x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
CALIFORNIA | | 94-1674111 |
(State or other jurisdiction of | | (I.R.S. Employer |
Incorporation or organization) | | Identification No.) |
Large accelerated filer ¨ | Accelerated filer ¨ |
| |
Non-accelerated filer ¨ | Smaller reporting company x |
| | Page |
| PART I | |
Item 1. | Business. | 4 |
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Item 1A. | Risk Factors. | 10 |
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Item 1B. | Unresolved Staff Comments. | 10 |
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Item 2. | Properties. | 10 |
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Item 3. | Legal Proceedings. | 11 |
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Item 4. | Mine Safety Disclosures | 11 |
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| PART II | |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 12 |
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Item 6. | Selected Financial Data. | 12 |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 13 |
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. | 18 |
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Item 8. | Financial Statements and Supplementary Data. | 18 |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. | 40 |
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Item 9A. | Controls and Procedures. | 40 |
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Item 9B. | Other Information. | 40 |
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| PART III | |
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Item 10. | Directors, Executive Officers and Corporate Governance. | 41 |
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Item 11. | Executive Compensation. | 44 |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 46 |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence. | 47 |
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Item 14. | Principal Accounting Fees and Services | 48 |
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| PART IV | |
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Item 15. | Exhibits, Financial Statement Schedules | 49 |
| | |
Signatures | 51 |
| • | risks associated with the lodging industry, including competition, increases in wages, labor relations, energy and fuel costs, actual and threatened pandemics, actual and threatened terrorist attacks, and downturns in domestic and international economic and market conditions, particularly in the San Francisco Bay area; |
| • | risks associated with the real estate industry, including changes in real estate and zoning laws or regulations, increases in real property taxes, rising insurance premiums, costs of compliance with environmental laws and other governmental regulations; |
| • | the availability and terms of financing and capital and the general volatility of securities markets; |
| • | changes in the competitive environment in the hotel industry; |
| • | risks related to natural disasters; |
| • | litigation; and |
| • | other risk factors discussed below in this Report. |
| · | Competition for guests and meetings from other hotels including competition and pricing pressure from internet wholesalers and distributors; |
| · | increases in operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may not be offset in the future by increased room rates; |
| · | labor strikes, disruptions or lock outs; |
| · | dependence on demand from business and leisure travelers, which may fluctuate and is seasonal; |
| · | increases in energy costs, cost of fuel, airline fares and other expenses related to travel, which may negatively affect traveling; |
| · | terrorism, terrorism alerts and warnings, wars and other military actions, pandemics or other medical events or warnings which may result in decreases in business and leisure travel; |
| · | natural disasters; and |
| · | adverse effects of downturns and recessionary conditions in international, national and/or local economies and market conditions. |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
| | | | | | ||
Fiscal 2013 | | High | | Low | | ||
| | | | | | | |
First Quarter (7/ 1 to 9/30) | | $ | 30.00 | | $ | 21.10 | |
Second Quarter (10/1 to 12/31) | | $ | 30.00 | | $ | 30.00 | |
Third Quarter (1/1 to 3/31) | | $ | 35.00 | | $ | 25.00 | |
Fourth Quarter (4/1 to 6/30) | | $ | 35.00 | | $ | 26.00 | |
| | | | | | | |
Fiscal 2012 | | | | | | | |
| | | | | | | |
First Quarter (7/ 1 to 9/30) | | $ | 25.00 | | $ | 23.00 | |
Second Quarter (10/1 to 12/31) | | $ | 23.00 | | $ | 21.00 | |
Third Quarter (1/1 to 3/31) | | $ | 28.00 | | $ | 21.00 | |
Fourth Quarter (4/1 to 6/30) | | $ | 28.00 | | $ | 25.00 | |
For the years ended June 30, | | 2013 | | 2012 | | ||
Hotel revenues: | | | | | | | |
Hotel rooms | | $ | 36,378,000 | | $ | 32,893,000 | |
Food and beverage | | | 6,617,000 | | | 5,779,000 | |
Garage | | | 2,786,000 | | | 2,765,000 | |
Other operating departments | | | 784,000 | | | 1,025,000 | |
Total hotel revenues | | | 46,565,000 | | | 42,462,000 | |
Operating expenses excluding interest, depreciation and amortization | | | (38,635,000) | | | (33,465,000) | |
Operating income before interest, depreciation and amortization | | | 7,930,000 | | | 8,997,000 | |
Interest | | | (2,612,000) | | | (2,724,000) | |
Depreciation and amortization | | | (2,257,000) | | | (2,163,000) | |
| | | | | | | |
Income from hotel operations | | $ | 3,061,000 | | $ | 4,110,000 | |
Fiscal Year | | Average | | Average | | | | | | |||
ended June 30, | | Daily Rate | | Occupancy % | | | RevPar | | ||||
| | | | | | | | | | | | |
| 2013 | | $ | 205 | | | 90 | % | | $ | 184 | |
| 2012 | | $ | 191 | | | 87 | % | | $ | 166 | |
As of June 30, 2013 | | | | | % of Total | | |
| | | | | Investment | | |
Industry Group | | Fair Value | | Securities | | ||
| | | | | | | |
Basic materials | | $ | 1,513,000 | | | 45.5 | % |
Technology | | | 622,000 | | | 18.7 | % |
Financial services | | | 526,000 | | | 15.8 | % |
REITs and real estate companies | | | 255,000 | | | 7.7 | % |
Other | | | 408,000 | | | 12.3 | % |
| | $ | 3,324,000 | | | 100.0 | % |
As of June 30, 2012 | | | | | % of Total | | |
| | | | | Investment | | |
Industry Group | | Fair Value | | Securities | | ||
| | | | | | | |
Basic materials | | $ | 1,660,000 | | | 61.9 | % |
Technology | | | 266,000 | | | 9.9 | % |
Financial services | | | 228,000 | | | 8.5 | % |
REITs and real estate companies | | | 177,000 | | | 6.6 | % |
Other | | | 352,000 | | | 13.1 | % |
| | $ | 2,683,000 | | | 100.0 | % |
| | Total | | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Thereafter | | |||||||
Mortgage notes payable | | $ | 43,413,000 | | $ | 960,000 | | $ | 1,015,000 | | $ | 41,438,000 | | $ | - | | $ | - | | $ | - | |
Other notes payable | | $ | 1,595,000 | | | 1,392,000 | | | 60,000 | | | 45,000 | | | 51,000 | | | 47,000 | | | - | |
Interest | | $ | 5,546,000 | | | 2,585,000 | | | 2,423,000 | | | 527,000 | | | 9,000 | | | 2,000 | | | - | |
Total | | $ | 50,554,000 | | $ | 4,937,000 | | $ | 3,498,000 | | $ | 42,010,000 | | $ | 60,000 | | $ | 49,000 | | $ | - | |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | PAGE |
| |
Report of Independent Registered Public Accounting Firm | 19 |
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Consolidated Balance Sheets - June 30, 2013 and 2012 | 20 |
| |
Consolidated Statements of Operations - For years ended June 30, 2013 and 2012 | 21 |
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Consolidated Statements of Shareholders’ Deficit For years ended June 30, 2013 and 2012 | 22 |
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Consolidated Statements of Cash Flows - For years ended June 30, 2013 and 2012 | 23 |
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Notes to the Consolidated Financial Statements | 24 - 39 |
/s/ Burr Pilger Mayer, Inc. | |
| |
San Francisco, California | |
September 18, 2013 | |
As of June 30, | | 2013 | | 2012 | | ||
| | | | | | | |
ASSETS | | | | | | | |
Investment in hotel, net | | $ | 34,048,000 | | $ | 32,822,000 | |
Investment in real estate | | | 973,000 | | | 973,000 | |
Investment in marketable securities | | | 3,324,000 | | | 2,683,000 | |
Other investments, net | | | 5,160,000 | | | 5,311,000 | |
Cash and cash equivalents | | | 668,000 | | | 1,032,000 | |
Accounts receivable - hotel, net | | | 1,957,000 | | | 1,641,000 | |
Other assets, net | | | 2,004,000 | | | 2,371,000 | |
Deferred tax asset | | | 3,193,000 | | | 3,236,000 | |
| | | | | | | |
Total assets | | $ | 51,327,000 | | $ | 50,069,000 | |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | | |
Liabilities: | | | | | | | |
Accounts payable and other liabilities | | $ | 9,176,000 | | $ | 8,438,000 | |
Due to securities broker | | | 579,000 | | | 53,000 | |
Obligations for securities sold | | | 531,000 | | | 188,000 | |
Other notes payable | | | 1,595,000 | | | 2,072,000 | |
Mortgage notes payable - hotel | | | 43,413,000 | | | 44,321,000 | |
| | | | | | | |
Total liabilities | | | 55,294,000 | | | 55,072,000 | |
| | | | | | | |
Commitments and contingencies | | | | | | | |
Shareholders' deficit: | | | | | | | |
Common stock, no par value: Authorized shares - 750,000; 734,183 shares issued and outstanding shares | | | 2,092,000 | | | 2,092,000 | |
Additional paid-in-capital | | | 916,000 | | | 916,000 | |
Retained earnings | | | 574,000 | | | 263,000 | |
Total Portsmouth shareholders' equity | | | 3,582,000 | | | 3,271,000 | |
Noncontrolling interest | | | (7,549,000) | | | (8,274,000) | |
Total shareholders' deficit | | | (3,967,000) | | | (5,003,000) | |
| | | | | | | |
Total liabilities and shareholders' deficit | | $ | 51,327,000 | | $ | 50,069,000 | |
For the years ended June 30, | | 2013 | | 2012 | | ||
| | | | | | | |
Revenue - Hotel | | $ | 46,565,000 | | $ | 42,462,000 | |
| | | | | | | |
Costs and operating expenses | | | | | | | |
Hotel operating expenses | | | (38,635,000) | | | (33,465,000) | |
Depreciation and amortization expense | | | (2,257,000) | | | (2,163,000) | |
General and administrative expense | | | (642,000) | | | (595,000) | |
| | | | | | | |
Total costs and operating expenses | | | (41,534,000) | | | (36,223,000) | |
| | | | | | | |
Income from operations | | | 5,031,000 | | | 6,239,000 | |
| | | | | | | |
Other income (expense) | | | | | | | |
Interest expense | | | (2,612,000) | | | (2,724,000) | |
Loss on marketable securities | | | (507,000) | | | (1,045,000) | |
Net unrealized loss on other investments | | | (116,000) | | | (187,000) | |
Impairment loss on other investments | | | (35,000) | | | (335,000) | |
Dividend and interest income | | | 349,000 | | | 385,000 | |
Trading and margin interest expense | | | (231,000) | | | (232,000) | |
| | | | | | | |
Net other expense | | | (3,152,000) | | | (4,138,000) | |
| | | | | | | |
Income before income taxes | | | 1,879,000 | | | 2,101,000 | |
Income tax (expense) benefit | | | (59,000) | | | 1,000 | |
| | | | | | | |
Net income | | | 1,820,000 | | | 2,102,000 | |
Less: Net income attributable to the noncontrolling interest | | | (1,325,000) | | | (1,868,000) | |
| | | | | | | |
Net income attributable to Portsmouth | | $ | 495,000 | | $ | 234,000 | |
| | | | | | | |
Basic and diluted income per share attributable to Portsmouth | | $ | 0.67 | | $ | 0.32 | |
| | | | | | | |
Weighted average number of common shares outstanding | | | 734,183 | | | 734,183 | |
| | | | | | | | | | Retained | | Total | | | | | | | | ||
| | | | Additional | | Earnings | | Portsmouth | | | | | Total | | |||||||
| | Common Stock | | Paid-in | | (Accumulated | | Shareholders' | | Noncontrolling | | Shareholders' | | ||||||||
| | Shares | | Amount | | Capital | | Deficit) | | Equity | | Interest | | Deficit | | ||||||
| | | | | | | | | | | | | | | | | | | | | |
Balance at June 30, 2011 | | 734,183 | | $ | 2,092,000 | | $ | 916,000 | | $ | 29,000 | | $ | 3,037,000 | | $ | (9,642,000) | | $ | (6,605,000) | |
| | | | | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | 234,000 | | | 234,000 | | | 1,868,000 | | | 2,102,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Distributions to noncontrolling interest | | | | | | | | | | | | | | | | | (500,000) | | | (500,000) | |
| | | | | | | | | | | | | | | | | | | | | |
Balance at June 30, 2012 | | 734,183 | | | 2,092,000 | | | 916,000 | | | 263,000 | | | 3,271,000 | | | (8,274,000) | | | (5,003,000) | |
| | | | | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | 495,000 | | | 495,000 | | | 1,325,000 | | | 1,820,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Distributions to noncontrolling interest | | | | | | | | | | | | | | | | | (600,000) | | | (600,000) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends paid | | | | | | | | | | | (184,000) | | | (184,000) | | | | | | (184,000) | |
| | | | | | | | | | | | | | | | | | | | | |
Balance at June 30, 2013 | | 734,183 | | $ | 2,092,000 | | $ | 916,000 | | $ | 574,000 | | $ | 3,582,000 | | $ | (7,549,000) | | $ | (3,967,000) | |
For the years ended June 30, | | 2013 | | 2012 | | ||
Cash flows from operating activities: | | | | | | | |
Net income | | $ | 1,820,000 | | $ | 2,102,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Net unrealized loss on marketable securities | | | 456,000 | | | 798,000 | |
Unrealized loss on other investments | | | 116,000 | | | 187,000 | |
Impairment loss on other investments | | | 35,000 | | | 335,000 | |
Depreciation and amortization | | | 2,257,000 | | | 2,163,000 | |
Changes in assets and liabilities: | | | | | | | |
Investment in marketable securities | | | (1,097,000) | | | 1,385,000 | |
Accounts receivable - hotel, net | | | (316,000) | | | 42,000 | |
Other assets, net | | | 243,000 | | | (472,000) | |
Accounts payable and other liabilities | | | 738,000 | | | 477,000 | |
Due to securities broker | | | 526,000 | | | (1,782,000) | |
Obligations for securities sold | | | 343,000 | | | 35,000 | |
Deferred income taxes | | | 43,000 | | | (37,000) | |
Net cash provided by operating activities | | | 5,164,000 | | | 5,233,000 | |
| | | | | | | |
Cash flows from investing activities: | | | | | | | |
Payments for hotel furniture, equipment and building improvements | | | (3,359,000) | | | (2,819,000) | |
Other investments, net | | | - | | | 80,000 | |
Net cash used in investing activities | | | (3,359,000) | | | (2,739,000) | |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
Distributions and dividends to noncontrolling interest | | | (784,000) | | | (500,000) | |
Payments on mortgage notes payable | | | (908,000) | | | (858,000) | |
Payments on other notes payable | | | (477,000) | | | (714,000) | |
Net cash used in financing activities | | | (2,169,000) | | | (2,072,000) | |
| | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (364,000) | | | 422,000 | |
Cash and cash equivalents at beginning of year | | | 1,032,000 | | | 610,000 | |
Cash and cash equivalents at end of year | | $ | 668,000 | | $ | 1,032,000 | |
| | | | | | | |
Supplemental information: | | | | | | | |
Income tax (paid) refund | | $ | (119,000) | | $ | 1,000 | |
Interest paid | | $ | 2,659,000 | | $ | 2,771,000 | |
24 |
25 |
| | | | | Accumulated | | Net Book | | ||
June 30, 2013 | | Cost | | Depreciation | | Value | | |||
| | | | | | | | | | |
Land | | $ | 1,124,000 | | $ | - | | $ | 1,124,000 | |
Furniture and equipment | | | 22,270,000 | | | (19,312,000) | | | 2,958,000 | |
Building and improvements | | | 50,473,000 | | | (20,507,000) | | | 29,966,000 | |
| | $ | 73,867,000 | | $ | (39,819,000) | | $ | 34,048,000 | |
| | | | | Accumulated | | Net Book | | ||
June 30, 2012 | | Cost | | Depreciation | | Value | | |||
| | | | | | | | | | |
Land | | $ | 1,124,000 | | $ | - | | $ | 1,124,000 | |
Furniture and equipment | | | 20,855,000 | | | (18,187,000) | | | 2,668,000 | |
Building and improvements | | | 48,529,000 | | | (19,499,000) | | | 29,030,000 | |
| | $ | 70,508,000 | | $ | (37,686,000) | | $ | 32,822,000 | |
| | | | | Gross | | Gross | | Net | | Fair | | ||||
Investment | | Cost | | Unrealized Gain | | Unrealized Loss | | Unrealized Gain | | Value | | |||||
| | | | | | | | | | | | | | | | |
As of June 30, 2013 | | | | | | | | | | | | | | | | |
Corporate | | | | | | | | | | | | | | | | |
Equities | | $ | 3,104,000 | | $ | 992,000 | | $ | (772,000) | | $ | 220,000 | | $ | 3,324,000 | |
| | | | | | | | | | | | | | | | |
As of June 30, 2012 | | | | | | | | | | | | | | | | |
Corporate | | | | | | | | | | | | | | | | |
Equities | | $ | 2,118,000 | | $ | 1,292,000 | | $ | (727,000) | | $ | 565,000 | | $ | 2,683,000 | |
For the year ended June 30, | | 2013 | | 2012 | | ||
Realized loss on marketable securities | | $ | (51,000) | | $ | (247,000) | |
Unrealized loss on marketable securities | | | (456,000) | | | (798,000) | |
| | | | | | | |
Net loss on marketable securities | | $ | (507,000) | | $ | (1,045,000) | |
Type | | June 30, 2013 | | June 30, 2012 | | ||
Preferred stock - Comstock, at cost | | $ | 4,410,000 | | $ | 4,410,000 | |
Private equity hedge fund, at cost | | | 646,000 | | | 681,000 | |
Corporate debt and equity instruments, at cost | | | 101,000 | | | 101,000 | |
Warrants - at fair value | | | 3,000 | | | 119,000 | |
| | $ | 5,160,000 | | $ | 5,311,000 | |
As of June 30, 2013 | | | | | | | | | | | | | |
Assets: | | Level 1 | | Level 2 | | Level 3 | | Total | | ||||
Cash equivalents - money market | | $ | 3,000 | | $ | - | | $ | - | | $ | 3,000 | |
Other investments - warrants | | | - | | | - | | | 3,000 | | | 3,000 | |
Investment in marketable securities: | | | | | | | | | | | | | |
Basic materials | | | 1,513,000 | | | - | | | - | | | 1,513,000 | |
Technology | | | 622,000 | | | - | | | - | | | 622,000 | |
Financial services | | | 526,000 | | | - | | | - | | | 526,000 | |
REITs and real estate companies | | | 255,000 | | | - | | | - | | | 255,000 | |
Other | | | 408,000 | | | - | | | - | | | 408,000 | |
| | | 3,324,000 | | | - | | | - | | | 3,324,000 | |
| | $ | 3,327,000 | | $ | - | | $ | 3,000 | | $ | 3,330,000 | |
As of June 30, 2012 | | | | | | | | | | | | | |
Assets: | | Level 1 | | Level 2 | | Level 3 | | Total | | ||||
Cash equivalents - money market | | $ | 3,000 | | $ | - | | $ | - | | $ | 3,000 | |
Other investments - warrants | | | - | | | - | | | 119,000 | | | 119,000 | |
Investment in marketable securities: | | | | | | | | | | | | | |
Basic materials | | | 1,660,000 | | | - | | | - | | | 1,660,000 | |
Technology | | | 266,000 | | | - | | | - | | | 266,000 | |
Financial services | | | 228,000 | | | - | | | - | | | 228,000 | |
REITs and real estate companies | | | 177,000 | | | - | | | - | | | 177,000 | |
Other | | | 352,000 | | | - | | | - | | | 352,000 | |
| | | 2,683,000 | | | - | | | - | | | 2,683,000 | |
| | $ | 2,686,000 | | $ | - | | $ | 119,000 | | $ | 2,805,000 | |
| | | | | | | | | | | | | | Net loss for the year | | |
Assets | | Level 1 | | Level 2 | | Level 3 | | June 30, 2013 | | ended June 30, 2013 | | |||||
| | | | | | | | | | | | | | | | |
Other non-marketable investments | | $ | - | | $ | - | | $ | 5,157,000 | | $ | 5,157,000 | | $ | (35,000) | |
| | | | | | | | | | | | | | Net loss for the year | | |
Assets | | Level 1 | | Level 2 | | Level 3 | | June 30, 2012 | | ended June 30, 2012 | | |||||
| | | | | | | | | | | | | | | | |
Other non-marketable investments | | $ | - | | $ | - | | $ | 5,192,000 | | $ | 5,192,000 | | $ | (335,000) | |
| | 2013 | | 2012 | | ||
Inventory - hotel | | $ | 918,000 | | $ | 907,000 | |
Prepaid expenses | | | 581,000 | | | 945,000 | |
Miscellaneous assets, net | | | 505,000 | | | 519,000 | |
| | | | | | | |
Total other assets | | $ | 2,004,000 | | $ | 2,371,000 | |
June 30, 2013 | | June 30, 2012 | | Interest Rate | | Origination Date | | Maturity Date | | ||
| | | | | | | | | | | |
$ | 26,043,000 | | $ | 26,599,000 | | Fixed 5.22 % | | July 27, 2005 | | August 5, 2015 | |
| 17,370,000 | | | 17,722,000 | | Fixed 6.42 % | | March 27, 2007 | | August 5, 2015 | |
$ | 43,413,000 | | $ | 44,321,000 | | | | | | | |
For the year ending June 30, | | | | |
2014 | | $ | 2,352,000 | |
2015 | | | 1,075,000 | |
2016 | | | 41,483,000 | |
2017 | | | 51,000 | |
2018 | | | 47,000 | |
| | $ | 45,008,000 | |
For the years ended June 30, | | 2013 | | 2012 | | ||
Federal | | | | | | | |
Current tax expense | | $ | (10,000) | | $ | (24,000) | |
Deferred tax (expense) benefit | | | (116,000) | | | 45,000 | |
| | | (126,000) | | | 21,000 | |
State | | | | | | | |
Current tax expense | | | (6,000) | | | (12,000) | |
Deferred tax benefit (expense) | | | 73,000 | | | (8,000) | |
| | | 67,000 | | | (20,000) | |
| | | | | | | |
Total income tax (expense) benefit | | $ | (59,000) | | $ | 1,000 | |
For the years ended June 30, | | 2013 | | | 2012 | | |
| | | | | | | |
Statutory federal tax rate | | 34.0 | % | | 34.0 | % | |
State income taxes, net of federal tax benefit | | -2.4 | % | | 0.6 | % | |
Noncontrolling interest | | -24.1 | % | | -30.4 | % | |
Other | | -4.4 | % | | -4.2 | % | |
| | 3.1 | % | | 0.0 | % | |
| | 2013 | | 2012 | | ||
Deferred tax assets | | | | | | | |
Net operating loss carryforward | | $ | 4,307,000 | | $ | 4,560,000 | |
Investment reserve | | | 955,000 | | | 1,315,000 | |
Other | | | 592,000 | | | 54,000 | |
| | | 5,854,000 | | | 5,929,000 | |
Deferred tax liabilities | | | | | | | |
Unrealized gains on marketable securities | | | (1,553,000) | | | (1,798,000) | |
State taxes | | | (265,000) | | | (239,000) | |
Basis difference in Justice | | | (843,000) | | | (656,000) | |
| | | (2,661,000) | | | (2,693,000) | |
Net deferred tax assets | | $ | 3,193,000 | | $ | 3,236,000 | |
As of and for the year | Hotel | | Investment | | | | | | | | ||
ended June 30, 2013 | Operations | | Transactions | | Other | | Total | | ||||
| | | | | | | | | | | | |
Revenues | $ | 46,565,000 | | $ | - | | $ | - | | $ | 46,565,000 | |
Segment operating expenses | | (38,635,000) | | | - | | | (642,000) | | | (39,277,000) | |
Segment income (loss) | | 7,930,000 | | | - | | | (642,000) | | | 7,288,000 | |
Interest expense | | (2,612,000) | | | - | | | - | | | (2,612,000) | |
Depreciation and amortization expense | | (2,257,000) | | | - | | | - | | | (2,257,000) | |
Loss from investments | | - | | | (540,000) | | | - | | | (540,000) | |
Income tax expense | | - | | | - | | | (59,000) | | | (59,000) | |
Net income (loss) | $ | 3,061,000 | | $ | (540,000) | | $ | (701,000) | | $ | 1,820,000 | |
Total assets | $ | 34,048,000 | | $ | 8,484,000 | | $ | 8,795,000 | | $ | 51,327,000 | |
As of and for the year | | Hotel | | Investment | | | | | | | | ||
ended June 30, 2012 | | Operations | | Transactions | | Other | | Total | | ||||
| | | | | | | | | | | | | |
Revenues | | $ | 42,462,000 | | $ | - | | $ | - | | $ | 42,462,000 | |
Segment operating expenses | | | (33,465,000) | | | - | | | (595,000) | | | (34,060,000) | |
Segment income (loss) | | | 8,997,000 | | | - | | | (595,000) | | | 8,402,000 | |
Interest expense | | | (2,724,000) | | | - | | | - | | | (2,724,000) | |
Depreciation and amortization expense | | | (2,163,000) | | | - | | | - | | | (2,163,000) | |
Loss from investments | | | - | | | (1,414,000) | | | - | | | (1,414,000) | |
Income tax benefit | | | - | | | - | | | 1,000 | | | 1,000 | |
Net income (loss) | | $ | 4,110,000 | | $ | (1,414,000) | | $ | (594,000) | | $ | 2,102,000 | |
Total assets | | $ | 32,822,000 | | $ | 7,994,000 | | $ | 9,253,000 | | $ | 50,069,000 | |
Name | | Position with the Company | | Age | | Term to Expire |
| | | | | | |
John V. Winfield | | Chairman of the Board; President | | 66 | | Fiscal 2013 Annual Meeting |
| | and Chief Executive Officer (1) | | | | |
| | | | | | |
Jerold R. Babin | | Director | | 79 | | Fiscal 2013 Annual Meeting |
| | | | | | |
Josef A. Grunwald | | Director | | 65 | | Fiscal 2013 Annual Meeting |
| | | | | | |
John C. Love | | Director (1)(2)(3) | | 73 | | Fiscal 2013 Annual Meeting |
| | | | | | |
William J. Nance | | Director(1)(2)(3) | | 69 | | Fiscal 2013 Annual Meeting |
| | | | | | |
Other Executive Officers: | | | | | | |
| | | | | | |
Michael G. Zybala | | Vice President, Secretary and General Counsel | | 61 | | N/A |
| | | | | | |
David T. Nguyen | | Treasurer and Controller (Principal Financial Officer) | | 39 | | N/A |
| | Annual Compensation | | | | | | | | | | | | | ||||
Name and | | Fiscal | | | | | | | | | All Other | | | | | | ||
Principal Position | | Year | | Salary | | | Bonus | | Compensation | | | Total | | |||||
| | | | | | | | | | | | | | | | | | |
John V. Winfield | | | 2013 | | $ | 134,000 | (1) | | | - | | $ | 17,000 | (2) | | $ | 151,000 | |
Chairman; President and Chief Executive Officer | | | 2012 | | $ | 134,000 | (1) | | | - | | $ | 17,000 | (2) | | $ | 151,000 | |
| | | | | | | | | | | | | | | | | | |
Michael G. Zybala | | | 2013 | | $ | 108,000 | | | $ | 15,000 | | | - | | | $ | 123,000 | |
Vice President, Secretary and General Counsel | | | 2012 | | $ | 101,000 | | | $ | 12,000 | | | - | | | $ | 113,000 | |
| | Fees Earned | | | All Other | | | | | ||
Name | | or Paid in Cash | | | Compensation | | Total | | |||
Jerold R. Babin | | $ | 6,000 | | | | - | | $ | 6,000 | |
Josef A. Grunwald | | $ | 6,000 | | | | - | | $ | 6,000 | |
John C. Love | | $ | 38,000 | (1) | | | - | | $ | 38,000 | |
William J. Nance | | $ | 38,000 | (1) | | | - | | $ | 38,000 | |
John V. Winfield(2) | | | - | | | | - | | | - | |
Name and Address | | Amount and Nature of | | | | | | | |
of Beneficial Owner | | Beneficial Ownership(1) | | | Percent of Class(2) | | | ||
| | | | | | | | | |
John V. Winfield | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
Jerold R. Babin | | | 48,345 | (3) | | | 6.6 | % | |
243 28th Street | | | | | | | | | |
San Francisco, CA 94121 | | | | | | | | | |
| | | | | | | | | |
Josef A. Grunwald | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
John C. Love | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
William J. Nance | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
Michael G. Zybala | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
David T. Nguyen | | | 0 | | | | - | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
Santa Fe Financial Corporation and | | | 600,299 | (4) | | | 81.7 | % | |
The InterGroup Corporation | | | | | | | | | |
10940 Wilshire Blvd., Suite 2150 | | | | | | | | | |
Los Angeles, CA 90024 | | | | | | | | | |
| | | | | | | | | |
All of the above as a group | | | 648,644 | | | | 88.3 | % | |
| | Fiscal Year | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Audit fees | | $ | 95,000 | | $ | 104,000 | |
Audit related fees | | | - | | | - | |
Tax fees | | | - | | | - | |
All other fees | | | - | | | - | |
TOTAL: | | $ | 95,000 | | $ | 104,000 | |
Exhibit Number | | Description |
| | |
3.(i) | | Articles of Incorporation* |
| | |
3.(ii) | | Bylaws (amended February 16, 2000) incorporated by reference to the Company’s Form 10-KSB filed with the Commission on March 19, 2000. |
| | |
4. | | Instruments defining the rights of security holders including indentures (See Articles of Incorporation and Bylaws)* |
| | |
10. | | Material Contracts: |
| | |
10.1 | | Amended and Restated Agreement of Limited Partnership of Justice Investors, effective November 30, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q Report for the quarterly period ended December 31, 2010, filed with the Commission on February 11, 2011). |
| | |
10.2 | | General Partner Compensation Agreement, dated December 1, 2008 (incorporated by reference to Exhibit 10.2 to Company’s Form 10-Q Report for the quarterly period ended December 31, 2008, filed with the Commission on February 12, 2009). |
10.3 | | Franchise License Agreement, dated December 10, 2004, between Justice Investors and Hilton Hotels (incorporated by reference to Exhibit 10.10 of the Company’s amended report on Form 10-K/A for the fiscal year ended June 30, 2011, as filed with the Commission on August 24, 2012). |
| | |
10.4 | | Management Agreement, dated February 2, 2012, between Justice Investors and Prism Hospitality, L.P. (incorporated by reference to Exhibit 10.11 of the Company’s amended report on Form 10-K/A for the fiscal year ended June 30, 2011, as filed with the Commission on August 24, 2012). |
| | |
14. | | Code of Ethics (filed herewith). |
| | |
31.1 | | Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a). |
| | |
31.2 | | Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a). |
| | |
32.1 | | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350. |
| | |
32.2 | | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. |
| | | PORTSMOUTH SQUARE, INC. | |
| | | (Registrant) | |
| | | | |
Date: | September 18, 2013 | | by | /s/ John V. Winfield |
| | | John V. Winfield, President, | |
| | | Chairman of the Board and | |
| | | Chief Executive Officer | |
| | | | |
Date: | September 18, 2013 | | by | /s/ David T. Nguyen |
| | | David T. Nguyen, Treasurer | |
| | | and Controller |
Signatures | | Title and Position | | Date |
| | | | |
/s/ John V Winfield | | President, Chief Operating Officer and Chairman | | September 18, 2013 |
John V. Winfield | | of the Board (Principal Executive Officer) | | |
| | | | |
/s/ David T. Nguyen | | Treasurer and Controller (Principal Financial Officer) | | September 18, 2013 |
David T. Nguyen | | | | |
| | | | |
/s/ Michael G. Zybala | | Vice President and Secretary | | September 18, 2013 |
Michael G. Zybala | | | | |
| | | | |
/s/ Jerold R. Babin | | Director | | September 18, 2013 |
Jerold R. Babin | | | | |
| | | | |
/s/ John C. Love | | | | |
John C. Love | | Director | | September 18, 2013 |
| | | | |
/s/ William J. Nance | | | | |
William J. Nance | | Director | | September 18, 2013 |
/s/ John V. Winfield | |
John V. Winfield | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ David T. Nguyen | |
David T. Nguyen | |
Treasurerand Controller | |
(Principal Financial Officer) | |
| ⋅ | The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and |
| | |
| ⋅ | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John V. Winfield | |
John V. Winfield | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
| ⋅ | The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and |
| | |
| ⋅ | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David T. Nguyen | |
David T. Nguyen | |
Treasurer and Controller | |
(Principal Financial Officer) | |
GARAGE OPERATIONS
|
12 Months Ended |
---|---|
Jun. 30, 2013
|
|
Garage Operations And Rental Income [Abstract] | |
Garage Operations And Rental Income [Text Block] | NOTE 11 GARAGE OPERATIONS The parking garage is operated by Ace Parking Management, Inc. (“Ace Parking”) for the Partnership pursuant to a Parking Facilities Management Agreement (the “Parking Agreement”). The initial term of the Parking Agreement was to expire on October 31, 2010, with an option to renew for another five-year term. Garage revenue is included as part of hotel revenue. For the year ended June 30, 2013 and 2012, garage revenue was $2,786,000 and $2,765,000, respectively On October 31, 2010, the Partnership and Ace Parking entered into an amendment of the Parking Agreement to extend the term for a period of sixty two (62) months, commencing on November 1, 2010 and terminating December 31, 2015, subject to either party’s right to terminate the agreement without cause on ninety (90) days written notice. The monthly management fee of $2,000 and the accounting fee of $250 remain the same, but the amendment modified how the Excess Profit Fee to be paid to Ace Parking would be calculated. The amendment provides that, if net operating income (NOI) from the garage operations exceeds $1,800,000 but is less than $2,000,000, then Ace Parking will be entitled to an Excess Profit Fee of one percent (1%) of the total annual NOI. If the annual NOI is $2,000,000 or higher, Ace Parking will be entitled to an Excess Profit Fee equal to two percent (2%) of the total annual NOI. The garage’s NOI exceeded the annual NOI of $2,000,000 for the years ended June 30, 2013 and 2012. Base Management and incentive fees to Ace Parking amounted to $44,000 and $52,000 during the years ended June 30, 2013 and 2012 . |
GARAGE OPERATIONS (Details Textual) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Oct. 31, 2010
|
|
Disclosure, Garage Operations And Rental Income [Line Items] | |||
Revenue from Hotels, Total | $ 46,565,000 | $ 42,462,000 | |
Gerage [Member]
|
|||
Disclosure, Garage Operations And Rental Income [Line Items] | |||
Revenue from Hotels, Total | 2,786,000 | 2,765,000 | |
Ace Parking [Member]
|
|||
Disclosure, Garage Operations And Rental Income [Line Items] | |||
Monthly Accounting Fees | 250 | ||
Monthly Management Fee | 2,000 | ||
Profit Fee Percentage In Criteria One | 1.00% | ||
Profit Fee Percentage In Criteria Two | 2.00% | ||
Management And Incentive Fee Expense | $ 44,000 | $ 52,000 | |
Profit Fee Percentage Determination Criteria One | if net operating income (NOI) from the garage operations exceeds $1,800,000 but is less than $2,000,000, then Ace Parking will be entitled to an Excess Profit Fee of one percent (1%) of the total annual NOI. | ||
Profit Fee Percentage Determination Criteria Two | If the annual NOI is $2,000,000 or higher, Ace Parking will be entitled to an Excess Profit Fee equal to two percent (2%) of the total annual NOI. | ||
Garages Net Operating Income Description | The garage’s NOI exceeded the annual NOI of $2,000,000 for the years ended June 30, 2013 and 2012. |
INVESTMENT IN REAL ESTATE
|
12 Months Ended |
---|---|
Jun. 30, 2013
|
|
Real Estate Investments, Net [Abstract] | |
Investment In Real Estate [Text Block] | NOTE 4 INVESTMENT IN REAL ESTATE In August 2007, the Company agreed to acquire 50% interest in Intergroup Uluniu, Inc., a Hawaiian corporation and a 100% owned subsidiary of InterGroup, for $973,000, which represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of approximately two acres of unimproved land held for development located in Maui, Hawaii. As a related party transaction, the fairness of the financial terms of the transaction were reviewed and approved by the independent director of the Company. |
EMPLOYEE BENEFIT PLAN
|
12 Months Ended |
---|---|
Jun. 30, 2013
|
|
Compensation and Retirement Disclosure [Abstract] | |
Compensation and Employee Benefit Plans [Text Block] | NOTE 18 EMPLOYEE BENEFIT PLAN Justice has a 401(k) Profit Sharing Plan (the Plan) for non-union employees who have completed six months of service. Justice provides a matching contribution up to 4% of the contribution to the Plan based upon a certain percentage on the employees’ elective deferrals. Justice may also make discretionary contributions to the Plan each year. Contributions made to the Plan amounted to $56,000 and $63,000 during the years ended June 30, 2013 and 2012, respectively. Certain employees of Justice who are members of various unions are covered by union-sponsored, collectively bargained, multi-employer health and welfare and benefit pension plans. Justice does not contribute separately to those multi-employer plans. |
INCOME TAXES (Details) (USD $)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Federal | ||
Current tax expense | $ (10,000) | $ (24,000) |
Deferred tax (expense) benefit | (116,000) | 45,000 |
Federal Income Tax Expense (Benefit), Continuing Operations, Total | (126,000) | 21,000 |
State | ||
Current tax expense | (6,000) | (12,000) |
Deferred tax benefit (expense) | 73,000 | (8,000) |
State and Local Income Tax Expense (Benefit), Continuing Operations, Total | 67,000 | (20,000) |
Total income tax (expense) benefit | $ (59,000) | $ 1,000 |
MANAGEMENT AGREEMENT
|
12 Months Ended |
---|---|
Jun. 30, 2013
|
|
Management Agreement [Abstract] | |
Management Agreement [Text Block] | NOTE 12 MANAGEMENT AGREEMENT On February 2, 2007, the Partnership entered into an agreement with Prism to manage and operate the Hotel as its agent. The agreement is effective for a term of ten years, unless the agreement is extended or earlier terminated as provided in the agreement. Under the management agreement, the Partnership is required to pay the base management fees of up to 2.5% of gross operating revenues of the Hotel (i.e., room, food and beverage, and other operating departments) for the fiscal year. Of that amount, 1.75% of the gross operating revenues are paid monthly. The balance or 0.75% is paid only to the extent that the partially adjusted net operating income (net operating income less capital expenditures) for the fiscal year exceeds the amount of the Hotel’s return for the fiscal year. The base management fee was limited to 1.75% as of and for the years ended June 30, 2013 and 2012. Prism is also entitled to an incentive management fee (not to exceed 4% in total) if certain milestones are accomplished. No incentive fees were paid during the years ended June 30, 2013 and 2012. Management fees paid to Prism during the years ended June 30, 2013 and 2012 were $754,000 and $626,000, respectively. |
OTHER ASSETS, NET (Details Textual) (USD $)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Other Assets Disclosure [Line Items] | ||
Amortization Expense Of Loan Fees And Franchise Costs | $ 72,000 | $ 72,000 |
INCOME TAXES (Details 1)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income Taxes [Line Items] | ||
Statutory federal tax rate | 34.00% | 34.00% |
State income taxes, net of federal tax benefit | (2.40%) | 0.60% |
Noncontrolling interest | (24.10%) | (30.40%) |
Other | (4.40%) | (4.20%) |
Effective Income Tax Rate Reconciliation, Percent, Total | 3.10% | 0.00% |
INVESTMENT IN HOTEL, NET (Details Textual) (USD $)
|
Jun. 30, 2013
|
Jun. 30, 2012
|
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Capital Leased Assets, Gross | $ 2,131,000 | $ 2,131,000 |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | $ 1,930,000 | $ 1,668,000 |
INVESTMENT IN HOTEL, NET (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] | Investment in hotel consisted of the following as of:
|
SIGNIFICANT ACCOUNTING POLICIES (Policies)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
||
Accounting Policies [Abstract] | ||
Basis of Accounting, Policy [Policy Text Block] | Description of Business Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth has a 50.0% limited partnership interest in Justice and serves as one of the two general partners. The other general partner, Evon Corporation (“Evon”), served as the managing general partner until December 1, 2008 at which time Portsmouth assumed the role of managing general partner. The financial statements of Justice are consolidated with those of the Company. As of June 30, 2013, Santa Fe Financial Corporation (“Santa Fe”), a public company, owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth” or the “Company”). Santa Fe is an 80.5%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 12.9% of the common stock of Portsmouth. Justice owns a 543-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (Prism) to perform the day-to-day management functions of the Hotel. The parking garage that is part of the Hotel property is managed by Ace Parking pursuant to a contract with the Partnership. Justice also leases a portion of the lobby level of the Hotel to a day spa operator. Due to the temporary closing of the Hotel to undergo major renovations from May 2005 until January 2006 to transition and reposition the Hotel from a Holiday Inn to a Hilton, and the substantial depreciation and amortization expenses resulting from the renovations and operating losses incurred as the Hotel ramped up operations after reopening, Justice has recorded net losses. These losses were anticipated and planned for as part of the Partnership’s renovation and repositioning plan for Hotel and management considers those net losses to be temporary. The Hotel has been generating positive cash flows from operations since June 2006. For the fiscal years ended June 30, 2013 and 2012, the Partnership generated net income of $3,061,000 and $4,110,000, respectively. Hotel operations improved significantly during the last two fiscal years and depreciation and amortization expenses decreased as many of the furniture and fixture improvements from the renovation of the Hotel reached full deprecation during the fiscal 2011. Management believes that the revenues expected to be generated from the operations of the hotel, garage and leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. Management also believes that there is significant value in the Hotel to support additional borrowings, if necessary. In December 2012, Portsmouth declared a special cash dividend of $0.25 per common share or $184,000, which was paid on December 28, 2012 to shareholders of record as of December 21, 2012. |
|
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The consolidated financial statements include the accounts of the Company and Justice Investors. All significant inter-company transactions and balances have been eliminated. |
|
Investment In Hotel [Policy Text Block] | Investment in Hotel, Net The Hotel property and equipment are stated at cost less accumulated depreciation. Building improvements are being depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are being depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years.
Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses). The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Partnership will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2013 and 2012. |
|
Marketable Securities, Policy [Policy Text Block] | Investment in Marketable Securities Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company's investment portfolio recorded through the consolidated statements of operations. |
|
Other Investments [Policy Text Block] | Other Investments, Net Other investments include non-marketable securities (carried at cost, net of any impairments loss), non marketable warrants (carried at fair value) and certain convertible preferred securities, received in exchange for debt instruments, carried at a book basis, initially determined using the estimated fair value on the exchange date. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2013 and 2012, the Company recorded impairment losses related to other investments of $35,000 and $335,000, respectively. As of June 30, 2013 and 2012, the allowance for impairment losses was $1,679,000 and $1,644,000, respectively. |
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Derivatives, Policy [Policy Text Block] | Derivative Financial Instruments The Company has investments in stock warrants that are considered derivative instruments. Derivative financial instruments, as defined in ASC 815-10-15-83, “Derivatives and Hedging”(pre-Codification SFAS No. 133 Accounting for Derivative Financial Instruments and Hedging Activities ), consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value on the Company’s consolidated balance sheet with the related unrealized gain or loss recorded in the Company’s consolidated statement of operations. The Company used the Black-Scholes option valuation model to estimate the fair value these instruments which requires management to make significant assumptions including trading volatility, estimated terms, and risk free rates. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based models are highly volatile and sensitive to changes in the trading market price of the underlying common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s consolidated statement of operations will reflect the volatility in these estimate and assumption changes. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. |
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Receivables, Policy [Policy Text Block] | Accounts Receivable - Hotel, Net Accounts receivable from Hotel customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Company extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. As of June 30, 2013 and 2012, the balance of allowance for doubtful accounts was $3,000 for each respective year. |
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Other Assets [Policy Text Block] | Other Assets, Net Other assets include prepaid insurance, loan fees, franchise fees, license fees and other miscellaneous assets. Loan fees are stated at cost and amortized over the term of the loan using the effective interest method. Franchise fees are stated at cost and amortized over the life of the agreement (15 years). License fees are stated at cost and amortized over 10 years. |
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Income Tax, Policy [Policy Text Block] | Income Taxes Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. |
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Due To and From Broker- Dealers [Policy Text Block] | Due to Securities Broker Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability. |
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Obligations For Securities Sold [Policy Text Block] | Obligations for Securities Sold Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations. |
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Accounts Payable and Other Liabilities [Policy Text Block] | Accounts Payable and Other Liabilities Accounts payable and other liabilities include trade payables, advance deposits and other liabilities. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows: Level 1inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3inputs to the valuation methodology are unobservable and significant to the fair value. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Room revenue is recognized on the date upon which a guest occupies a room and/or utilizes the Hotel’s services. Food and beverage revenues are recognized upon delivery. Garage revenue is recognized when a guest uses the garage space. The Company records a liability for payments collected in advance of revenue recognition. This liability is included in Accounts payable and other liabilities. |
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Advertising Costs, Policy [Policy Text Block] | Advertising Costs Advertising costs are expensed as incurred. Advertising costs were $419,000 and $415,000 for the years ended June 30, 2013 and 2012, respectively. |
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Earnings Per Share, Policy [Policy Text Block] | Basic and Diluted Income per Share Basic income per share is calculated based upon the weighted average number of common shares outstanding during each fiscal year. As of June 30, 2013 and 2012, the Company did not have any potentially dilutive securities outstanding. |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 changes the way other comprehensive income (“OCI”) appears within the financial statements. Companies will be required to show net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements. Components of OCI may no longer be presented solely in the statement of changes in shareholders’ deficit. ASU 2011-05 was effective for the Company beginning July 1, 2012. For the year ended June 30, 2013 and 2012, the Company had no components of Comprehensive Income other than net income itself. In September 2011, the FASB issued ASU No. 2011-09, Compensation - Retirement Benefits - Multiemployer Plans (Subtopic 715-80) - Disclosures about an Employer's Participation in a Multiemployer Plan, which requires employers that participate in multiemployer pension plans to provide additional quantitative and qualitative disclosures in order to provide more information about an employer's involvement in multiemployer pension plans. Although the majority of the amendments in this ASU apply only to multiemployer pension plans, there are also amendments that require changes in disclosures for multiemployer plans that provide postretirement benefits other than pensions. The Company adopted this ASU on June 30, 2012. This ASU impacted the Company's disclosures only and did not have any impact on the Company's financial position, results of operations, or cash flows. The disclosures required by this ASU are presented in Note 17 and Note 18 to the financial statements. |
FAIR VALUE MEASUREMENTS (Details 1) (USD $)
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12 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | $ 5,157,000 | $ 5,192,000 |
Net loss for the year | (35,000) | (335,000) |
Fair Value, Inputs, Level 1 [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | 0 | 0 |
Fair Value, Inputs, Level 2 [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | 0 | 0 |
Fair Value, Inputs, Level 3 [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | $ 5,157,000 | $ 5,192,000 |
SEGMENT INFORMATION (Tables)
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Jun. 30, 2013
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Information below represents reporting segments for the year ended June 30, 2013 and 2012, respectively. Segment income (loss) from Hotel operations consists of the operation of the hotel and operation of the garage. Loss from investments consists of net investment gain (loss), dividend and interest income and investment related expenses.
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INVESTMENT IN MARKETABLE SECURITIES (Details) (USD $)
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12 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Investments in Debt and Marketable Equity Securities [Line Items] | ||
Cost | $ 3,104,000 | $ 2,118,000 |
Gross Unrealized Gain | 992,000 | 1,292,000 |
Gross Unrealized Loss | (772,000) | (727,000) |
Net Unrealized Gain | 220,000 | 565,000 |
Fair Value | $ 3,324,000 | $ 2,683,000 |
OTHER NOTES PAYABLE (Details Textual) (USD $)
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12 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Other Notes Payable [Line Items] | ||
Line of Credit Facility, Current Borrowing Capacity | $ 2,500,000 | |
Line of Credit Facility, Expiration Date | Apr. 30, 2014 | |
Line of Credit Facility, Interest Rate Description | Pursuant to the modification, the annual floating interest rate was reduced by 0.5% to the WSJ Prime Rate plus 2.5% (with a minimum floor rate of 5.0% per annum) | |
Line of Credit Facility, Periodic Payment, Principal | 124,000 | |
Line of Credit Facility, Amount Outstanding | 1,167,000 | 1,702,000 |
Line of Credit Facility, Interest Rate at Period End | 5.75% | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |
Notes Payable | 71,000 | 61,000 |
Capital Lease Obligations | 429,000 | 309,000 |
Other Notes Payable | 1,595,000 | 2,072,000 |
Justice Member
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Other Notes Payable [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 11.50% | |
Other Notes Payable | $ 219,000 |
OTHER ASSETS, NET (Tables)
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Jun. 30, 2013
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Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets [Table Text Block] | Other assets consist of the following as of June 30:
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EMPLOYEE BENEFIT PLAN (Details Textual) (USD $)
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12 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Funded Percentage | 4.00% | |
Defined Benefit Plan, Contributions by Employer | $ 56,000 | $ 63,000 |
OTHER INVESTMENTS, NET (Details) (USD $)
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Jun. 30, 2013
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Jun. 30, 2012
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Other Investments [Line Items] | ||
Other investments, net | $ 5,160,000 | $ 5,311,000 |
Preferred Stock - Comstock, At Cost [Member]
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Other Investments [Line Items] | ||
Other investments, net | 4,410,000 | 4,410,000 |
Private Equity Hedge Fund At Cost [Member]
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Other Investments [Line Items] | ||
Other investments, net | 646,000 | 681,000 |
Corporate Debt and Equity Instruments At Cost [Member]
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Other Investments [Line Items] | ||
Other investments, net | 101,000 | 101,000 |
Warrants - at fair value [Member]
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Other Investments [Line Items] | ||
Other investments, net | $ 3,000 | $ 119,000 |
SUBSEQUENT EVENTS
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12 Months Ended |
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Jun. 30, 2013
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Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 19 SUBSEQUENT EVENTS The Company has evaluated all events occurring subsequent to June 30, 2013 through September 18, 2013, the date which these financial statements were available to be issued, and concluded that nothing has occurred outside the normal course of business operations that require disclosure or recognition as of June 30, 2013. |
JUSTICE INVESTORS
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12 Months Ended |
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Jun. 30, 2013
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Justice Investors [Abstract] | |
Justice Investors [Text Block] | NOTE 2 - JUSTICE INVESTORS On July 14, 2005, the FASB issued Staff Position (FSP) SOP 78-9-1, “Interaction of AICPA Statement of Position 78-9 and EITF Issue No. 04-5” which was codified into ASC Topic 910-810, “Real Estate General Consolidation”, to amend the guidance in AICPA Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures” (SOP 78-9) to be consistent with the consensus in Emerging Issues Task Force Issue No. 04-5 “Determining Whether a General Partner, or General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” which was codified into ASC 810-20, “Consolidation”, eliminated the concept of “important rights”(ASC Topic 970-810) and replaces it with the concepts of “kick out rights” and “substantive participating rights”. In accordance with guidance set forth in ASC Topic 970-20, Portsmouth has applied the principles of accounting applicable for investments in subsidiaries due to its substantial limited partnership interest and general partnership rights and has consolidated the financial statements of Justice with those of the Company effective as of July 1, 2006. For the years ended June 30, 2013 and 2012, the results of operations for Justice were consolidated with those of the Company. On December 1, 2008, Portsmouth and Evon, as the two general partners of Justice, entered into a 2008 Amendment to the Limited Partnership Agreement (the “Amendment”) that provides for a change in the respective roles of the general partners. Pursuant to the Amendment, Portsmouth assumed the role of Managing General Partner and Evon continued on as the Co-General Partner of Justice. The Amendment was ratified by approximately 98% of the limited partnership interests. The Amendment also provides that future amendments to the Limited Partnership Agreement may be made only upon the consent of the general partners and at least seventy five percent (75%) of the interests of the limited partners. Consent of at least 75% of the interests of the limited partners will also be required to remove a general partner pursuant to the Amendment. Effective November 30, 2010, the general and limited partners of Justice Investors entered into an Amended and Restated Agreement of Limited Partnership, which was approved and ratified by more than 98% of the limited partnership interests of Justice. The Partnership Agreement was amended and restated in its entirety to comply with the new provisions of the California Corporations Code known as the “Uniform Limited Partnership Act of 2008”. The amendment did not result in any material modifications of the rights or obligations of the general and limited partners. Concurrent with the Amendment to the Limited Partnership Agreement, a new General Partner Compensation Agreement (the “Compensation Agreement”) was entered into on December 1, 2008, among Justice, Portsmouth and Evon to terminate and supersede all prior compensation agreement for the general partners of Justice Investors. Pursuant to the Compensation Agreement, the general partners of Justice will be entitled to receive an amount equal to 1.5% of the gross annual revenues of the Partnership (as defined), less $75,000 to be used as a contribution toward the cost of Justice engaging an asset manager. In no event shall the annual compensation be less than a minimum base of approximately $285,000, with eighty percent (80%) of that amount being allocated to Portsmouth for its services as managing general partner of Justice and twenty percent (20%) allocated to Evon as the co-general partner. Compensation earned by the general partners in each calendar year in excess of the minimum base, will be payable in equal fifty percent (50%) shares to Portsmouth and Evon. |
INVESTMENT IN MARKETABLE SECURITIES
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | NOTE 5 - INVESTMENT IN MARKETABLE SECURITIES The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also invested in corporate bonds and income producing securities, which may include interests in real estate based companies and REITs, where financial benefit could insure to its shareholders through income and/or capital gain. At June 30, 2013 and 2012, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:
As of June 30, 2013 and 2012, the Company had $637,000 and $579,000, respectively, of unrealized losses related to securities held for over one year. Net loss on marketable securities on the statement of operations is comprised of realized and unrealized losses. Below is the composition of the two components for the years ended June 30, 2013 and 2012, respectively.
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INVESTMENT IN HOTEL, NET
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Jun. 30, 2013
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] | NOTE 3 INVESTMENT IN HOTEL, NET Investment in hotel consisted of the following as of:
The Partnership leases certain equipment under agreements that are classified as capital leases. The cost of equipment under capital leases was $2,131,000 at June 30, 2013 and 2012. The accumulated depreciation on capital leases was $1,930,000 and $1,668,000 as of June 30, 2013 and 2012, respectively. |
INVESTMENT IN MARKETABLE SECURITIES (Details 1) (USD $)
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12 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Investments in Debt and Marketable Equity Securities [Line Items] | ||
Realized loss on marketable securities | $ (51,000) | $ (247,000) |
Unrealized loss on marketable securities | (456,000) | (798,000) |
Net loss on marketable securities | $ (507,000) | $ (1,045,000) |
INVESTMENT IN MARKETABLE SECURITIES (Tables)
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Table Text Block] | The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:
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Gain (Loss) on Investments [Table Text Block] | Below is the composition of the two components for the years ended June 30, 2013 and 2012, respectively.
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MORTGAGE NOTES PAYABLE (Tables)
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Mortgage Notes Payable [Table Text Block] | Each mortgage note payable is secured by its respective land and building. As of June 30, 2013 and 2012, the Company had the following mortgages:
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Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | Future minimum payments for all notes payable are as follows:
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INVESTMENT IN HOTEL, NET (Details) (USD $)
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Jun. 30, 2013
|
Jun. 30, 2012
|
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Property, Plant and Equipment [Line Items] | ||
Cost | $ 73,867,000 | $ 70,508,000 |
Accumulated Depreciation | (39,819,000) | (37,686,000) |
Net Book Value | 34,048,000 | 32,822,000 |
Land [Member]
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Property, Plant and Equipment [Line Items] | ||
Cost | 1,124,000 | 1,124,000 |
Accumulated Depreciation | 0 | 0 |
Net Book Value | 1,124,000 | 1,124,000 |
Furniture and Fixtures [Member]
|
||
Property, Plant and Equipment [Line Items] | ||
Cost | 22,270,000 | 20,855,000 |
Accumulated Depreciation | (19,312,000) | (18,187,000) |
Net Book Value | 2,958,000 | 2,668,000 |
Building Improvements [Member]
|
||
Property, Plant and Equipment [Line Items] | ||
Cost | 50,473,000 | 48,529,000 |
Accumulated Depreciation | (20,507,000) | (19,499,000) |
Net Book Value | $ 29,966,000 | $ 29,030,000 |
CONCENTRATION OF CREDIT RISK (Details Textual) (USD $)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Concentration Risk [Line Items] | ||
Accounts Receivable, Net, Total | $ 1,957,000 | $ 1,641,000 |
Travel Agent And Airlines [Member]
|
||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 30.00% | 20.00% |
Accounts Receivable, Net, Total | 595,000 | 332,000 |
Hotel [Member]
|
||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 27.00% | 7.00% |
Accounts Receivable, Net, Total | $ 525,000 | $ 122,000 |