Financial Analysis

NOTE 15 COMMITMENTS AND CONTINGENCIES Cash Management Agreement In connection with the March 28, 2025 refinancing of the Hotels senior mortgage, Justice Operating Company, LLC (Operating) entered into a Cash Management Agreement with Prime Finance (lender) and Wells Fargo Bank, N.A. (cash management bank). Under this agreement, all Hotel receipts are deposited into a lender-controlled lockbox pursuant to a deposit account control agreement and swept to a cash management account maintained for the benefit of the lender. The cash management bank maintains subaccounts (including debt service, property tax, insurance, capital expenditure/FF&E, PIP, carry reserve, cash collateral, casualty/condemnation and security deposit subaccounts). On each monthly payment date, funds are applied in a set priority: (i) tax reserve, (ii) insurance reserve, (iii) bank fees, (iv) amounts due under the senior loan (interest and any other amounts due thereunder), (v) capital expenditure/FF&E reserve, (vi) approved operating expenses and custodial funds, and (vii) all remaining available cash to the carry reserve during the initial cash-management period or, thereafter, to the cash collateral subaccount, all in accordance with the loan documents. The account must maintain a minimum balance of $ 5,000 . While no event of default exists, interest on balances (other than tax and insurance subaccounts) accrues to Operating; upon an event of default, the lender may direct application of all funds …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following table presents our revenue disaggregated by revenue streams: SCHEDULE OF REVENUE DISAGGREGATION BY REVENUE STREAMS For the years ended June 30, 2025 2024 Hotel revenues: Hotel rooms $ 39,648,000 $ 35,239,000 Food and beverage 2,862,000 3,213,000 Garage 3,214,000 2,988,000 Other operating departments 639,000 446,000 Total Hotel revenue $ 46,363,000 $ 41,886,000

DisaggregationOfRevenueTableTextBlock

NOTE 6 - FAIR VALUE MEASUREMENTS The carrying values of the Companys financial instruments that are not measured at fair value on a recurring basis approximate fair value due to their short maturities (including accounts receivable, other assets, accounts payable and other liabilities, due to securities broker and obligations for securities sold) or the nature and terms of the obligation (such as other notes payable and mortgage notes payable). Management has determined that there are no material differences between the carrying amounts and estimated fair values of these financial instruments as of June 30, 2025 and 2024. The assets measured at fair value on a recurring basis are as follows: SCHEDULE OF FAIR VALUE, ASSETS MEASURED ON RECURRING BASIS % of Total As of June 30, 2025 Investment Industry Group Fair Value Securities REITs and real estate companies $ 127,000 100.0 % % of Total As of June 30, 2024 Investment Industry Group Fair Value Securities REITs and real estate companies $ 202,000 96.7 % Basic materials 7,000 3.3 % Investment in marketable securities $ 209,000 100.0 % The fair values of investments in marketable securities are classified as Level 1 within the fair value hierarchy and are determined using quoted prices in active markets for identical assets. Specifically, the fair value of each security is based on the most recently traded price at the balance sheet date. On March 31, 2025, the Company, through its affiliate Justice Operating Company, LLC, entere …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 12 - INCOME TAXES The provision for income tax (expense) benefit consists of the following: SCHEDULE OF PROVISION FOR INCOME TAX (EXPENSE) BENEFIT For the years ended June 30, 2025 2024 Federal Current tax expense $ - $ - Deferred tax expense - - Federal income tax benefit - - State Current tax expense (1,000 ) (1,000 ) Deferred tax expense - - State and local income tax benefit (1,000 ) (1,000 ) Income tax expense $ (1,000 ) $ (1,000 ) A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: SCHEDULE OF STATUTORY FEDERAL INCOME TAX RATE For the years ended June 30, 2025 2024 Statutory federal tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 8.8 % 8.8 % Provision to return adjustment 4.3 % -6.6 % Valuation allowance -31.1 % -22.5 % Other -3.0 % -0.7 % Effective income tax rate reconciliation percentage 0.0 % 0.0 % The components of the Companys deferred tax assets and (liabilities) as of June 30, 2025 and 2024 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2025 2024 Deferred tax assets Net operating loss carryforward $ 14,822,000 $ 14,359,000 Interest expense 6,385,000 5,157,000 Accruals and reserves 622,000 596,000 Depreciation 13,877,000 14,260,000 Related party interest 2,243,000 - State tax credits 165,000 524,000 Capital loss carryforward 1,054,000 1,333,000 Other 1,000 111,000 Deferred tax assets before valuation allowance 39,169,000 36,340,000 Less Valuation allowance (39,169,000 ) (36 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recently Issued and Adopted Accounting Pronouncements In November 2023, the FASB issued ASU No 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 202307). We adopted ASU 2023-07 effective July 1, 2024 (fiscal 2025). The amendments expanded annual segment disclosure (including significant segment expenses and CODM measures) and will expand interim segment disclosures beginning in fiscal 2026. Adoption did not have a material impact on our consolidated financial statements, but resulted in enhanced segment disclosures. In December 2023, the FASB issued ASU No 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 (our fiscal 2026). We expect the standard to expand our income tax rate reconciliation and cash taxes paid disclosures; we do not expect a material impact on our consolidated financial position or results of operations. …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 14 RELATED PARTY TRANSACTIONS Related Party Credit Facility InterGroup The Company maintains an unsecured revolving credit facility with its majority shareholder, The InterGroup Corporation (InterGroup). While the facility remains available, management is not currently relying on it to fund ongoing Hotel operations, whichfollowing the March 28, 2025 refinancinghave been self-funding from operating cash flows. Key modifications include: December 2021: Portsmouth assumed $ 11.35 million in outstanding debt upon the dissolution of Justice Investors L.P. July 2023: Increased available borrowings to $ 20,000,000 and extended maturity to July 31, 2025 with a 0.5 % loan modification fee. March 2024: Increased available borrowings to $ 30,000,000 with a 0.5 % loan modification fee March 2025: Further increased available borrowing capacity to $ 40,000,000 and extended the maturity to July 31, 2027 . May 2025: Reduction of interest rate from 12 % to 9 %. The facility now bears interest at 9 % and does not require monthly principal or interest payments; instead, accrued interest and principal are payable in full at maturity. The loan may be prepaid at any time without penalty. During the fiscal year ended June 30, 2025, the Company borrowed an additional $ 11,615,000 primarily to fund certain requirements due in connection with the Hotels March 2025 refinancing, including senior mortgage principal paydown, the establishment of lender-required $ 5 million escrow reserves for potenti …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 3 - REVENUE The following table presents our revenue disaggregated by revenue streams: SCHEDULE OF REVENUE DISAGGREGATION BY REVENUE STREAMS For the years ended June 30, 2025 2024 Hotel revenues: Hotel rooms $ 39,648,000 $ 35,239,000 Food and beverage 2,862,000 3,213,000 Garage 3,214,000 2,988,000 Other operating departments 639,000 446,000 Total Hotel revenue $ 46,363,000 $ 41,886,000 Contract Assets and Liabilities The Company does not have any material contract assets as of June 30, 2025 and 2024, other than trade and other receivables, net on our consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected. The Company records 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- Hotel on our consolidated balance sheets and had a balance of $ 370,000 at July 1, 2024. Contract liabilities were $ 505,000 as of June 30, 2025. The increase as of June 30, 2025, was primarily driven by an increase in advance deposits received from customers for services to be performed after June 30, 2025. Contract liabilities were $ 370,000 as of June 30, 2024 compared to $ 290,000 as of June 30, 2023. The increase for the twelve months ended June 30, 2024 was primarily driven by an increase in advance deposits receive …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

NOTE 13 - SEGMENT INFORMATION The Company operates in two reportable segments: (i) the operation of the Hotel (Hotel Operations) and (ii) the investment of its cash in marketable securities and other investments (Investment Transactions). These segments reflect the manner in which management evaluates financial performance, allocates resources, and makes strategic decisions. Corporate expenses that are not allocated to segments are presented in Other. CODM is a group of senior executives who collectively use segment income (loss) before interest expense, gain on extinguishment of debt, depreciation and amortization, and income taxes as the primary measure reviewed for evaluating performance and allocating resources. The significant expense categories regularly provided for Hotel operations include labor and related benefits, utilities, repairs and maintenance, marketing, and general and administrative costs. These expenses are included in Segment operating expenses in the table below. Information below represents the Companys reportable segments for the years ended June 30, 2025 and 2024, respectively. Segment loss from Hotel Operations includes the results of the Hotel and its five-level parking garage. Loss from Investments Transactions include net investment gain (loss), dividend and interest income, and investment-related expenses. SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT As of and for the year Hotel Investment ended June 30, 2025 Operations Transactions Othe …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 16 SUBSEQUENT EVENTS The Company evaluated subsequent events through the date that the accompanying financial statements were issued, and has determined that no other material subsequent events that require adjustment to or disclosure in the financial statements exist through the date of this filing, except as disclosed below. One Big Beautiful Bill Act On July 4, 2025, the One Big Beautiful Bill was enacted (OBBBA), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of 100% accelerated tax depreciation on qualifying property including expansion to cover qualified production property. Another major aspect incudes the return to immediate expensing of domestic research and experimental expenditures (R&E) which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $ 31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions. The Company is currently assessing the potential impact of this legislation on its future financial position, results of operations, and cash flows. In accordance with U.S. GAAP, the effects will be recognized in the period of enactment. Othe …

SubsequentEventsTextBlock · excerpt; the full note is in the filing