Financial Analysis

NOTE 14 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 the senior mortgage lender and Wells Fargo Bank, N.A., as cash management bank. Under the agreement, Hotel receipts are deposited into lender-controlled accounts and applied in accordance with the priority and reserve requirements specified in the senior loan documents. The cash management arrangement remained in effect as of June 30, 2026. See Note 9 Mortgage and Mezzanine Loans for additional information regarding the senior mortgage loan and the cash management release conditions. Franchise Agreements Operating is party to a franchise agreement with HLT Franchise Holding, LLC (Hilton) under which the Hotel operates as the Hilton San Francisco Financial District. The franchise agreement extends through January 31, 2030 and requires the Hotel to pay royalties, program fees and certain other charges based primarily on Hotel revenues and to comply with applicable Hilton brand standards. Franchise-related fees were approximately $ 3,989,000 and $ 3,529,000 for the years ended June 30, 2026 and 2025, respectively, and are included in Hotel operating expenses. See Note 8 Related Party and Other Financing Transactions for information regarding the Hilton development incentive note. Hotel Employees and Collective Bargaining Agreements As of June 30, 20 …

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The following table presents the Companys revenue disaggregated by major revenue streams: SCHEDULE OF REVENUE DISAGGREGATION BY REVENUE STREAMS For the years ended June 30, 2026 2025 Hotel revenues: Hotel rooms $ 48,396,000 $ 39,648,000 Food and beverage 3,164,000 2,862,000 Parking 3,307,000 3,214,000 Other operating departments 930,000 639,000 Total Hotel revenue $ 55,797,000 $ 46,363,000 …

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NOTE 6 - FAIR VALUE MEASUREMENTS Fair value measurements are classified within a three-level hierarchy based on the observability of the inputs used. Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable inputs other than Level 1 quoted prices; and Level 3 inputs are significant unobservable inputs. Assets measured at fair value on a recurring consisted of the following: SCHEDULE OF FAIR VALUE, ASSETS MEASURED ON RECURRING BASIS June 30, 2026 Total Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 200,000 $ 200,000 $ - $ - Interest rate cap 23,000 - 23,000 - Total $ 223,000 $ 200,000 $ 23,000 $ - June 30, 2025 Total Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 127,000 $ 127,000 $ - $ - Interest rate cap 52,000 - 52,000 - Total $ 179,000 $ 127,000 $ 52,000 $ - Marketable equity securities are classified within Level 1 because their fair values are based on quoted prices in active markets for identical securities. See Note 5 Investment in Marketable Securities. The Interest Rate Cap is classified within Level 2 because its fair value is determined using observable market inputs, including forward Term SOFR curves and implied volatility assumptions obtained from a third-party pricing service. The Interest Rate Cap is not designated as a hedging instrument, and changes in its fair value are recognized in earnings. The Interest Rate Cap had a notional amount of $ 67,000,000 as of J …

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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, 2026 2025 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, 2026 2025 Statutory federal tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 7.0 % 8.8 % Provision to return adjustment 3.3 % 4.3 % Valuation allowance -32.1 % -31.1 % Other -0.8 % -3.0 % Effective income tax rate reconciliation percentage 0.0 % 0.0 % The components of the Companys deferred tax assets and (liabilities) as of June 30, 2026 and 2025 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2026 2025 Deferred tax assets Net operating loss carryforward $ 15,149,000 $ 14,822,000 Interest expense 7,110,000 6,385,000 Accruals and reserves 714,000 622,000 Depreciation 13,679,000 13,877,000 Related party interest 3,269,000 2,243,000 State tax credits - 165,000 Capital loss carryforward 975,000 1,054,000 Other 38,000 1,000 Deferred tax assets before valuation allowance 40,934,000 39,169,000 Less Valuation allowance (40,908,000 ) (39,1 …

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Recently Issued and Adopted Accounting Pronouncements The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective July 1, 2025. The adoption did not affect the Companys consolidated financial position, results of operations or cash flows and resulted in expanded income tax disclosures. In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently clarified by ASU 2025-01. The amendments require additional disaggregation of certain expense captions and are effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact on its disclosures. In July 2025, the FASB issued ASU 2025-05, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient for estimating expected credit losses on certain current accounts receivable and contract assets and are effective for annual reporting periods beginning after December 15, 2025. The Company is evaluating the impact of the guidance. Other recently issued accounting pronouncements are not expected to have a material effect on the Companys consolidated financial statements. …

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NOTE 8 RELATED PARTY AND OTHER FINANCING TRANSACTIONS Related party and other notes payable consisted of the following: SCHEDULE OF RELATED PARTY AND OTHER NOTES PAYABLE As of June 30, 2026 2025 Related party note payable - InterGroup $ 38,108,000 $ 38,108,000 Other note payable - Hilton 1,267,000 1,583,000 Other note payable - Aimbridge 146,000 396,000 Total related party and other notes payable $ 39,521,000 $ 40,087,000 Related party and other notes payable $ 39,521,000 $ 40,087,000 InterGroup Credit Facility The Company has an unsecured revolving credit facility with its majority shareholder, The InterGroup Corporation (InterGroup), with borrowing capacity of up to $ 40,000,000 . The facility bears interest at 9 %, may be prepaid without penalty, and had a contractual maturity date of July 31, 2027 as of June 30, 2026. Principal and accrued interest are due at maturity, and no monthly principal or interest payments are required prior to maturity. During the years ended June 30, 2026 and 2025, the Company borrowed $ 0 and $ 11,615,000 , respectively, under the facility. The outstanding principal balance was $ 38,108,000 as of both June 30, 2026 and 2025, leaving $ 1,892,000 of available borrowing capacity as of June 30, 2026. Interest expense related to the InterGroup facility was $ 3,437,000 and $ 3,570,000 for the years ended June 30, 2026 and 2025, respectively. In August 2026, the Company and InterGroup amended the facility to extend its maturity date from July 31, 2027 …

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NOTE 3 - REVENUE The following table presents the Companys revenue disaggregated by major revenue streams: SCHEDULE OF REVENUE DISAGGREGATION BY REVENUE STREAMS For the years ended June 30, 2026 2025 Hotel revenues: Hotel rooms $ 48,396,000 $ 39,648,000 Food and beverage 3,164,000 2,862,000 Parking 3,307,000 3,214,000 Other operating departments 930,000 639,000 Total Hotel revenue $ 55,797,000 $ 46,363,000 Contract Assets and Liabilities The Company does not have any material contract assets as of June 30, 2026 and 2025, 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 $ 505,000 at July 1, 2025. Contract liabilities were $ 472,000 as of June 30, 2026. The advance deposits received from customers for services to be performed after June 30, 2026. Contract liabilities were $ 505,000 as of June 30, 2025 compared to $ 370,000 as of June 30, 2024. The increase for the twelve months ended June 30, 2025 was primarily driven by an increase in advance deposits received from customers for services to be performed after J …

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NOTE 13 - SEGMENT INFORMATION The Company operates in two reportable segments: (i) the operation of the Hotel (Hotel Operations) and (ii) the investment of cash in marketable securities and other investments (Investment Transactions). These segments reflect the manner in which management evaluates financial performance, allocates resources. Corporate expenses and other amounts that are not allocated to the reportable segments are in Other. The Companys chief operating decision maker (CODM) is a group of senior executives. The CODM uses segment income (loss) as the primary measure for assessing segment performance and making resource-allocation decisions. For Hotel Operations, segment income represents Hotel revenue less Hotel operating expenses before depreciation and amortization and financing-related interest expense. For Investment Transactions, segment loss includes gains and losses on marketable securities, dividend and interest income, and trading and margin interest expense. The significant expense categories regularly provided to the CODM and included in Hotel Operations segment income utilities, real estate taxes, insurance and Hotel general and administrative expenses. Significant expenses regularly provided to the CODM for Investment Transactions include trading and margin interest expense. Hotel Operations includes the operations of the Hotel and its five-level parking garage. The following tables present the Companys reportable segment information for the years e …

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NOTE 15 SUBSEQUENT EVENTS Portsmouth Square Pedestrian Bridge Removal On August 9, 2026, the physical removal of the pedestrian bridge connecting the Hotel to Portsmouth Square was completed. The Hotel had temporarily suspended guest operations from July 31, 2026 through August 9, 2026 to facilitate the bridge demolition and resumed guest operations on August 10, 2026. Following removal of the bridge, the City and its contractor continued work associated with the project, including restoration of portions of the Hotel facade and surrounding areas affected by the demolition. The Company is separately responsible for the design and construction of permanent improvements to the Hotels Kearny Street entrance. Extension of Related Party Credit Facility In August 2026, the Company and its majority shareholder, The InterGroup Corporation (InterGroup), amended the Companys unsecured revolving credit facility to extend its maturity date from July 31, 2027 to July 31, 2029. All other material terms of the facility remained unchanged. As of June 30, 2026, $ 38,108,000 was outstanding under the $ 40,000,000 facility. See Note 8 Related Party and Other Financing Transactions. …

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