# Intergroup Corp: Form 10-Q for the period ended Dec 31, 2025

- Company: [Intergroup Corp](/companies/intg.md) (CIK 69422)
- Form: 10-Q
- Filed: 2026-02-12
- Accepted by EDGAR: Feb 12, 2026, 16:16 ET
- Period: 2025-12-31
- Accession: 0001493152-26-006429
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/69422/000149315226006429/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/69422/000149315226006429/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-10-01 to 2025-12-31 | $17.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-07-01 to 2025-12-31 | $35.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2025-10-01 to 2025-12-31 | $2.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-07-01 to 2025-12-31 | $4.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-10-01 to 2025-12-31 | $1.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-07-01 to 2025-12-31 | $1.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-10-01 to 2025-12-31 | $1.5m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-07-01 to 2025-12-31 | $980.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-10-01 to 2025-12-31 | $0.71 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-07-01 to 2025-12-31 | $0.46 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-10-01 to 2025-12-31 | $0.71 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-07-01 to 2025-12-31 | $0.46 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-10-01 to 2025-12-31 | 2,148,812 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-07-01 to 2025-12-31 | 2,149,976 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-07-01 to 2025-12-31 | −$319.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-07-01 to 2025-12-31 | $1.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2025-07-01 to 2025-12-31 | $73.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-12-31 | $6.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-12-31 | $101.1m | us-gaap:Assets |
| Total liabilities | at 2025-12-31 | $215.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-12-31 | $233.2m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-12-31 | −$85.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 27,464 characters.

FORWARD-LOOKING STATEMENTS AND PROJECTIONS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, without limitation, statements regarding our business strategy; operating performance; financial condition and results of operations, liquidity and capital resources (including anticipated refinancing or repayment of indebtedness); capital expenditures; market conditions; and other plans and objectives. These statements are not historical facts and can be identified by words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “seeks,” “may,” “will,” “should,” “could,” and similar expressions.

Forward-looking statements are based on our current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially. Important factors include, among others: general economic conditions; interest-rate and inflation trends; availability and terms of financing and refinancing; operating performance of the Hilton San Francisco Financial District and conditions in the San Francisco hospitality market; competitive dynamics in our hotel and real estate markets; labor availability and costs; regulatory and legal developments; property-level operating risks (including maintenance, tax and insurance costs); capital market conditions; and other risks described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and in other reports we file with the SEC. These risks and uncertainties are not exhaustive.

You should not place undue reliance on forward-looking statements, which speak only as of the date of this report. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

### RESULTS OF OPERATIONS

As of December 31, 2025, the Company owned approximately 75.9% of the common shares of Portsmouth Square, Inc. (“Portsmouth”). The Company’s principal sources of revenue are (i) revenues from the hotel operations conducted through Portsmouth, (ii) rental income from multifamily and commercial real estate, and (iii) income from the investment of cash and marketable securities and other investments. Portsmouth’s primary asset is the 558-room Hilton San Francisco Financial District and related facilities (including a five-level underground garage). The Company also generates income from its owned and in-house managed real estate, concentrated in Texas and Southern California.

### Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

The Company had net income of $962,000 for the three months ended December 31, 2025 compared to net loss of $3,697,000 for the three months ended December 31, 2024. Net income attributable to The InterGroup Corporation was $1,515,000 for the three months ended December 31, 2025 compared to a net loss attributable to The InterGroup Corporation of $2,725,000 for the three months ended December 31, 2024. The year-over-year improvement was primarily attributable to the $3,508,000 gain on sale of real estate and improved operating results (income from operations increased to $2,015,000 from $853,000), other expenses (expense), net was $12,000 compared to other expense of $4,431,000 in the prior-year period), partially offset by higher income tax expense. The change in other income (expense), net was primarily driven by a smaller net loss on marketable securities (net unrealized loss of $39,000 in 2025 compared to a net unrealized loss of $1,002,000 in 2024, which also included net realized gains of $404,000), partially offset by higher mortgage interest expense and trading and margin interest expense. Net loss attributable to the noncontrolling interest was $553,000 for the three months ended December 31, 2025 compared to $972,000 for the three months ended December 31, 2024.

### Hotel Operations

The Company had net loss from Hotel operations of $1,091,000 for the three months ended December 31, 2025 compared to net loss of $2,838,000 for the three months ended December 31, 2024. The decrease in net loss primarily reflected higher revenues from returning renovated administrative office space to available room inventory, partially offset by higher operating expenses. The Hotel’s operating metrics average daily room rate, average occupancy and revenue per available room (“ADR, occupancy and RevPAR”) are presented below.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended December 31, 2025 and 2024:

| For the three months ended December 31, Hotel revenues: | 2025 | 2024 |
| --- | ---: | ---: |
| Hotel rooms | $11,055,000 | $8,401,000 |
| Food and beverage | 620,000 | 654,000 |
| Garage | 822,000 | 780,000 |
| Other operating departments | 164,000 | 130,000 |
| Total Hotel revenues | 12,661,000 | 9,965,000 |
| Operating expenses excluding depreciation and amortization | (10,427,000) | (9,055,000) |
| Operating income before interest expense, |  |  |
| depreciation and amortization | 2,234,000 | 910,000 |
| Interest expense - mortgage | (2,385,000) | (2,845,000) |
| Depreciation and amortization expense | (940,000) | (903,000) |
| Net loss from Hotel operations | $(1,091,000) | $(2,838,000) |

For the three months ended December 31, 2025, total Hotel revenues were $12,661,000, compared to $9,965,000 for the three months ended December 31, 2024, an increase of $2,696,000, or 27%, primarily due to higher room revenue. Operating expenses (excluding depreciation and amortization) were $10,427,000 for the three months ended December 31, 2025, compared to $9,055,000 for the three months ended December 31, 2024, an increase of $1,372,000, or 15%. As a result, operating income before interest expense and depreciation and amortization increased to $2,234,000 from $910,000. Mortgage interest expense decreased to $2,385,000 from $2,845,000, and depreciation and amortization expense increased to $940,000 from $903,000. Net loss from Hotel operations decreased to $1,091,000 from $2,838,000.

The following table sets forth ADR, occupancy and RevPAR of the Hotel for the three months ended December 31, 2025 and 2024.

| Three Months Ended December 31, | Average Daily Rate | Average Occupancy % | RevPAR |
| --- | ---: | ---: | ---: |
| **2025** | $234 | 92% | $215 |
| **2024** | $190 | 88% | $168 |

### Real Estate Operations

Revenue from real estate operations increased to $4,640,000 for the three months ended December 31, 2025 from $4,476,000 for the three months ended December 31, 2024, primarily reflecting higher rental revenues in the Company’s multifamily portfolio, including improved occupancy. Operating expenses increased to $2,419,000 from $2,208,000, reflecting higher labor-related costs and continued investments in property-level operational efficiency.

During the three months ended December 31, 2025, the Company recorded a $3,508,000 gain on the sale of a non-core multifamily property in Los Angeles County, which is included in gain on sale of real estate (see Note 15).

### Investment Transactions

The Company had a net loss on marketable securities of $39,000 for the three months ended December 31, 2025 compared to a net loss of $598,000 for the three months ended December 31, 2024. For the three months ended December 31, 2025, the Company recorded a net unrealized loss of $39,000. Given the Company’s relatively modest marketable securities balances ($926,000 at December 31, 2025), period-to-period gains and losses are not expected to be material to consolidated results of operations or liquidity. See Note 6 – Investment in Marketable Securities. For the three months ended December 31, 2024, the Company had a net realized gain of $404,000 and a net unrealized loss of $1,002,000.

### Six Months Ended December 31, 2025 Compared to Six Months Ended December 31, 2024

The Company had net loss of $197,000 for the six months ended December 31, 2025 compared to net loss of $4,549,000 for the six months ended December 31, 2024. Net income attributable to The InterGroup Corporation was $980,000 for the six months ended December 31, 2025 compared to a net loss attributable to The InterGroup Corporation of $3,123,000 for the six months ended December 31, 2024. The year-over-year improvement was primarily attributable to the $3,508,000 gain on sale of real estate and improved operating results (including an increase in income from operations to $4,747,000 from $3,982,000), partially offset by income tax expense and higher Hotel operating expenses due in part to the absence of a prior-year Hotel management incentive fee waiver (approximately $1.030 million) that reduced Hotel operating expenses during the six months ended December 31, 2024. The improvement also reflected lower mortgage interest expense. The Company’s consolidated results for the six months ended December 31, 2025 also reflect net income attributable to the noncontrolling interest of $1,177,000 compared to $1,426,000 in the prior-year period.

### Hotel Operations

The Company had net loss from Hotel operations of $2,546,000 for the six months ended December 31, 2025 compared to net loss of $3,563,000 for the six months ended December 31, 2024. The decrease in net loss primarily reflected higher revenues including increased room revenue, partially offset by higher operating expenses and lower mortgage interest expense. A significant driver of the year-over year operating expense increase was the non-recurrence of a management incentive fee waiver recognized in the prior-year period (approximately $1.030 million).

The following table sets forth a more detailed presentation of Hotel operations for the six months ended December 31, 2025 and 2024:

| For the six months ended December 31, Hotel revenues: | 2025 | 2024 |
| --- | ---: | ---: |
| Hotel rooms | $21,483,000 | $18,511,000 |
| Food and beverage | 1,532,000 | 1,387,000 |
| Garage | 1,722,000 | 1,655,000 |
| Other operating departments | 342,000 | 232,000 |
| Total Hotel revenues | 25,079,000 | 21,785,000 |
| Operating expenses excluding depreciation and amortization | (20,908,000) | (17,847,000) |
| Operating income before interest expense, depreciation and amortization | 4,171,000 | 3,938,000 |
| Interest expense - mortgage | (4,878,000) | (5,669,000) |
| Depreciation and amortization expense | (1,839,000) | (1,832,000) |
| Net loss from Hotel operations | $(2,546,000) | $(3,563,000) |

For the six months ended December 31, 2025, the Hotel had operating income of $4,171,000 before interest expense and depreciation and amortization expense on total operating revenues of $25,079,000 compared to operating income of $3,938,000 before interest expense and depreciation and amortization expense on total operating revenues of $21,785,000 for the six months ended December 31, 2024. Hotel revenues increased $3,294,000, driven primarily by higher room revenue. Operating expenses (excluding depreciation and amortization expenses) increased $3,061,000 due to the absence of a management incentive fee waiver in the prior-year period (approximately $1.030 million), partially offset by cost-control efforts and other operating variances. Mortgage interest expense decreased by $791,000 primarily reflecting changes in debt terms following the March 2025 refinancing. Depreciation and amortization expense was relatively consistent period over period.

The following table sets forth the ADR, occupancy, and RevPAR of the Hotel for the six months ended December 31, 2025 and 2024.

| Six Months Ended December 31, | Average Daily Rate | Average Occupancy % | RevPAR |
| --- | ---: | ---: | ---: |
| **2025** | $226 | 94% | $211 |
| **2024** | $200 | 92% | $184 |

As shown in the operating metrics table above, ADR and occupancy increased year-over-year, resulting in higher RevPAR for the six months ended December 31, 2025.

### Real Estate Operations

Revenue from real estate operations increased to $10,135,000 for the six months ended December 31, 2025 from $9,562,000 for the six months ended December 31, 2024, primarily driven by stronger multifamily occupancy and rental rate trends across the portfolio. Operating expenses increased to $4,757,000 from $4,665,000, reflecting higher labor-related costs and property-level operating and maintenance costs.

During the six months ended December 31, 2025, the Company recorded a $3,508,000 gain on the sale of a non-core multifamily property in Los Angeles County, which is included in gain on sale of real estate (see Note 15).

### Investment Transactions

The Company had a net gain on marketable securities of $97,000 for the six months ended December 31, 2025 compared to a net loss of $469,000 for the six months ended December 31, 2024. For the six months ended December 31, 2025, the Company recorded a net realized gain of $20,000 and a net unrealized gain of $77,000. Dividend and interest income was $4,000 for the six months ended December 31, 2025 compared to $121,000 for the six months ended December 31, 2024. Trading and management expenses were $600,000 for the six months ended December 31, 2025 compared to $613,000 for the six months ended December 31, 2024. The Company did not incur margin interest expense during the six months ended December 31, 2025, compared to $48,000 during the six months ended December 31, 2024. As a result, net loss from investment transactions was $499,000 for the six months ended December 31, 2025 compared to $1,009,000 for the six months ended December 31, 2024. For the six months ended December 31, 2024, the Company had a net realized loss of $255,000 and a net unrealized loss of $214,000. See Note 6 – Investment in Marketable Securities.

### Tax Estimates

The Company and Portsmouth compute and file income tax returns separately and, for financial reporting purposes, each entity records a discrete income tax provision. Income tax expense for the six months ended December 31, 2025 and December 31, 2024 primarily reflects the combined income tax effect of Portsmouth’s pretax loss (including Hotel operations) and InterGroup’s standalone pretax income.

### MARKETABLE SECURITIES

The following tables present the composition of the Company’s marketable securities portfolio at period-end and the related net gains and losses on marketable securities, dividends and interest income, margin interest (if any), and trading and management expenses for the periods presented.

| As of December 31, 2025 Industry Group | Fair Value | % of Total Investment Securities |
| --- | ---: | ---: |
| REITs and real estate companies | $925,000 | 100% |
| Technology | 1,000 | 0% |
|  | $926,000 | 100% |

| As of June 30, 2025 Industry Group | Fair Value | % of Total Investment Securities |
| --- | ---: | ---: |
| REITs and real estate companies | $966,000 | 100% |
| Technology | 3,000 | 0% |
|  | $969,000 | 100% |

- 24-

The following table shows the net gains and losses on the Company’s marketable securities and the associated margin interest and trading expenses for the respective periods:

| For the three months ended December 31, | 2025 | 2024 |
| --- | ---: | ---: |
| Net loss on marketable securities | $(39,000) | $(598,000) |
| Dividend and interest income | 2,000 | 34,000 |
| Margin interest expense | - | (13,000) |
| Trading and management expenses | (303,000) | (324,000) |
| Net loss from investment transactions | $(340,000) | $(901,000) |

| For the six months ended December 31, | 2025 | 2024 |
| --- | ---: | ---: |
| Net gain (loss) on marketable securities | $97,000 | $(469,000) |
| Dividend and interest income | 4,000 | 121,000 |
| Margin interest expense | - | (48,000) |
| Trading and management expenses | (600,000) | (613,000) |
| Net loss from investment transactions | $(499,000) | $(1,009,000) |

### FINANCIAL CONDITION AND LIQUIDITY

As of December 31, 2025, the Company had cash and cash equivalents of $6,576,000, restricted cash of $8,391,000, and marketable securities (net of margin balances) of $926,000, compared to $5,092,000, $10,103,000, and $969,000, respectively, as of June 30, 2025 (each of the June 30, 2025 amounts includes balances classified as held for sale).

Parent Company (InterGroup) – Liquidity and Capital Resources

InterGroup’s parent-level liquidity is generated primarily from cash flows from its multifamily and commercial real estate operations and cash on hand, and is for corporate overhead, income taxes, debt service on non-hotel mortgages, and capital expenditures across its real estate portfolio. InterGroup does not rely on Portsmouth for parent-level liquidity.

In December 2025, the Company sold a non-core 12-unit multifamily property in Los Angeles County that had been classified as held for sale at June 30, 2025. Net proceeds from the sale of approximately $2.6 million were used for general corporate purposes, including working capital.

### Related-Party Credit Facility (InterGroup as lender; Portsmouth as borrower)

Portsmouth maintains an unsecured revolving credit facility with InterGroup as a contingency source of liquidity. As of December 31, 2025, the outstanding balance was $38,108,000. The facility bears interest at 9%, matures July 31, 2027, and is payable at maturity; amounts due under the facility are eliminated in consolidation. See Note 12 – Related Party Transactions.

Cash receipts at the Hotel are subject to a lender-controlled cash-management/lockbox arrangement at Portsmouth’s subsidiaries, which may limit distributions upstream while in effect (see Note 13 – Mortgage Notes Payable and Mezzanine Financing).

For additional information regarding Portsmouth’s prior going-concern evaluation and the March 2025 refinancing, see the Company’s Annual Report on Form 10-K for the year ended June 30, 2025 and Portsmouth’s Annual Report on Form 10-K for the year ended June 30, 2025.

See Note 11 – Other Notes Payable, Note 12 – Related Party Transactions and Note 13 - Mortgage Notes Payable and Mezzanine Financing for additional information.

### OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2025, the Company had no material off-balance sheet arrangements as defined in Item 303(a) of Regulation S-K.

### MATERIAL CONTRACTUAL OBLIGATIONS

As of December 31, 2025, the Company’s material contractual obligations (including estimated interest) totaled $233,246,000, consisting of $195,315,000 of mortgage and subordinated notes payable, $1,696,000 of other notes payable, and $36,235,000 of interest. The largest concentration of these obligations occurs in fiscal year 2027, reflecting scheduled maturities and payments totaling $120,082,000. The Company expects to address these obligations through a combination of property-level cash flows, cash on hand, and, as applicable, refinancing or extension alternatives consistent with the terms of its debt arrangements. There can be no assurance that refinancing or extension alternatives will be available on acceptable terms, if at all.

Of the amounts shown, Hotel-related mortgage and mezzanine obligations are obligations of Portsmouth’s subsidiaries; InterGroup’s parent-level mortgages relate to its non-Hotel real estate portfolio.

|  | Total | 6 Months 2026 | Year 2027 | Year 2028 | Year 2029 | Year 2030 | Thereafter |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage and subordinated notes payable | $195,315,000 | $594,000 | $104,858,000 | $6,589,000 | $1,846,000 | $16,033,000 | $65,395,000 |
| Other notes payable | 1,696,000 | 283,000 | 463,000 | 317,000 | 317,000 | 316,000 | - |
| Interest | 36,235,000 | 5,775,000 | 14,761,000 | 2,643,000 | 2,578,000 | 2,434,000 | 8,044,000 |
| Total | $233,246,000 | $6,652,000 | $120,082,000 | $9,549,000 | $4,741,000 | $18,783,000 | $73,439,000 |

### 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. Since Aimbridge has the power and ability under the terms of its management agreement to adjust hotel room rates on an ongoing basis, management believes there has not been a material adverse impact on the Hotel’s revenues due to inflation. For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material. However, inflationary pressures on wages, utilities, food and beverage costs, and other operating expenses could adversely affect operating margins to the extent such increases cannot be offset through pricing actions or operating efficiencies.

The Company’s residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Accordingly, management believes the Company generally has the ability to adjust rental rates over time to reflect changes in operating costs, although there can be no assurance that rental-rate increases will fully offset inflationary costs pressures.

### CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Critical accounting policies are those that are most significant to the portrayal of our financial position and results of operations and require judgments by management to make estimates about the effect of matters that are inherently uncertain. The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, including those related consolidation, revenue recognition, allowance for credit losses, accrued liabilities, impairment assessments, investments, income taxes, and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, and use the results of those assumptions to form judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. There have been no material changes to the Company’s critical accounting policies during the six months ended December 31, 2025. For a discussion of the Company’s critical accounting policies and estimates, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

### INCOME TAXES

We apply ASC 740 in accounting for income taxes. Significant judgment is required to estimate the future tax consequences of events recognized in our condensed consolidated financial statements and tax returns, including the realizability of deferred tax assets and the effects of changes in tax laws or their interpretation. Our income tax returns are subject to examination by the IRS and other taxing authorities; changes in our assessment of these matters could materially affect our consolidated financial statements. We evaluate tax positions taken or expected to be taken on a tax return and recognize benefits only when it is more-likely-than-not that the position will be sustained upon examination, based on the technical merits and assuming full knowledge by the taxing authority. For positions that meet this threshold, the recognized benefit is measured as the largest amount of tax benefit that is greater than 50% likely to be realized upon settlement. Positions that do not meet the recognition threshold are not recognized. Changes in these estimates and judgments could materially affect our condensed consolidated financial statements. We recognize interest and penalties related to uncertain tax positions in income tax expense.

### DEFERRED INCOME TAXES – VALUATION ALLOWANCE

We assess the realizability of deferred tax assets (“DTA”) each reporting period on a jurisdiction-by-jurisdiction basis. A valuation allowance is recorded when it is more-likely-than not that some or all DTAs will not be realized. In forming this conclusion, we weigh all available positive and negative evidence, placing significant weight on objectively verifiable evidence, including recent financial results.

Cumulative pre-tax losses over the preceding three years constitute significant negative evidence that DTAs may not be realizable, while cumulative pre-tax income provides objective positive evidence of our ability to generate taxable income. Consistent with GAAP, when there is a recent history of pre-tax losses, limited or no weight is placed on forecasts in assessing DTA realizability. When relevant, we use systematic and logical scheduling to estimate the timing of reversal of temporary differences (i.e., when deferred tax liabilities will generate taxable income and when DTAs will generate deductions). These assessments require assumptions and judgments and are inherently complex and subjective. Significant judgment is also required to determine the timing and amount of any future release of the valuation allowance should our evidence change.

### HOTEL ASSETS AND DEFINITE-LIVED INTANGIBLE ASSETS

We review hotel property and equipment and definite-lived intangible assets (together, “long-lived assets”) each quarter and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We generally assess recoverability at the property (asset-group) level (the lowest level for which identifiable cash flows are largely independent).

When indicators of impairment exist, we compare the carrying amount to the sum of the asset group’s undiscounted cash flows expected from use and eventual disposition. If the carrying amount is not recoverable, an impairment loss is measured as the excess of the carrying amount over fair value. Fair value is estimated using market and/or income approaches, which require significant judgment, including assumptions about occupancy, ADR/RevPAR, operating margins, required capital expenditures, terminal values, and market discount and capitalization rates. Our indicators of impairment assessment consider industry conditions, property location, market dynamics, historical performance, and property-specific facts available at the time; conclusions may vary from period to period as facts change.

Changes in economic or operating conditions, or in the estimates and assumptions used in our analysis, could result in future impairment charges.

No impairment losses were recorded for the six months ended December 31, 2025 and 2024, respectively.

### STOCK-BASED COMPENSATION

We account for stock-based compensation by measuring and recognizing as compensation cost the fair value of all share-based payment awards made to employees, including employee stock options, restricted stock awards and purchases under our Employee Stock Purchase Plan (“ESPP”), based on estimated grant-date fair values. The determination of fair value involves significant judgment. We use the Black-Scholes option pricing model to estimate the value of employee stock options which requires assumptions, including the expected volatility of our stock and employee exercise behavior, which are based on historical data as well as expectations of future developments over the term of the options.

## Controls and procedures

As filed, 2,643 characters.

### EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2025. Based on that evaluation, management concluded that the Company’s disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Management identified a material weakness related to the design and operation of controls over the interpretation and accounting for stock-based compensation.

Considering this material weakness, management performed additional analysis and other procedures to ensure the financial statements in this Form 10-Q are prepared in conformity with U.S. GAAP. Management believes the financial statements included in this report present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented.

Management is in the process of remediating the material weakness and plans to: (i) formalize and implement a comprehensive stock-based compensation accounting policy, including grant-date measurement, modification accounting, and related income-tax effects; (ii) enhance review controls over the classification and valuation of awards, supported by a documented checklist and calendar; (iii) provide targeted training to accounting personnel; and (iv) engage an external technical accounting resource to assist with complex or non-routine equity transactions until internal expertise is fully established. Management will monitor the effectiveness of these actions and will consider the material weakness remediated when the enhanced controls operate for a sufficient period and are tested successfully.

### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, other than the matters described above under “Evaluation of Disclosure Controls and Procedures” regarding the material weakness and the Company’s remediation plan.

### PART II

### OTHER INFORMATION

Filed Feb 12, 2026.
Source: SEC EDGAR, the filing index for accession 0001493152-26-006429. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.