10-Q 1 form10-q.htm

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, 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 1-10324

THE INTERGROUP CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE		13-3293645
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

1516 S. Bundy Dr., Suite 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, 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

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock		INTG		NASDAQ CAPITAL MARKET

The number of shares outstanding of registrant’s Common Stock, as of May 21, 2021 was 2,236,714.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page

Item 1.	Financial Statements.

	Condensed Consolidated Balance Sheets as of March 31, 2021 and June 30, 2020 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2021 and 2020 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Nine Months ended March 31, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Shareholders’ Deficit for the Nine Months ended March 31, 2021 and 2020 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2021 and 2020 (Unaudited)	7
	Notes to the Condensed Consolidated Financial Statements	8-22

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23-31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	31

Item 4.	Controls and Procedures.	31

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	32

Item 1A.	Risk Factors.	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	32

Item 3.	Defaults Upon Senior Securities.	32

Item 4.	Mine Safety Disclosures.	32

Item 5.	Other Information.	32

Item 6.	Exhibits.	32

Signatures		33

- 2 -

PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of	March 31, 2021			June 30, 2020
ASSETS
Investment in Hotel, net	$	37,599,000		$	38,769,000
Investment in real estate, net		46,225,000			50,338,000
Investment in marketable securities		36,996,000			6,178,000
Other investments, net		41,000			278,000
Cash and cash equivalents		8,880,000			14,163,000
Restricted cash		7,643,000			14,123,000
Other assets, net		3,184,000			1,985,000
Deferred tax asset		2,725,000			4,383,000
Total assets	$	143,293,000		$	130,217,000

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities - Justice	$	5,967,000		$	7,414,000
Accounts payable and other liabilities		3,171,000			4,213,000
Due to securities broker		9,021,000			1,576,000
Obligations for securities sold		5,261,000			294,000
Related party and other notes payable		4,229,000			4,654,000
Finance leases		783,000			1,098,000
Other notes payable - SBA Loans		6,719,000			5,172,000
Line of credit payable		-			2,985,000
Mortgage notes payable - Hotel, net		110,465,000			111,446,000
Mortgage notes payable - real estate, net		69,280,000			65,612,000
Total liabilities		214,896,000			204,464,000

Shareholders’ deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued		-			-
Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,250,765 and 2,288,809 outstanding, respectively		33,000			33,000
Additional paid-in capital		6,638,000			6,626,000
Accumulated deficit		(37,574,000	)		(43,541,000	)
Treasury stock, at cost, 1,154,217 and 1,116,173 shares, respectively		(16,333,000	)		(14,995,000	)
Total InterGroup shareholders’ deficit		(47,236,000	)		(51,877,000	)
Noncontrolling interest		(24,367,000	)		(22,370,000	)
Total shareholders’ deficit		(71,603,000	)		(74,247,000	)

Total liabilities and shareholders’ deficit	$	143,293,000		$	130,217,000

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

- 3 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended March 31,	2021			2020
Revenues:
Hotel	$	2,902,000		$	11,259,000
Real estate		3,465,000			3,757,000
Total revenues		6,367,000			15,016,000
Costs and operating expenses:
Hotel operating expenses		(3,990,000	)		(10,060,000	)
Real estate operating expenses		(2,043,000	)		(2,071,000	)
Depreciation and amortization expenses		(1,127,000	)		(1,216,000	)
General and administrative expenses		(605,000	)		(890,000	)

Total costs and operating expenses		(7,765,000	)		(14,237,000	)

(Loss) income from operations		(1,398,000	)		779,000

Other income (expense):
Interest expense - mortgages		(2,180,000	)		(2,251,000	)
Net gain (loss) on marketable securities		768,000			(2,367,000	)
Net gain (loss) on marketable securities - Comstock		4,870,000			(26,000	)
Gain on extinguishment of debt		453,000			-
Impairment loss on other investments		(30,000	)		(103,000	)
Dividend and interest income		158,000			105,000
Trading and margin interest expense		(362,000	)		(256,000	)
Total other income (expense), net		3,677,000			(4,898,000	)

Income (loss) before income taxes		2,279,000			(4,119,000	)
Income tax (expense) benefit		(880,000	)		1,060,000
Net income (loss)		1,399,000			(3,059,000	)
Less: Net (income) loss attributable to the noncontrolling interest		(289,000	)		479,000
Net income (loss) attributable to InterGroup Corporation	$	1,110,000		$	(2,580,000	)

Net income (loss) per share
Basic	$	0.62		$	(1.33	)
Diluted	$	0.54			N/A

Net income per share attributable to InterGroup Corporation
Basic	$	0.49		$	(1.12	)
Diluted	$	0.43			N/A

Weighted average number of basic common shares outstanding		2,267,115			2,298,064
Weighted average number of diluted common shares outstanding		2,604,710			N/A

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

- 4 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the nine months ended March 31,	2021			2020
Revenues:
Hotel	$	9,436,000		$	41,589,000
Real estate		10,503,000			11,313,000
Total revenues		19,939,000			52,902,000
Costs and operating expenses:
Hotel operating expenses		(14,156,000	)		(33,138,000	)
Real estate operating expenses		(6,031,000	)		(6,110,000	)
Depreciation and amortization expenses		(3,499,000	)		(3,661,000	)
General and administrative expenses		(2,531,000	)		(2,231,000	)

Total costs and operating expenses		(26,217,000	)		(45,140,000	)

(Loss) income from operations		(6,278,000	)		7,762,000

Other income (expense):
Interest expense - mortgages		(6,736,000	)		(6,978,000	)
Gain from sale of real estate		12,043,000			-
Net gain (loss) on marketable securities		4,016,000			(2,565,000	)
Net gain (loss) on marketable securities - Comstock		4,921,000			(396,000	)
Gain on extinguishment of debt		453,000			-
Impairment loss on other investments		(119,000	)		(103,000	)
Dividend and interest income		363,000			346,000
Trading and margin interest expense		(918,000	)		(790,000	)
Total other income (expense), net		14,023,000			(10,486,000	)

Income before income taxes		7,745,000			(2,724,000	)
Income tax (expense) benefit		(2,590,000	)		689,000
Net income (loss)		5,155,000			(2,035,000	)
Less: Net loss attributable to the noncontrolling interest		440,000			39,000
Net income (loss) attributable to InterGroup Corporation	$	5,595,000		$	(1,996,000	)

Net income per share
Basic	$	2.26		$	(0.88	)
Diluted	$	1.97			N/A

Net income per share attributable to InterGroup Corporation
Basic	$	2.46		$	(0.87	)
Diluted	$	2.14			N/A

Weighted average number of basic common shares outstanding		2,276,220			2,303,421
Weighted average number of diluted common shares outstanding		2,613,815			N/A

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

- 5 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

					Additional								InterGroup						Total
	Common Stock				Paid-in		Accumulated			Treasury			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Capital		Deficit			Stock			Deficit			Interest			Deficit
Balance at July 1, 2020		3,404,982	$	33,000	$	6,626,000	$	(43,541,000	)	$	(14,995,000	)	$	(51,877,000	)	$	(22,370,000	)	$	(74,247,000	)
Net income		-		-		-		4,550,000			-			4,550,000			269,000			4,819,000
Stock options expense		-		-		5,000		-			-			5,000			-			5,000
Purchase of treasury stock		-		-		-		-			(140,000	)		(140,000	)		-			(140,000	)
Balance at September 30, 2020		3,404,982		33,000		6,631,000		(38,991,000	)		(15,135,000	)		(47,462,000	)		(22,101,000	)		(69,563,000	)
Net income (loss)		-		-		-		(65,000	)		-			(65,000	)		(998,000	)		(1,063,000	)
Stock options expense		-		-		5,000		-			-			5,000			-			5,000
Purchase of treasury stock		-		-		-		-			(116,000	)		(116,000	)		-			(116,000	)
Balance at December 31, 2020		3,404,982		33,000		6,636,000		(39,056,000	)		(15,251,000	)		(47,638,000	)		(23,099,000	)		(70,737,000	)
Net income		-		-		-		1,110,000			-			1,110,000			289,000			1,399,000
Stock options expense		-		-		2,000		-			-			2,000			-			2,000
Reclassify NCI to INTG		-		-		-		372,000			-			372,000			(372,000	)		-
Investment in Justice		-		-		-		-			-			-			(206,000	)		(206,000	)
Distribution to NCI		-		-		-		-			-			-			(979,000	)		(979,000	)
Purchase of treasury stock		-		-		-		-			(1,082,000	)		(1,082,000	)		-			(1,082,000	)
Balance at March 31, 2021		3,404,982	$	33,000	$	6,638,000	$	(37,574,000	)	$	(16,333,000	)	$	(47,236,000	)	$	(24,367,000	)	$	(71,603,000	)

					Additional									InterGroup						Total
	Common Stock				Paid-in			Accumulated			Treasury			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit
Balance at July 1, 2019		3,404,982	$	33,000	$	10,342,000		$	(39,760,000	)	$	(14,347,000	)	$	(43,732,000	)	$	(24,697,000	)	$	(68,429,000	)
Net income		-		-		-			336,000			-			336,000			308,000			644,000
Stock options expense		-		-		8,000			-			-			8,000			-			8,000
Investment in Santa Fe		-		-		(147,000	)		-			-			(147,000	)		74,000			(73,000	)
Purchase of treasury stock		-		-		-			-			(156,000	)		(156,000	)		-			(156,000	)
Balance at September 30, 2019		3,404,982		33,000		10,203,000			(39,424,000	)		(14,503,000	)		(43,691,000	)		(24,315,000	)		(68,006,000	)
Net income		-		-		-			248,000			-			248,000			132,000			380,000
Stock options expense		-		-		9,000			-			-			9,000			-			9,000
Investment in Santa Fe		-		-		(46,000	)		-			-			(46,000	)		22,000			(24,000	)
Purchase of treasury stock		-		-		-			-			(190,000	)		(190,000	)		-			(190,000	)
Balance at December 31, 2019		3,404,982		33,000		10,166,000			(39,176,000	)		(14,693,000	)		(43,670,000	)

SEC Form 10-Q filed by The Intergroup Corporation