FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "may," "could," "might" and similar expressions, are intended to identify forward-looking statements.


Such statements are subject to certain risks and uncertainties. These risks and
uncertainties include, but are not limited to, the following: national and
worldwide economic conditions, including the impact of recessionary conditions
on tourism, travel and the lodging industry; the impact of terrorism and war on
the national and international economies, including tourism, securities markets,
energy and fuel costs; natural disasters; general economic conditions and
competition in the hotel industry in the San Francisco area; seasonality, labor
relations and labor disruptions; actual and threatened pandemics such as swine
flu or the outbreak of COVID-19 or similar outbreaks; partnership distributions;
the ability to obtain financing at favorable interest rates and terms;
securities markets, regulatory factors, litigation and other factors discussed
below in this Report and in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2021. These risks and uncertainties could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as to the date hereof. The Company undertakes no obligation to publicly
release the results of any revisions to those forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS


On February 25, 2020, the City of San Francisco issued the proclamation by the
Mayor declaring the existence of a local emergency. The negative effects of the
civil authority actions related to the novel strain of coronavirus ("COVID-19")
on our business have been significant. In March 2020, the World Health
Organization declared COVID-19 a global pandemic. This contagious virus, which
has continued to spread, has adversely affected workforces, customers,
economies, and financial markets globally. It has also disrupted the normal
operations of many businesses, including ours. To mitigate the harm from the
pandemic, on March 16, 2020, the City and County of San Francisco, along with a
group of five other Bay Area counties and the City of Berkeley, issued parallel
health officer orders imposing shelter in place limitations across the Bay Area,
requiring everyone to stay safe at home except for certain essential needs.
Since February 2020, several unfavorable events and civil authority actions have
unfolded causing demand for our hotel rooms to suffer including cancellations of
all citywide conventions, reduction of flights in and out of the Bay Area and
decline in both leisure and business travel.



In December 2020, due to the surge in COVID-19 cases and hospitalizations, the
Health Officer of the City and County of San Francisco suspended or restricted
certain activities. Health Order C19-07q (the "Order") incorporates suspensions,
reductions in capacity limits, and other restrictions contained in the Regional
Stay At Home Order issued by the California Department of Public Health on
December 3, 2020. Effective December 17, 2020, the Bay Area Region, including
San Francisco, was required to comply with the State's December 3, 2020 Regional
Stay-at-Home Order. The Order strongly discouraged anyone in the County from
travelling for leisure, recreation, business, or other purposes that could be
postponed until after the surge. With limited exceptions, this Order imposed a
mandatory quarantine on anyone traveling, moving, or returning to the County
from anywhere outside the Bay Area. Effective January 20, 2021, Health Order
C19- 07r revised and replaced the previous Order; it continued to temporarily
prohibit certain businesses and activities from resuming but allowed certain
other businesses, activities, travel, and governmental functions to occur
subject to specified health and safety restrictions, limitations, and conditions
to limit the transmission of COVID-19.



On March 24, 2021, the City and County of San Francisco announced it moved into
the orange tier which removed the suggested Shelter in Place for guests
travelling to San Francisco. This was a very positive step for the hotel
community. This tier opened activities in the city including expanded restaurant
capacities, museums, and attractions. For the hotel it allowed for guests to
gather in public spaces and for outlets and amenities to open at limited
capacities including fitness centers. It did not change the very stringent
cleaning and sanitation requirements set forth by the Health Officer of the City
and County of San Francisco which proved to be a costly measure to maintain.
Effective May 6, 2021, the City and County of San Francisco moved into the
yellow tier guidelines. We continue to closely monitor the very fluid changes
that the Center for Disease Control, San Francisco Department of Health and
other authorities implement with regards to the COVID-19 pandemic.



On August 20, 2021, San Francisco announced vaccination requirements for indoor
activities. This order requires restaurants, theaters, and entertainment venues
where food or drink is served inside, as well as gyms, recreation facilities,
yoga studios, dance studios and other fitness establishments, clubs involving
elevated breathing to show proof of vaccination.



On January 11, 2022, a new Health Order has been issued. The primary change to
the Order is to comply with changes the State made lowering the threshold for
mega events to 500 attendees indoor and 5,000 attendees outdoor beginning
January 15, 2022. On March 17, 2022, the State of California announced that
beginning on April 1, 2022, it will no longer require that people attending
Indoor Mega-Event (i.e., events with 1,000 or more attendees) provide proof of
vaccination or negative testing to gain entry. Instead, the State strongly
recommend that venues hosting Indoor Mega-Events continue to impose that
requirement.



-19-






The San Francisco hospitality market has seen the two largest citywide events go
virtual with DreamForce in September 2021 and JP Morgan Healthcare Conference in
January 2022. RSA Conference originally scheduled for February 2022 was moved to
June 2022 and Google Cloud Next was cancelled for 2022. As of the date of this
report, the market is seeing slow and steady improvement month over month. Rates
in the market grew roughly 20% from February 2022 to March 2022 as demand is
steadily increasing, particularly midweek where it has been the softest. Demand
generators are returning to the market with the largest being Game Developers
Conference in March 2022. Although it was approximately half of the pre-COVID
attendance, it lifted the market to the best RevPAR we have seen since March
2020. April 2022 continues the trend with midweek rates rising and another
strong performance from the RIMS citywide. San Francisco has two more citywide
conferences in May 2022 and the momentum continues into the summer. The
cancellations and pushing back of these major events have stopped, providing
cautious optimism about the market's ability to recover in 2022 and beyond.



In response to the decrease in demand, we have since furloughed most managers at
the Hotel except for members of the executive team and continue to limit hourly
staff to a minimum. By the end of March 2020, we had temporarily closed all our
food and beverage outlets, valet parking, concierge and bell services, fitness
center, as well as the executive lounge facility. We continue to implement
social distancing standards and cleaning processes designed by Aimbridge and
Hilton to keep employees and guests safe. The full impact and duration of the
COVID-19 outbreak continues to evolve as of the date of this report. The
pandemic effectively eliminated our ability to generate any profits, due to the
drastic decline in both leisure and business travel. As a result, management
believes the ongoing length and severity of the economic downturn caused by the
pandemic will have a material adverse impact on our future business, financial
condition, liquidity, and financial results. We are also assessing the potential
impact on the impairment analysis of our long-lived assets and the realization
of our deferred tax assets. As of the date of this report, the effects of the
pandemic continue to affect our economy, business and leisure travel, and our
needs to continue to curtail certain revenue generating activities at the Hotel.
We expect that the effects will continue to have a material adverse effect on
our business until the pandemic ends.



As a result of the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") signed into law on March 27, 2020, additional avenues of relief may
be available to workers and families through enhanced unemployment insurance
provisions and to small businesses through programs administered by the Small
Business Administration ("SBA"). The CARES Act includes, among other things,
provisions relating to payroll tax credits and deferrals, net operating loss
carryback periods, alternative minimum tax credits and technical corrections to
tax depreciation methods for qualified improvement property. The CARES Act also
established a Paycheck Protection Program ("PPP"), whereby certain small
businesses are eligible for a loan to fund payroll expenses, rent, and related
costs. On April 9, 2020, Justice entered into a loan agreement ("SBA Loan") with
CIBC Bank USA under the CARES Act. Justice received proceeds of $4,719,000 from
the SBA Loan. In accordance with the requirements of the CARES Act, Justice used
proceeds from the SBA Loan for payroll costs and other qualified expenses. The
SBA Loan was scheduled to mature on April 9, 2022 with a 1.00% interest rate and
was subject to the terms and conditions applicable to loans administered by the
U.S. Small Business Administration under the CARES Act. On June 10, 2021, the
SBA Loan was forgiven in full.



On February 3, 2021, Justice entered into a second loan agreement ("Second SBA
Loan") with CIBC Bank USA administered by the SBA. Justice received proceeds of
$2,000,000 from the Second SBA Loan. As of June 30, 2021, Justice used all
proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA
Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and
was subject to the terms and conditions applicable to loans administered by the
U.S. Small Business Administration under the CARES Act. On November 19, 2021,
the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on
debt extinguishment on the condensed consolidated statement of operations for
the nine months ended March 31, 2022.



RESULTS OF OPERATIONS




The Company's principal source of revenue continues to be derived from its
ownership in Justice Operating Company, LLC ("Operating") inclusive of hotel
room revenue, food and beverage revenue, garage revenue, and revenue from other
operating departments. Operating owns the Hotel and related facilities,
including a five-level underground parking garage. The financial statements of
Operating have been consolidated with those of the Company.



The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License
Agreement (the "License Agreement") with Hilton. The Partnership entered into
the License Agreement on December 10, 2004. The term of the License Agreement
was for an initial period of 15 years commencing on the opening date, with an
option to extend the License Agreement for another five years, subject to
certain conditions. On June 26, 2015, Operating and Hilton entered into an
amended franchise agreement which extended the License Agreement through 2030,
modified the monthly royalty rate, extended geographic protection to Operating,
and provided the Partnership certain key money cash incentives to be earned
through 2030. The key money cash incentives were received on July 1, 2015.




-20-






Aimbridge Hospitality ("Aimbridge") manages the Hotel, along with its five-level
parking garage, under certain Hotel management agreement ("HMA") with Operating.
Under the terms on the HMA, base management fee payable to Aimbridge shall be
one and seven-tenths percent (1.70%) of total Hotel revenue. The term of the
management agreement is for an initial period of ten years commencing on the
takeover date and automatically renews for successive one (1) year periods, to
not exceed five years in the aggregate, subject to certain conditions.

Three months ended March 31, 2022 compared to three months ended March 31, 2021


The Company had net loss of $1,629,000 for the three months ended March 31, 2022
compared to net loss of $1,737,000 for the three months ended March 31, 2021.
While loss from operations decreased by $1,048,000 year over year, income from
marketable securities decreased by $1,168,000.



Hotel Operations
The Company had net loss from Hotel operations of $2,471,000 for the three
months ended March 31, 2022 compared to net loss of $3,424,000 for the three
months ended March 31, 2021. The change is primarily attributable to increase in
Hotel revenue.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended March 31, 2022 and 2021.


For the three months ended March 31,                         2022
  2021
Hotel revenues:
Hotel rooms                                              $  5,505,000     $  2,368,000
Food and beverage                                             372,000           17,000
Garage                                                        677,000          479,000
Other operating departments                                    78,000           38,000
Total hotel revenues                                        6,632,000        2,902,000
Operating expenses excluding depreciation and
amortization                                               (6,544,000 )     (3,990,000 )
Operating loss before interest, depreciation and
amortization                                                   88,000       (1,088,000 )
Interest expense - mortgage                                (1,624,000 )     (1,675,000 )
Interest expense - related party                             (385,000 )       (158,000 )
Depreciation and amortization expense                        (550,000 )       (503,000 )
Net loss from Hotel operations                           $ (2,471,000 )   $

(3,424,000 )




For the three months ended March 31, 2022, the Hotel had operating income of
$88,000 before interest expense, depreciation, and amortization on total
operating revenues of $6,632,000 compared to operating loss of $1,088,000 before
interest expense, depreciation, and amortization on total operating revenues of
$2,902,000 for the three months ended March 31, 2021. For the three months ended
March 31, 2022, room revenues increased by $3,137,000, food and beverage revenue
increased by $355,000, and garage revenue increased by $198,000, compared to the
three months ended March 31, 2021. The year over year increase in all the
revenue sources are the result of the recovery from the business interruption
attributable to a variety of responses by federal, state, and local civil
authority to the COVID-19 outbreak since March 2020. Total operating expenses
increased by $2,554,000 due to increase in salaries and wages, union health
insurance, repairs and maintenance, credit card fees, management fees, and
franchise fees.



The following table sets forth the average daily room rate, average occupancy
percentage and RevPAR of the Hotel for the three months ended March 31, 2022 and
2021.



 Three Months       Average           Average
Ended March 31,    Daily Rate       Occupancy %       RevPAR

     2022         $        149                74 %   $    110
     2021         $        103                47 %   $     48




-21-






The Hotel's revenues increased by 128% this quarter as compared to the previous
comparable quarter. Average daily rate increased by $46, average occupancy
increased by 27%, and RevPAR increased by $62 for the three months ended March
31, 2022 compared to the three months ended March 31, 2021.



Investment Transactions



The Company had a net gain on marketable securities of $100,000 for the three
months ended March 31, 2022 compared to a net gain on marketable securities of
$1,268,000 for the three months ended March 31, 2021. For the three months ended
March 31, 2022, the Company had a net realized gain of $85,000 and a net
unrealized gain of $15,000. For the three months ended March 31, 2021, the
Company had a net realized loss of $250,000 and a net unrealized gain of
$1,518,000.

Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company's results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company's marketable securities see the Marketable Securities section below.


The Company consolidated Justice ("Hotel") for financial reporting purposes and
was not taxed on its non-controlling interest in the Hotel. Effective July 15,
2021, the Company become the owner of 100% of Justice and will include all the
Hotel's income and expense accounts into its income taxes calculations. The
income tax benefit during the three months ended March 31, 2022 and 2021
represent the income tax effect on the Company's pretax loss which includes its
share in the net loss of the Hotel accordingly.

Nine months ended March 31, 2022 compared to nine months ended March 31, 2021


The Company had net loss of $4,564,000 for the nine months ended March 31, 2022
compared to net loss of $7,996,000 for the nine months ended March 31, 2021.
While loss from operations decreased by $4,791,000 year over year, income from
marketable securities decreased by $2,141,000.



Hotel Operations



The Company had net loss from Hotel operations of $5,028,000 for the nine months
ended March 31, 2022 compared to net loss of $11,701,000 for the nine months
ended March 31, 2021. The change is primarily attributable to increase in Hotel
revenue and $2,000,000 one-time gain on debt extinguishment recorded for the SBA
Loan forgiven in November 2021.

The following table sets forth a more detailed presentation of Hotel operations for the nine months ended

March 31, 2022 and 2021.



For the nine months ended March 31,                          2022
   2021
Hotel revenues:
Hotel rooms                                              $  16,285,000     $   7,842,000
Food and beverage                                              934,000           130,000
Garage                                                       2,352,000         1,373,000
Other operating departments                                    214,000            91,000
Total hotel revenues                                        19,785,000         9,436,000
Operating expenses excluding depreciation and
amortization                                               (19,356,000 )

(14,156,000 ) Operating income (loss) before interest, depreciation and amortization

                                               429,000        (4,720,000 )
Gain on extinguishment of debt                               2,000,000                 -
Interest expense - mortgage                                 (4,939,000 )      (5,076,000 )
Interest expense - related party                              (925,000 )        (339,000 )
Depreciation and amortization expense                       (1,593,000 )      (1,566,000 )
Net loss from Hotel operations                           $  (5,028,000 )
$ (11,701,000 )




-22-







For the nine months ended March 31, 2022, the Hotel had operating income of
$429,000 before interest expense, depreciation, and amortization on total
operating revenues of $19,785,000 compared to operating loss of $4,720,000
before interest expense, depreciation, and amortization on total operating
revenues of $9,436,000 for the nine months ended March 31, 2021. For the nine
months ended March 31, 2022, room revenues increased by $8,443,000, food and
beverage revenue increased by $804,000, and garage revenue increased by
$979,000, compared to the nine months ended March 31, 2021. The year over year
increase in all the revenue sources are the result of the recovery from the
business interruption attributable to a variety of responses by federal, state,
and local civil authority to the COVID-19 outbreak since March 2020. Total
operating expenses increased by $5,200,000 due to increase in salaries and
wages, frequent stay program costs, union health insurance, repairs and
maintenance, credit card fees, management fees, travel agent commission, and
franchise fees.



The following table sets forth the average daily room rate, average occupancy
percentage and RevPAR of the Hotel for the nine months ended March 31, 2022

and
2021.



  Nine Months       Average           Average
Ended March 31,    Daily Rate       Occupancy %       RevPAR

     2022         $        143                76 %   $    108
     2021         $        106                49 %   $     52
The Hotel's revenues increased by 109% for the nine months ended March 31, 2022
as compared to the nine months ended March 31, 2021. Average daily rate
increased by $37, average occupancy increased by 27%, and RevPAR increased by
$56 for the nine months ended March 31, 2022 compared to the nine months ended
March 31, 2021.



Investment Transactions



The Company had a net loss on marketable securities of $757,000 for the nine
months ended March 31, 2022 compared to a net gain on marketable securities of
$1,384,000 for the nine months ended March 31, 2021. For the nine months ended
March 31, 2022, the Company had a net realized loss of $2,055,000 and a net
unrealized gain of $1,298,000. For the nine months ended March 31, 2021, the
Company had a net realized loss of $261,000 and a net unrealized gain of
$1,645,000.

Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company's results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company's marketable securities see the Marketable Securities section below.


The Company consolidated Justice ("Hotel") for financial reporting purposes and
was not taxed on its non-controlling interest in the Hotel. Effective July 15,
2021, the Company become the owner of 100% of Justice and will include all the
Hotel's income and expense accounts into its income taxes calculations. The
income tax benefit during the nine months ended March 31, 2022 and 2021
represent the income tax effect on the Company's pretax loss which includes its
share in the net loss of the Hotel accordingly.



-23-






MARKETABLE SECURITIES



The following table shows the composition of the Company's marketable securities
portfolio as of March 31, 2022 and June 30, 2021 by selected industry groups.



     As of March 31, 2022                          % of Total Investment
        Industry Group            Fair Value            Securities

Communication services            $ 1,101,000                        77.9 %

REITs and real estate companies       184,000                        13.0 %

Basic materials                        42,000                         3.0 %
Financial services                     38,000                         2.7 %
Consumer cyclical                      32,000                         2.3 %
Utilities                               6,000                         0.4 %
Healthcare                              5,000                         0.4 %
Technologies                            4,000                         0.3 %
                                  $ 1,412,000                       100.0 %




                                                   % of Total
      As of June 30, 2021                          Investment
        Industry Group            Fair Value       Securities

Communication services            $ 1,334,000             37.7 %
Basic materials                       720,000             20.3 %
Industrials                           653,000             18.5 %
REITs and real estate companies       438,000             12.4 %
Energy                                250,000              7.1 %
Healthcare                            141,000              4.0 %
                                  $ 3,536,000            100.0 %




As of March 31, 2022, the Company's investment portfolio includes eight equity
positions. The Company holds two equity securities that are more than 10% of the
equity value of the portfolio. The largest security position represents 78% of
the portfolio and consists of the preferred stock of Paramount Global (NASDAQ:
PARAP) which is included in the communication services industry group.



As of June 30, 2021, the Company held twelve different equity positions in its
investment portfolio. The Company held three equity securities that comprised
more than 10% of the equity value of the portfolio. The largest security
position represents 38% of the portfolio and consists of the common stock of
ViacomCBS Inc. (NASDAQ: VIACP) which is included in the communication services
industry group.

The following table shows the net gain (loss) on the Company's marketable securities and the associated margin interest and trading expenses for the respective periods:





For the three months ended March 31,     2022           2021

Net gain on marketable securities $ 100,000 $ 1,268,000 Impairment loss on other investments

           -         (15,000 )
Dividend and interest income              27,000           1,000
Margin interest expense                   (7,000 )             -

Trading and management expenses (41,000 ) (35,000 )

$  79,000     $ 1,219,000




-24-






For the nine months ended March 31,           2022           2021

Net (loss) gain on marketable securities $ (757,000 ) $ 1,384,000 Impairment loss on other investments (20,000 ) (38,000 ) Dividend and interest income

                   91,000          16,000
Margin interest expense                       (35,000 )             -
Trading and management expenses              (121,000 )       (91,000 )
                                           $ (842,000 )   $ 1,271,000

FINANCIAL CONDITION AND LIQUIDITY





The Company had cash and cash equivalents of $1,687,000 and $2,310,000 as of
March 31, 2022 and June 30, 2021, respectively. The Company had marketable
securities, net of margin due to securities brokers, of $843,000 and $1,821,000
as of March 31, 2022 and June 30, 2021, respectively. These marketable
securities are short-term investments and liquid in nature.



On December 16, 2020, Justice and InterGroup entered into a loan modification
agreement which increased Justice's borrowing from InterGroup as needed up to
$10,000,000 and extended the maturity date of the loan to July 31, 2021. On July
7, 2021, the maturity date was extended to July 31, 2022. Upon the dissolution
of Justice in December 2021, Portsmouth assumed Justice's note payable to
InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and
InterGroup entered into a loan modification agreement which increased
Portsmouth's borrowing from InterGroup as needed up to $16,000,000. During the
nine months ending March 31, 2022, InterGroup advanced $7,550,000 to the Hotel,
bringing the total amount due to InterGroup to $14,200,000 as of March 31, 2022.
We expect the maturity date to be extended for another year before July 31,
2022. The Company could amend its by-laws and increase the number of authorized
shares to issue additional shares to raise capital in the public markets if
needed.



On April 9, 2020, Justice entered into a loan agreement ("SBA Loan") with CIBC
Bank USA under the Coronavirus Aid, Relief, and Economic Security Act ("CARES
Act") administered by the U.S. Small Business Administration (the "SBA").
Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with
the requirements of the CARES Act, Justice used the proceeds from the SBA Loan
for payroll costs and other qualified expenses. The SBA Loan was scheduled to
mature on April 9, 2022 with a 1.00% interest rate and was subject to the terms
and conditions applicable to loans administered by the U.S. Small Business
Administration under the CARES Act. On June 10, 2021, the SBA Loan was forgiven
in full.




On February 3, 2021, Justice entered into a second loan agreement ("Second SBA
Loan") with CIBC Bank USA administered by the SBA. Justice received proceeds of
$2,000,000 from the Second SBA Loan. As of June 30, 2021, Justice used all
proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA
Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and
was subject to the terms and conditions applicable to loans administered by the
U.S. Small Business Administration under the CARES Act. On November 19, 2021,
the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on
debt extinguishment on the condensed consolidated statement of operations for
the nine months ended March 31, 2022.



Our known short-term liquidity requirements primarily consist of funds necessary
to pay for operating and other expenditures, including management and franchise
fees, corporate expenses, payroll and related costs, taxes, interest and
principal payments on our outstanding indebtedness, and repairs and maintenance
of the Hotel.



Our long-term liquidity requirements primarily consist of funds necessary to pay
for scheduled debt maturities and capital improvements of the Hotel. We will
continue to finance our business activities primarily with existing cash,
including from the activities described above, and cash generated from our
operations. After considering our approach to liquidity and accessing our
available sources of cash, we believe that our cash position, after giving
effect to the transactions discussed above, will be adequate to meet anticipated
requirements for operating and other expenditures, including corporate expenses,
payroll and related benefits, taxes and compliance costs and other commitments,
for at least twelve months from the date of issuance of these financial
statements, even if current levels of occupancy and RevPAR were to persist. The
objectives of our cash management policy are to maintain existing leverage
levels and the availability of liquidity, while minimizing operational costs. We
believe that our cash on hand, along with other potential sources of liquidity
that management may be able to obtain, will be sufficient to fund our working
capital needs, as well as our capital lease and debt obligations for at least
the next twelve months and beyond. However, there can be no guarantee that
management will be successful with its plan.



-25-

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of March 31, 2022, the Company's material financial obligations which also including interest payments:





                                                        3 Months           Year             Year            Year          Year
                                         Total            2022             2023             2024            2025          2026        Thereafter
Mortgage notes payable               $ 109,520,000     $   552,000     $  1,729,000     $ 107,239,000     $       -     $       -     $         -
Related party notes payable             17,863,000         142,000       14,767,000           567,000       567,000       567,000       1,253,000
Interest                                11,620,000       2,386,000        6,167,000         3,067,000             -             -               -
Total                                $ 139,003,000     $ 3,080,000     $ 22,663,000     $ 110,873,000     $ 567,000     $ 567,000     $ 1,253,000

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no material off balance sheet arrangements.





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. Room rates can be, and usually are, adjusted to account for inflationary
cost increases. Since Aimbridge has the power and ability to adjust hotel room
rates on an ongoing basis, there should be minimal impact on partnership
revenues due to inflation. Partnership revenues are also subject to interest
rate risks, which may be influenced by inflation. For the two most recent fiscal
years, the impact of inflation on the Company's income is not viewed by
management as material.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES





Critical accounting policies are those that are most significant to the
presentation of our financial position and results of operations and require
judgments by management in order to make estimates about the effect of matters
that are inherently uncertain. The preparation of these condensed financial
statements requires us to make estimates and judgments that affect the reported
amounts in our consolidated financial statements. We evaluate our estimates on
an on-going basis, including those related to the consolidation of our
subsidiaries, to our revenues, allowances for bad debts, accruals, asset
impairments, other investments, income taxes and commitments and contingencies.
We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities. The actual results may differ from these estimates, or our
estimates may be affected by different assumptions or conditions. There have
been no material changes to the Company's critical accounting policies during
the nine months ended March 31, 2022. Please refer to the Company's Annual
Report on Form 10-K for the year ended June 30, 2021 for a summary of the
critical accounting policies.

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