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LIQUIDITY | 9 Months Ended
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Mar. 31, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
LIQUIDITY | NOTE 2 - LIQUIDITY 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. As a result, the Company experienced net cash provided for operating activities of $1,725,000 for the nine months ended March 31, 2025. In response to ongoing market pressures, Portsmouth 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, 2025, Portsmouth continued to invest in property enhancements, incurring capital expenditure of $912,000. During the same period, the Company made capital improvements in the amount of $1,329,000 to its multi-family and commercial real estate. As of March 31, 2025, the Company had:
| ● | Cash and cash equivalents of $4,017,000 (compared to $4,333,000 as of June 30, 2024),
| ● | Restricted cash of $9,377,000 (compared to $4,361,000 as of June 30, 2024), and
| ● | Marketable securities, net of margin balances, of $751,000 (compared to $7,266,000 as of June 30, 2024). These securities are considered liquid and available for short-term needs.
Related Party Financing To supplement its liquidity position, the Company maintains access to an unsecured loan facility with its subsidiary company, Portsmouth Square, Inc (“Portsmouth”), a related party. The initial facility, dated July 2, 2014, has undergone several amendments. In March 2025, the facility was amended to:
| ● | Increase the available borrowing capacity to $40,000,000, and
| ● | Extend the maturity date to July 31, 2027.
During the nine months ended March 31, 2025, Portsmouth borrowed an additional $11,615,000 under this facility to support Hotel operations. As of March 31, 2025, the outstanding loan balance was $38,108,000, with no principal repayments made to date. All material intercompany accounts and transactions have been eliminated in consolidation. Real Estate In December 2024, the Company refinanced mortgage on its 157-unit apartment located in Florence, Kentucky in the amount of $9,800,000. The new 10-year interest only loan has an interest rate of 5.40%. The loan matures in January 2035. Liquidity Outlook and Going Concern Considerations The Company’s short-term liquidity requirements include payments for Hotel operating costs, payroll, management and franchise fees, taxes, corporate overhead, interest on outstanding debt, and regular maintenance. Long-term liquidity requirements primarily include scheduled debt maturities and continued capital investments to maintain the Hotel’s competitive positioning. As described in Note 1, the Company has made substantial progress in refinancing its mortgage and mezzanine debt obligations, which previously raised doubt regarding its near-term financial viability. On March 28, 2025, the Company completed the refinancing of its senior mortgage and modified its mezzanine debt structure, both of which provide near-term relief and reduce imminent refinancing risk. Nonetheless, the Company’s liquidity position continues to be impacted by broader macroeconomic and market-specific factors, including high interest rates, ongoing weakness in San Francisco’s business travel segment, and elevated operating costs. These uncertainties, combined with the need to maintain compliance with newly established debt covenants, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the issuance of these financial statements. Management continues to evaluate financing strategies, capital allocation decisions, and operating efficiencies to preserve liquidity. There can be no assurance, however, that these initiatives will be sufficient to meet all of the Company’s liquidity requirements, particularly in the event of continued market underperformance. The following table provides a summary as of March 31, 2025, the Company’s material financial obligations which also includes interest payments. SCHEDULE OF MATERIAL FINANCING OBLIGATION
|  |  |  |  | 3 Months |  |  | Year |  |  | Year |  |  | Year |  |  | Year |  |  |  |
|  | Total |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | 2029 |  |  | Thereafter |
Mortgage and subordinated notes payable |  | $ | 198,396,000 |  |  | $ | 5,589,000 |  |  | $ | 1,162,000 |  |  | $ | 106,596,000 |  |  | $ | 1,770,000 |  |  | $ | 1,845,000 |  |  | $ | 81,434,000 |
Other notes payable |  |  | 2,121,000 |  |  |  | 142,000 |  |  |  | 567,000 |  |  |  | 463,000 |  |  |  | 317,000 |  |  |  | 317,000 |  |  |  | 315,000 |
Interest |  |  | 40,970,000 |  |  |  | 2,454,000 |  |  |  | 11,667,000 |  |  |  | 11,098,000 |  |  |  | 2,648,000 |  |  |  | 2,582,000 |  |  |  | 10,521,000 |
Total |  | $ | 241,487,000 |  |  | $ | 8,185,000 |  |  | $ | 13,396,000 |  |  | $ | 118,157,000 |  |  | $ | 4,735,000 |  |  | $ | 4,744,000 |  |  | $ | 92,270,000 |

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- Definition The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-40/tableOfContent + Details
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