-21-~~

The following table sets forth a more detailed presentation of Hotel operations for the nine months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

For the nine months ended March 31,	2020			2019			2021			2020
Hotel revenues:
Hotel rooms	$	35,453,000		$	38,608,000		$	7,842,000		$	35,453,000
Food and beverage		3,521,000			4,232,000			130,000			3,521,000
Garage		2,162,000			2,160,000			1,373,000			2,162,000
Other operating departments		453,000			276,000			91,000			453,000
Total hotel revenues		41,589,000			45,276,000			9,436,000			41,589,000
Operating expenses excluding depreciation and amortization		(33,138,000	)		(33,424,000	)		(14,156,000	)		(33,138,000	)
Operating income before interest, depreciation and amortization		8,451,000			11,852,000
Loss on disposal of assets		-			(398,000	)
Operating (loss) income before interest, depreciation and amortization								(4,720,000	)		8,451,000
Interest expense - mortgage		(5,541,000	)		(5,733,000	)		(5,415,000	)		(5,541,000	)
Depreciation and amortization expense		(1,653,000	)		(1,748,000	)		(1,566,000	)		(1,653,000	)
Net income from Hotel operations	$	1,257,000		$	3,973,000
Net (loss) income from Hotel operations							$	(11,701,000	)	$	1,257,000

For the nine months ended March 31, ~~2020,~~2021, the Hotel had operating loss of $4,720,000 before interest expense, depreciation and amortization on total operating revenues of $9,436,000 compared to operating income of $8,451,000 before interest expense, depreciation and amortization on total operating revenues of $41,589,000 ~~compared to operating income of $11,852,000 before interest, depreciation and amortization on total operating revenues of $45,276,000~~ for the nine months ended March 31, ~~2019.~~

2020. For the nine months ended March 31, ~~2020,~~2021, room revenues decreased by ~~$3,155,000 and~~$27,611,000, food and beverage revenue decreased by ~~$711,000.~~$3,391,000, and garage revenue decreased by $789,000, compared to the nine months ended March 31, 2020. The year over year decline in ~~both~~all areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak insince March 2020. ~~Garage revenue remained consistent year over year. Revenue from other operating departments increased by $177,000 as a result of increase in cancellation revenue.~~

Total operating expenses decreased by ~~$286,000~~$18,982,000 due to decrease in salaries and wages, rooms commission, credit card fees, management fees, ~~rooms commission,~~ and franchise fees.

- 24 -

The following table sets forth the average daily room rate, average occupancy percentage and ~~room revenue per available room (“RevPAR”)~~RevPAR of the Hotel for the nine months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

Nine Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPAR		Average Daily Rate		Average Occupancy %			RevPAR

2021								$	106		49	%	$	52
2020	$	256		91	%	$	233	$	256		91	%	$	233
2019	$	269		96	%	$	259

The Hotel’s ~~total~~ revenues decreased by 8%77% for the nine months ended March 31, ~~2020~~2021, as compared to the nine months ended March 31, ~~2019.~~2020. Average daily rate decreased by ~~$13~~$150, average occupancy decreased by 42%, and RevPAR decreased by ~~$26~~$181 for the nine months ended March 31, ~~2020~~2021, compared to the nine months ended March 31, ~~2019. Average occupancy dropped by 5% during the nine months ended March 31, 2020 versus the comparable period.~~2020.

Investment Transactions

The Company had a net gain on marketable securities of $1,384,000 for the nine months ended March 31, 2021 compared to a net loss on marketable securities of $521,000 for the nine months ended March 31, ~~2020 compared to a net loss on marketable securities of $309,000 for~~2020. For the nine months ended March 31, ~~2019.~~2021, the Company had a net realized loss of $261,000 and a net unrealized gain of $1,645,000. For the nine months ended March 31, 2020, the Company had a net realized loss of $175,000 and a net unrealized loss of $346,000. ~~For the nine months ended March 31, 2019, the Company had a net realized gain of $68,000 and a net unrealized loss of $377,000.~~ 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.

~~-22-~~

The Company consolidates Justice (Hotel) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax ~~expense~~benefit (expense) during the nine months ended March 31, ~~2020~~2021 and ~~2019~~2020 represents the income tax effect on the Company’s pretax income which includes its share in the net (loss) income of the Hotel.

MARKETABLE SECURITIES

The following table shows the composition of the Company’s marketable securities portfolio as of March 31, ~~2020~~2021 and June 30, ~~2019~~2020 by selected industry groups.

			% of Total					% of Total
As of March 31, 2020			Investment
As of March 31, 2021								Investment
Industry Group	Fair Value		Securities			Fair Value		Securities

Basic materials	$	170,000		51.4	%	$	1,265,000		78.9	%
REITs and real estate companies		158,000		47.7	%		276,000		17.2	%
Consumer cyclical		3,000		0.9	%
Industrials							62,000		3.9	%
	$	331,000		100.0	%	$	1,603,000		100.0	%

			% of Total					% of Total
As of June 30, 2019			Investment
As of June 30, 2020								Investment
Industry Group	Fair Value		Securities			Fair Value		Securities

Basic materials						$	377,000		66.7	%
REITs and real estate companies	$	451,000		31.7	%		162,000		28.7	%
Basic materials		351,000		24.6	%
Consumer cyclical		318,000		22.3	%
Financial Services		165,000		11.6	%
Energy		98,000		6.9	%		26,000		4.6	%
Healthcare		42,000		2.9	%
	$	1,425,000		100.0	%	$	565,000		100.0	%

As of March 31, ~~2020,~~2021, the Company’s investment portfolio includes ~~four~~six equity positions. The Company holds ~~two~~one equity securities that are more than 10% of the equity value of the portfolio. The largest security position represents 48% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NYSE: ARL), which is included in the REITs and real estate companies’ industry group. The second largest security position represents 43% of the portfolio and consists of the common stock of Comstock, which is included in the basic materials industry group.

As of June 30, 2019, the Company’s investment portfolio includes approximately eleven equity positions. The Company holds five equity securities that comprised more than 10% of the equity value of the portfolio. The largest security position represents 24%77% of the portfolio and consists of the common stock of Comstock, which is included in the basic materials industry group.

~~-23-~~

- 25 -

As of June 30, 2020, the Company held four different equity positions in its investment portfolio. The Company held two equity securities that comprised more than 10% of the equity value of the portfolio. The largest security position represents 60% of the portfolio and consists of the common stock of Comstock which is included in the basic materials industry group.

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

For the three months ended March 31,	2020			2019			2021			2020
Net (loss) gain on marketable securities	$	(307,000	)	$	144,000
Net gain (loss) on marketable securities							$	1,268,000		$	(307,000	)
Impairment loss on other investments		(38,000	)		(36,000	)		(15,000	)		(38,000	)
Dividend and interest income		41,000			105,000			1,000			41,000
Margin interest expense		(5,000	)		(8,000	)		-			(5,000	)
Trading and management expenses		(28,000	)		(33,000	)		(35,000	)		(28,000	)
	$	(337,000	)	$	172,000		$	1,219,000		$	(337,000	)

For the nine months ended March 31,		2020			2019		2021			2020
Net loss on marketable securities	$	(521,000	)	$	(309,000	)
Net gain (loss) on marketable securities							$	1,384,000		$	(521,000	)
Impairment loss on other investments		(38,000	)		(36,000	)		(38,000	)		(38,000	)
Dividend and interest income		129,000			125,000			16,000			129,000
Margin interest expense		(19,000	)		(37,000	)		-			(19,000	)
Trading and management expenses		(84,000	)		(99,000	)		(91,000	)		(84,000	)
	$	(533,000	)	$	(356,000	)	$	1,271,000		$	(533,000	)

FINANCIAL CONDITION AND LIQUIDITY

We have taken several steps to preserve capital and increase liquidity, including the implementation of various cost saving initiatives at our Hotel. For further discussion, see “Item 2 - Negative Effects of COVID-19 on our Business” included in this Quarterly Report. We may also receive cash generated from the investment of ourThe Company had cash and ~~marketable securities, other investments,~~cash equivalents of $3,298,000 and other sources, including financing from our parent companies, Santa Fe and InterGroup. Subsequent to March 31, 2020, in order to increase its liquidity positions and take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey, generating net proceeds of approximately $6,814,000. InterGroup is also currently refinancing two of its California properties scheduled to close in June and July 2020, and it could refinance additional multifamily properties should the need arise; however, InterGroup does not deem it necessary at this time. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) of which $5,000,000 is available to be drawn down$4,710,000 as ~~of June 18, 2020, should additional liquidity be necessary.~~

As of March 31, 2021 and June 30, 2020, werespectively. In addition, the Hotel had ~~cash, cash equivalents,~~$5,785,000 and ~~restricted cash of $17,457,000 which included $11,550,000~~$10,666,000 of restricted cash held by ~~our Hotel~~its senior lender Wells Fargo Bank, N.A. (“Lender”). as of March 31, 2021 and June 30, 2020, respectively. Of the ~~total~~$10,666,000 restricted cash ~~$7,977,000 was~~ held ~~for furniture, fixtures and equipment (“FF&E”) reserves and~~as of June 30, 2020, $2,432,000 was ~~held~~ for a possible future property improvement plan (“PIP”) ~~request~~requested by our franchisor, Hilton. However, Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the earlier of (i) January 2030, which is six years after the maturity date of our current senior and mezzanine loans, or (ii) upon the sale of our Hotel. ~~Therefore, Justice is currently in discussions with the~~On August 19, 2020, Lender ~~to release the~~released PIP deposits in the amount of $2,379,000 to the ~~Hotel and to allow the Hotel to utilize some or all of its FF&E reserves~~Hotel. The funds were utilized to fund operating expenses, ~~as well as debt service. Additionally, Justice has requested to temporarily pay interest only on the senior mortgage~~including franchise and the suspension of the monthly FF&E reserve installment, for a combined monthly savings in cash flow of approximately $321,000. Justice anticipates a resolution with the Lender in regard to the aforementioned requests before June 30, 2020.management fees and other expenses.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES ~~Act~~Act”) administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice ~~will use~~has used the proceeds from the SBA Loan primarily for payroll costs. As of March 31, 2021, Justice had used all proceeds of the SBA Loan in qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days. Repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. All unforgiven portion of the principal and accrued interest will be due at maturity. On December 29, 2020, Justice submitted its application for full loan forgiveness. As of March 31, 2021, the SBA has not forgiven the SBA Loan.

- 26 -

In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New ~~guidance~~Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. During the nine months ended March 31, 2021, InterGroup completed refinancing on three of its California properties and generated net proceeds of $5,384,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of March 31, 2021 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the ~~criteria for forgiveness continues~~sale of approximately $12,043,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to ~~be released.~~ pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.

~~-24-~~

~~We may also~~As the sole general partner of Justice that controls approximately 97.5% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup to ~~meets our~~meet any capital calls and its other obligations during the next twelve months and ~~beyond, should~~beyond. On August 28, 2020, the ~~need arise.~~

~~We cannot presently estimate~~Board of InterGroup passed resolutions to provide funding to Portsmouth if necessary. 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. Since December 2020, InterGroup has advanced $2,950,000 to Justice per the ~~full financial impact~~aforementioned loan modification agreement. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the ~~unprecedented COVID-19 pandemic on our business~~general partner and a super majority in interest, the Partnership may sell additional classes or ~~predict the related federal, state and local civil authority actions, which are highly dependent on the severity and duration~~series of units of the ~~pandemic, but we expect that the COVID-19 closures and other imposed restrictions will continue~~Partnership under certain conditions in order to have a significant adverse impact on our results of operations. Due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect the hospitality industry, we have taken proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.raise additional capital.

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 position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low RevPAR 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. We believe that our cash on hand, ~~cash provided by the SBA loan,~~ along with other potential aforementioned 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. However, there can be no guarantee that management will be successful with its plan.

- 27 -

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of March 31, ~~2020,~~2021, the Company’s material financial obligations which also ~~includes~~including interest payments:

			3 Months		Year		Year		Year		Year						3 Months		Year		Year		Year		Year
	Total		2020		2021		2022		2023		2024		Thereafter		Total		2021		2022		2023		2024		2025		Thereafter
Mortgage notes payable	$	112,656,000	$	364,000	$	1,547,000	$	1,632,000	$	1,721,000	$	107,392,000	$	-	$	111,130,000	$	385,000	$	1,632,000	$	1,721,000	$	107,392,000	$	-	$	-
Related party and other notes payable		9,002,000		250,000		1,016,000		4,033,000		750,000		567,000		2,386,000
SBA loans and other notes payable																7,502,000		119,000		5,200,000		183,000		-		-		2,000,000
Related party notes payable																10,178,000		379,000		6,517,000		567,000		567,000		567,000		1,581,000
Interest		24,403,000		2,123,000		6,756,000		6,283,000		6,172,000		3,069,000		-		17,290,000		1,365,000		6,291,000		6,180,000		3,454,000		-		-
Total	$	146,061,000	$	2,737,000	$	9,319,000	$	11,948,000	$	8,643,000	$	111,028,000	$	2,386,000	$	146,100,000	$	2,248,000	$	19,640,000	$	8,651,000	$	111,413,000	$	567,000	$	3,581,000

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 ~~Interstate~~Aimbridge has the power and ability to adjust hotel room rates on an ongoing basis,there should be minimal impact on partnership revenues due to inflation. Partnership revenues are also subject to interest rate risks, which may be influenced by inflation. For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Critical accounting policies are those that are most significant to the presentation 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 condensed 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. There have been no material changes to the Company’s critical accounting policies during the nine months ended March 31, ~~2020 except for the adoption of ASU 2016-02.~~2021. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, ~~2019~~2020 for a summary of the critical accounting policies.

~~-25-~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

- 28 -

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company’s internal control over financial reporting during the last quarterly period

covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

During the period ending March 31, ~~2020,~~2021, there were no pending or threatened legal actions.

Item 1A. RISK FACTORS

~~Except as set forth below, during~~As a smaller reporting company, we are not required to provide the period ended March 31, 2020, there were no material changes to the Risk Factors disclosed in Item 1A - “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.

~~The responses~~information required by federal, state, and local civil authority to the COVID-19 pandemic has had a material detrimental impact on our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.this Item.

The global spread of the COVID-19 pandemic is complex and rapidly-evolving, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs. The shelter-in-place, physical distancing, city closures and their consequences have dramatically reduced travel, conventions and demand for hotel rooms, which has and will continue to impact our business, operations, and financial results. The extent to which the closures impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the closures; the negative impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; our ability to successfully navigate the impacts of the closures; governments actions, businesses and individuals take in response to the closures, including limiting or banning travel; and how quickly economies, travel activity, and demand for lodging recovers after the closures subsides.

~~-26-~~

~~The COVID-19 closures have subjected our business, operations and financial condition to a number of risks, including, but not limited to, those discussed below:~~

	●	~~Risks Related to Revenue:~~ The COVID-19 closures and other imposed restrictions have negatively impacted and will in the future negatively impact to an extent we are unable to predict, our revenue from the Hotel. Currently, the Hotel is not generating revenue sufficient to meet its operating expenses, which is adversely affecting our net income.

	●	~~Risks Related to Operations:~~ Because of the significant decline in the demand for hotel rooms, Interstate have taken steps to reduce operating costs and improve efficiency, including furloughing a substantial number of its personnel and implementing reduced work weeks for other personnel. Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty, or our ability to attract and retain associates, and our reputation and market share may suffer as a result. For example, if our furloughed personnel do not return to work with us when the COVID-19 closures and imposed restrictions are lifted, including because they find new jobs during the furlough, we may experience operational challenges that impact guest loyalty and our market share, which could limit our ability to grow revenue and could reduce our profits. Further, reputational damage from, and the financial impact of, reduced work weeks could lead associates to depart the company and could make it harder for us to recruit new associates in the future. We may also face demands or requests from labor unions that represent our associates, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors that we identify in our 2019 Form 10-K, which in turn could materially adversely affect our business, financial condition, liquidity, and results of operations (including revenues and profitability). Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider presenting significant risks to our operations.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no events that are required to be reported under this Item.

Item 3. DEFAULTS UPON SENIOR SECURITIES

There have been no events that are required to be reported under this Item.

Item 4. MINE SAFETY DISCLOSURES

There have been no events that are required to be reported under this Item.

Item 5. OTHER INFORMATION

~~There have been~~As disclosed in its Definitive Information Statement on Schedule 14C, filed with the SEC on January 25, 2021, personnel of the former Santa Fe Financial Corporation (“Santa Fe”) received shareholder approval to distribute its assets, as described and subsequently dissolve, all as set forth in the Information Statement. 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 now fully dissolved and no ~~events that are required to be reported under this Item.~~longer in legal existence.

~~-27-~~

Item 6. EXHIBITS

31.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

31.2	Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section ~~1350~~1350.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

~~-28-~~

- 29 -

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.

		PORTSMOUTH SQUARE, INC.
		(Registrant)

Date:~~June 18,~~ ~~2020~~	May 21, 2021	by	*/s/ John V. Winfield*
			John V. Winfield
			President, Chairman of the Board and
			Chief Executive Officer
			(Principal Executive Officer)

Date:~~June 18,~~ ~~2020~~	May 21, 2021	by	*/s/ Danfeng Xu*
			Danfeng Xu
			Treasurer and Controller
			(Principal Financial Officer)

~~-29-~~

- 30 -

					Retained			Total
					Earnings			Portsmouth						Total
	Common Stock				(Accumulated			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Deficit)			Deficit			Interest			Deficit

Balance at July 1, 2019		734,183	$	2,092,000	$	(70,876,000	)	$	(68,784,000	)	$	(5,534,000	)	$	(74,318,000	)

Net income		-		-		826,000			826,000			99,000			925,000

Balance at September 30, 2019		734,183		2,092,000		(70,050,000	)		(67,958,000	)		(5,435,000	)		(73,393,000	)

Net income		-		-		381,000			381,000			45,000			426,000

Balance at December 31, 2019		734,183		2,092,000		(69,669,000	)		(67,577,000	)		(5,390,000	)		(72,967,000	)

Net loss						(1,123,000	)		(1,123,000	)		(82,000	)		(1,205,000	)

Balance at March 31, 2020		734,183	$	2,092,000	$	(70,792,000	)	$	(68,700,000	)	$	(5,472,000	)	$	(74,172,000	)