NOTE 2 – LIQUIDITY

See Note 1 – Basis of Presentation and Significant Accounting Policies (Going Concern) for management’s going concern assessment under ASC 205-40.

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

The Company experienced net cash provided by operating activities of approximately $1,869,000 for the nine months ended March 31, 2026. In response to ongoing market pressures, the Company has adopted several capital preservation initiatives, including deferral of non-essential capital projects, temporary suspension of certain Hotel services, renegotiation of vendor agreements, and reduction of controllable operating expenses. During the nine months ended March 31, 2026, the Company continued to invest in property enhancements, incurring capital expenditures totaling approximately $1,787,000. These expenditures included the renovation of 14 guest rooms, which had previously been utilized as administrative offices and were returned to the Company’s available room inventory upon completion in September 2025 (see Note 4).

As of March 31, 2026, the Company had:

These securities are considered liquid and available for short-term needs (See Note 5).

Summary of Related Party Financing (See Note 9 for full details)

To supplement its liquidity position, the Company maintains access to an unsecured loan facility with its parent company, The InterGroup Corporation (“InterGroup”), a related party. In March 2025, the facility was amended to (i) increase the available borrowing capacity to $40,000,000, and (ii) extend the maturity date to July 31, 2027. In May 2025, the facility was amended to reduce the interest rate to 9% from 12%. During the nine months ended March 31, 2026, the Company had no additional borrowings under this facility. As of March 31, 2026, the outstanding loan balance was $38,108,000, with no principal repayments made to date. See Note 9 – Related Party and Other Financing Transactions for additional terms and activity.

The Company remains current on its debt service obligations as of March 31, 2026. For management’s going concern evaluation under ASC 205-40, including the assessment conclusion, see Note 1 (Going Concern).

The following table provides a summary as of March 31, 2026, the Company’s material financial obligations including interest payments:

 SCHEDULE OF FINANCIAL OBLIGATIONS INCLUDING INTEREST PAYMENTS

Mortgage Notes Payable

See Note 10 – Mortgage Notes Payable and Mezzanine Financing for current facility terms, maturities, covenants, and cash-management provisions.

Related Party Notes Payable

See Note 9 – Related Party and Other Financing Transactions for additional information on the InterGroup revolving credit facility.