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, 2021. 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.

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.



-16-








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 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 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. We continue to closely monitor the very fluid changes
that the Center for Disease Control, San Francisco Department of Health and
other authorities implement with regards to the COVID-19 pandemic.



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. By the end of March 2020, we had temporarily closed all our
food and beverage 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 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. 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.




As a result of the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") signed into law on March 27, 2020, additional avenues of relief may
be available to workers and families through enhanced unemployment insurance
provisions and to small businesses through programs administered by the Small
Business Administration ("SBA"). The CARES Act includes, among other things,
provisions relating to payroll tax credits and deferrals, net operating loss
carryback periods, alternative minimum tax credits and technical corrections to
tax depreciation methods for qualified improvement property. The CARES Act also
established a Paycheck Protection Program ("PPP"), whereby certain small
businesses are eligible for a loan to fund payroll expenses, rent, and related
costs. On April 9, 2020, Justice entered into a loan agreement ("SBA Loan") with
CIBC Bank USA under the CARES Act. Justice received proceeds of $4,719,000 from
the SBA Loan. In accordance with the requirements of the CARES Act, Justice used
proceeds from the SBA Loan for payroll costs and other qualified expenses. The
SBA Loan was 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. On June 10, 2021, the
SBA Loan was forgiven in full.



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. As of June 30, 2021, Justice had used all
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. Justice submitted its application
for full loan forgiveness on September 3, 2021.



-17-







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. 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 name in the Americas. During the first quarter of
fiscal year 2021, the Hotel obtained approval from Interstate to use the key
money for hotel operations and the funds were exhausted by December 31, 2020.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020


The Company had net loss of $1,975,000 for the three months ended September 30,
2021 compared to net loss of $3,015,000 for the three months ended September 30,
2020. The change is primarily attributable to the increase in Hotel revenue.



Hotel Operations

The Company had net loss from Hotel operations of $1,955,000 for the three months ended September 30, 2021 compared to net loss of $3,929,000 for the three months ended September 30, 2020. The change is primarily attributable to increase in Hotel revenue.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended

September 30, 2021 and 2020.



For the three months ended September 30,                2021
2020
Hotel revenues:
Hotel rooms                                        $    5,562,000     $    2,890,000
Food and beverage                                         266,000             37,000
Garage                                                    907,000            470,000
Other operating departments                                70,000             28,000
Total hotel revenues                                    6,805,000          3,425,000
Operating expenses excluding depreciation and
amortization                                           (6,333,000 )       (5,033,000 )
Operating income (loss) before interest,
depreciation and amortization                             472,000         (1,608,000 )
Interest expense - mortgage                            (1,898,000 )       (1,791,000 )
Depreciation and amortization expense                    (529,000 )         (530,000 )
Net loss from Hotel operations                     $   (1,955,000 )   $   (3,929,000 )




For the three months ended September 30, 2021, the Hotel had operating income of
$472,000 before interest expense, depreciation, and amortization on total
operating revenues of $6,805,000 compared to operating loss of $1,608,000 before
interest expense, depreciation, and amortization on total operating revenues of
$3,425,000 for the three months ended September 30, 2020. For the three months
ended September 30, 2021, room revenues increased by $2,672,000, food and
beverage revenue increased by $229,000, and garage revenue increased by
$437,000, compared to the three months ended September 30, 2020. The year over
year increase in all the revenue sources are result of the recovery from the
business interruption attributable to a variety of responses by federal, state,
and local civil authority to the COVID-19 outbreak since March 2020. Total
operating expenses increased by $1,300,000 due to increase in salaries and
wages, rooms commission, credit card fees, management fees, and franchise fees.



-18-







The following table sets forth the average daily room rate, average occupancy
percentage and RevPAR of the Hotel for the three months ended September 30,

2021
and 2020.



   Three Months         Average         Average
Ended September 30,    Daily Rate     Occupancy %       RevPAR

       2021           $        141              79 %   $    111
       2020           $        108              54 %   $     58

The Hotel's revenues increased by 98% this quarter as compared to the previous comparable quarter. Average daily rate increased by $33, average occupancy increased by 25%, and RevPAR increased by $53 for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.





Investment Transactions



The Company had a net loss on marketable securities of $445,000 for the three
months ended September 30, 2021 compared to a net gain on marketable securities
of $57,000 for the three months ended September 30, 2020. For the three months
ended September 30, 2021, the Company had a net realized loss of $45,000 and a
net unrealized loss of $400,000. For the three months ended September 30, 2020,
the Company had a net realized loss of $11,000 and a net unrealized gain of
$68,000. 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
was not taxed on its non-controlling interest in the Hotel. Effective July 15,
2021, the Company become the owner of 100% of Justice and will include all of
the Hotel's income and expense accounts into its income taxes calculations. The
income tax benefit during the three months ended September 30, 2021 and 2020
represent the income tax effect on the Company's pretax loss which includes its
share in the net loss of the Hotel accordingly.



-19-







MARKETABLE SECURITIES

The following table shows the composition of the Company's marketable securities portfolio as of September 30, 2021 and June 30, 2021 by selected industry groups.





                                                  % of Total
    As of September 30, 2021                      Investment
         Industry Group            Fair Value     Securities

 Communication services            $ 1,177,000           47.0 %
 Basic materials                       509,000           20.3 %
 REITs and real estate companies       412,000           16.4 %
 Industrials                           210,000            8.4 %
 Energy                                187,000            7.5 %
 Healthcare                             10,000            0.4 %
                                   $ 2,505,000          100.0 %




                                                    % of Total
      As of June 30, 2021                           Investment
         Industry Group            Fair Value       Securities

 Communication services            $ 1,334,000             37.7 %
 Basic materials                       720,000             20.3 %
 Industrials                           653,000             18.5 %
 REITs and real estate companies       438,000             12.4 %
 Energy                                250,000              7.1 %
 Healthcare                            141,000              4.0 %
                                   $ 3,536,000            100.0 %




As of September 30, 2021, the Company's investment portfolio includes eleven
equity positions. The Company holds one equity securities that are more than 10%
of the equity value of the portfolio. The largest security position represents
19% of the portfolio and consists of the common stock of Comstock, which is
included in the basic materials industry group.



As of June 30, 2021, the Company held twelve different equity positions in its
investment portfolio. The Company held three equity securities that comprised
more than 10% of the equity value of the portfolio. The largest security
position represents 38% of the portfolio and consists of the common stock of
ViacomCBS Inc. (NASDAQ: VIACP) which is included in the communication services
industry group.

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

For the three months ended September 30, 2021 2020 Net (loss) gain on marketable securities $ (445,000 ) $ 57,000 Impairment loss on other investments

                -       (22,000 )
Dividend and interest income                   34,000        15,000
Margin interest expense                       (16,000 )           -
Trading and management expenses               (40,000 )     (31,000 )
                                           $ (467,000 )   $  19,000




-20-

FINANCIAL CONDITION AND LIQUIDITY





The Company had cash and cash equivalents of $1,782,000 and $2,310,000 as of
September 30, 2021 and June 30, 2021, respectively. The Company had marketable
securities, net of margin due to securities brokers, of $1,281,000 and
$1,821,000 as of September 30, 2021 and June 30, 2020, respectively. These
marketable securities are short-term investments and liquid in nature.



On December 16, 2020, Justice and InterGroup entered into a loan modification
agreement which increased Justice's borrowing from InterGroup as needed up to
$10,000,000. During the three months ending September 30, 2021, InterGroup
advanced $1,500,000 to Justice per the aforementioned loan modification
agreement, bringing the total amount due to InterGroup to $8,150,000 at
September 30, 2021. The Company could amend its by-laws and increase the number
of authorized shares in order to issue additional shares to raise capital in the
public markets if needed. On September 7, 2021, the Board of InterGroup passed
resolution to provide funding to Portsmouth for the working capital of the Hotel
up to $16,000,000 if necessary.



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
fiscal year ended June 30, 2021, InterGroup completed refinancing on six of its
California properties and generated net proceeds of $6,762,000. During the three
months ending September 30, 2021, InterGroup refinanced four of its California
properties' existing mortgages and obtained a mortgage note payable on one of
its California properties, generating net proceeds totaling $3,161,000 as a
result. 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 $5,000,000 revolving line of credit from CIBC Bank USA
("CIBC") and the entire $5,000,000 is available to be drawn down as of September
30, 2021 should additional liquidity be necessary.



On April 9, 2020, Justice entered into a loan agreement ("SBA Loan") with CIBC
Bank USA under the Coronavirus Aid, Relief, and Economic Security Act ("CARES
Act") administered by the U.S. Small Business Administration (the "SBA").
Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with
the requirements of the CARES Act, Justice used the proceeds from the SBA Loan
for payroll costs and other qualified expenses. The SBA Loan was 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. On June 10, 2021, the SBA Loan was forgiven
in full.




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. As of June 30, 2021, Justice had used all
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. Justice submitted its application
for full loan forgiveness on September 3, 2021.



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



Our long-term liquidity requirements primarily consist of funds necessary to pay
for scheduled debt maturities and capital improvements of the Hotel. We will
continue to finance our business activities primarily with existing cash,
including from the activities described above, and cash generated from our
operations. After considering our approach to liquidity and accessing our
available sources of cash, we believe that our cash 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.




-21-

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of September 30, 2021, the Company's material financial obligations which also including interest payments:





                                                         9 Months           Year             Year            Year           Year
                                          Total            2022             2023             2024            2025           2026         Thereafter
Mortgage notes payable                $ 110,355,000     $ 1,242,000     $  1,721,000     $ 107,392,000     $       -     $         -     $         -
PPP and other notes payable               2,544,000         361,000          183,000                 -             -       2,000,000               -
Related party notes payable              12,097,000         425,000        8,717,000           567,000       567,000         567,000       1,254,000
Interest                                 15,063,000       5,431,000        6,180,000         3,452,000             -               -               -
Total                                 $ 140,059,000     $ 7,459,000     $ 16,801,000     $ 111,411,000     $ 567,000     $ 2,567,000     $ 1,254,000

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no material off balance sheet arrangements.





IMPACT OF INFLATION



Hotel room rates are typically impacted by supply and demand factors, not
inflation, since rental of a hotel room is usually for a limited number of
nights. Room rates can be, and usually are, adjusted to account for inflationary
cost increases. Since Aimbridge has the power and ability 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 three
months ended September 30, 2021. Please refer to the Company's Annual Report on
Form 10-K for the year ended June 30, 2021 for a summary of the critical
accounting policies.

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