UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended September 30, 2021

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from ________________ to ________________

Commission file number: 001-36400

ASHFORD INC.

(Exact name of registrant as specified in its charter)

Nevada						84-2331507
(State or other jurisdiction of incorporation or organization)						(IRS employer identification number)
14185 Dallas Parkway
Suite 1200
Dallas
Texas						75254
(Address of principal executive offices)						(Zip code)

(972) 490-9600

(Registrant’s telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☐			Accelerated filer			☐
Non-accelerated filer			☑			Smaller reporting company			☑
						Emerging growth company			☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

AINC

NYSE American LLC

    

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.001 par value per share						3,022,670
(Class)						Outstanding at November 10, 2021

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ASHFORD INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020			2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020			3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020			4
Condensed Consolidated Statements of Equity (Deficit) for the Three and Nine Months Ended September 30, 2021 and 2020			5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020			8
Notes to Condensed Consolidated Financial Statements			10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			52
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			73
ITEM 4. CONTROLS AND PROCEDURES			74
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			75
ITEM 1A. RISK FACTORS			75
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			76
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			76
ITEM 4. MINE SAFETY DISCLOSURES			76
ITEM 5. OTHER INFORMATION			76
ITEM 6. EXHIBITS			77
SIGNATURES			78

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PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (unaudited)

ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)

			September 30, 2021						December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents			$	40,210					$	45,270
Restricted cash			34,554						37,396
Restricted investment			636						290
Accounts receivable, net			7,369						3,458
Due from affiliates			513						353
Due from Ashford Trust			2,068						13,198
Due from Braemar			600						2,142
Inventories			1,726						1,546
Prepaid expenses and other			7,083						7,629
Total current assets			94,759						111,282
Investments in unconsolidated entities			3,548						3,687
Property and equipment, net ($15,094 and $12,972, respectively, attributable to VIEs)			83,708						88,760
Operating lease right-of-use assets			27,678						30,431
Goodwill			56,622						56,622
Intangible assets, net ($3,266 and $3,409, respectively, attributable to VIEs)			251,113						271,432
Other assets			4,572						3,225
Total assets			$	522,000					$	565,439
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses			$	34,120					$	40,378
Dividends payable			33,928						16,280
Due to affiliates			10						1,471
Deferred income			5,215						12,738
Deferred compensation plan			12						29
Notes payable, net ($981 and $972, respectively, attributable to VIEs)			5,868						5,347
Finance lease liabilities			1,009						841
Operating lease liabilities			3,640						3,691
Other liabilities			26,590						29,905
Total current liabilities			110,392						110,680
Deferred income			14,267						8,621
Deferred tax liability, net			32,735						37,904
Deferred compensation plan			2,846						1,678
Notes payable, net ($7,842 and $6,911, respectively, attributable to VIEs)			53,573						57,349
Finance lease liabilities			43,686						43,143
Operating lease liabilities			24,172						26,881
Total liabilities			281,671						286,256
Commitments and contingencies (note 8)
MEZZANINE EQUITY
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding, net of discount, as of September 30, 2021 and December 31, 2020			477,880						476,947
Redeemable noncontrolling interests			60						1,834
EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized, $0.001 par value, 3,022,670 and 2,868,288 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively			3						3
Additional paid-in capital			293,562						293,597
Accumulated deficit			(529,992)						(491,483)
Accumulated other comprehensive income (loss)			(1,032)						(1,156)
Treasury stock, at cost, 49,185 and 32,031 shares at September 30, 2021 and December 31, 2020, respectively			(591)						(438)
Total equity (deficit) of the Company			(238,050)						(199,477)
Noncontrolling interests in consolidated entities			439						(121)
Total equity (deficit)			(237,611)						(199,598)
Total liabilities and equity (deficit)			$	522,000					$	565,439

See Notes to Condensed Consolidated Financial Statements.

2

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ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
REVENUE
Advisory services fees			$	10,143					$	10,832					$	30,132					$	34,098
Hotel management fees			7,750						3,777						18,737						13,592
Design and construction fees			2,202						1,790						5,611						7,780
Audio visual			15,108						3,114						28,170						33,758
Other			13,104						8,222						35,899						18,250
Cost reimbursement revenue			54,048						28,133						136,079						127,830
Total revenues			102,355						55,868						254,628						235,308
EXPENSES
Salaries and benefits			13,793						13,820						46,961						43,807
Cost of revenues for design and construction			1,032						703						2,812						3,032
Cost of revenues for audio visual			11,353						3,126						22,611						25,872
Depreciation and amortization			8,056						10,094						24,454						30,172
General and administrative			7,585						5,540						19,444						16,064
Impairment			1,160						—						1,160						178,213
Other			4,758						9,147						13,428						14,734
Reimbursed expenses			53,991						28,072						135,816						127,638
Total expenses			101,728						70,502						266,686						439,532
OPERATING INCOME (LOSS)			627						(14,634)						(12,058)						(204,224)
Equity in earnings (loss) of unconsolidated entities			12						48						(160)						301
Interest expense			(1,290)						(1,259)						(3,845)						(3,681)
Amortization of loan costs			(78)						(86)						(209)						(242)
Interest income			72						—						207						29
Realized gain (loss) on investments			370						—						(3)						(386)
Other income (expense)			29						(44)						(256)						(499)
INCOME (LOSS) BEFORE INCOME TAXES			(258)						(15,975)						(16,324)						(208,702)
Income tax (expense) benefit			(98)						1,835						1,550						7,404
NET INCOME (LOSS)			(356)						(14,140)						(14,774)						(201,298)
(Income) loss from consolidated entities attributable to noncontrolling interests			180						319						509						757
Net (income) loss attributable to redeemable noncontrolling interests			13						604						208						1,688
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY			(163)						(13,217)						(14,057)						(198,853)
Preferred dividends, declared and undeclared			(8,762)						(7,985)						(26,001)						(23,800)
Amortization of preferred stock discount			(306)						(781)						(933)						(2,386)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS			$	(9,231)					$	(21,983)					$	(40,991)					$	(225,039)
INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:
Net income (loss) attributable to common stockholders			$	(3.31)					$	(9.53)					$	(14.93)					$	(99.62)
Weighted average common shares outstanding - basic			2,785						2,306						2,746						2,259
Diluted:
Net income (loss) attributable to common stockholders			$	(3.64)					$	(9.53)					$	(14.93)					$	(99.62)
Weighted average common shares outstanding - diluted			2,982						2,306						2,746						2,259

See Notes to Condensed Consolidated Financial Statements.

3

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ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
NET INCOME (LOSS)			$	(356)					$	(14,140)					$	(14,774)					$	(201,298)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustment			(8)						(1,170)						96						(584)
Unrealized gain (loss) on restricted investment			(600)						(214)						(350)						(1,014)
Less reclassification for realized (gain) loss on restricted investment included in net income			5						—						378						386
COMPREHENSIVE INCOME (LOSS)			(959)						(15,524)						(14,650)						(202,510)
Comprehensive (income) loss attributable to noncontrolling interests			180						319						509						757
Comprehensive (income) loss attributable to redeemable noncontrolling interests			13						739						208						1,753
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY			$	(766)					$	(14,466)					$	(13,933)					$	(200,000)

See Notes to Condensed Consolidated Financial Statements.

4

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ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(unaudited, in thousands)

			Common Stock												Additional Paid-in Capital						Accumulated  Deficit						Accumulated Other Comprehensive Income (Loss)						Treasury Stock												Noncontrolling Interests in Consolidated Entities						Total						Convertible Preferred Stock												Redeemable Noncontrolling Interests
			Shares						Amount																								Shares						Amount																		Shares						Amount
Balance at June 30, 2021			3,023						$	3					$	292,534					$	(520,787)					$	(429)					(48)						$	(582)					$	251					$	(229,010)					19,120						$	477,574					$	94
Equity-based compensation			—						—						868						—						—						—						—						—						868						—						—						—
Forfeiture of restricted common shares			(1)						—						9						—						—						(1)						(9)						—						—						—						—						—
Amortization of preferred stock discount			—						—						—						(306)						—						—						—						—						(306)						—						306						—
Dividends declared and undeclared - preferred stock			—						—						—						(8,762)						—						—						—						—						(8,762)						—						—						—
Deferred compensation plan distribution			1						—						13						—						—						—						—						—						13						—						—						—
Employee advances			—						—						141						—						—						—						—						—						141						—						—						—
Acquisition of noncontrolling interest in consolidated entities			—						—						(2)						5						—						—						—						—						3						—						—						—
Contributions from noncontrolling interests			—						—						—						—						—						—						—						367						367						—						—						—
Reallocation of carrying value			—						—						(1)						—						—						—						—						1						—						—						—						—
Redemption value adjustment			—						—						—						21						—						—						—						—						21						—						—						(21)
Foreign currency translation adjustment			—						—						—						—						(8)						—						—						—						(8)						—						—						—
Unrealized gain (loss) on available for sale securities			—						—						—						—						(600)						—						—						—						(600)						—						—						—
Reclassification for realized loss (gain) on available for sale securities			—						—						—						—						5						—						—						—						5						—						—						—
Net income (loss)			—						—						—						(163)						—						—						—						(180)						(343)						—						—						(13)
Balance at September 30, 2021			3,023						$	3					$	293,562					$	(529,992)					$	(1,032)					(49)						$	(591)					$	439					$	(237,611)					19,120						$	477,880					$	60

5

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			Common Stock												Additional Paid-in Capital						Accumulated  Deficit						Accumulated Other Comprehensive Income (Loss)						Treasury Stock												Noncontrolling Interests in Consolidated Entities						Total						Convertible Preferred Stock												Redeemable Noncontrolling Interests
			Shares						Amount																								Shares						Amount																		Shares						Amount
Balance at December 31, 2020			2,868						$	3					$	293,597					$	(491,483)					$	(1,156)					(32)						$	(438)					$	(121)					$	(199,598)					19,120						$	476,947					$	1,834
Equity-based compensation			169						—						3,395						—						—						—						—						3						3,398						—						—						—
Forfeiture of restricted common shares			(3)						—						32						—						—						(3)						(32)						—						—						—						—						—
Purchase of treasury stock			(14)						—						—						—						—						(14)						(121)						—						(121)						—						—						—
Amortization of preferred stock discount			—						—						—						(933)						—						—						—						—						(933)						—						933						—
Dividends declared and undeclared - preferred stock			—						—						—						(26,001)						—						—						—						—						(26,001)						—						—						—
Deferred compensation plan distribution			3						—						39						—						—						—						—						—						39						—						—						—
Employee advances			—						—						190						—						—						—						—						—						190						—						—						—
Acquisition of noncontrolling interest in consolidated entities			—						—						(3,317)						2,564						—						—						—						325						(428)						—						—						(1,648)
Contributions from noncontrolling interests			—						—						—						—						—						—						—						367						367						—						—						—
Reallocation of carrying value			—						—						(374)						—						—						—						—						374						—						—						—						—
Redemption value adjustment			—						—						—						(82)						—						—						—						—						(82)						—						—						82
Foreign currency translation adjustment			—						—						—						—						96						—						—						—						96						—						—						—
Unrealized gain (loss) on available for sale securities			—						—						—						—						(350)						—						—						—						(350)						—						—						—
Reclassification for realized loss (gain) on available for sale securities			—						—						—						—						378						—						—						—						378						—						—						—
Net income (loss)			—						—						—						(14,057)						—						—						—						(509)						(14,566)						—						—						(208)
Balance at September 30, 2021			3,023						$	3					$	293,562					$	(529,992)					$	(1,032)					(49)						$	(591)					$	439					$	(237,611)					19,120						$	477,880					$	60

			Common Stock												Additional Paid-in Capital						Accumulated  Deficit						Accumulated Other Comprehensive Income (Loss)						Treasury Stock												Noncontrolling Interests in Consolidated Entities						Total						Convertible Preferred Stock												Redeemable Noncontrolling Interests
			Shares						Amount																								Shares						Amount																		Shares						Amount
Balance at June 30, 2020			2,505						$	3					$	288,774					$	(447,649)					$	(114)					(31)						$	(428)					$	251					$	(159,163)					19,120						$	475,665					$	3,682
Equity-based compensation			35						—						1,922						—						—						—						—						—						1,922						—						—						—
Forfeiture of restricted common shares			(1)						—						7						—						—						(1)						(7)						—						—						—						—						—
Purchase of treasury stock			—						—						—						—						—						—						(1)						—						(1)						—						—						—
Amortization of preferred stock discount			—						—						—						(781)						—						—						—						—						(781)						—						781						—
Dividends declared and undeclared - preferred stock			—						—						—						(7,985)						—						—						—						—						(7,985)						—						—						—
Deferred compensation plan distribution			—						—						2						—						—						—						—						—						2						—						—						—
Employee advances			—						—						(31)						—						—						—						—						—						(31)						—						—						—
Contributions from noncontrolling interests			—						—						—						—						—						—						—						380						380						—						—						—
Redemption value adjustment			—						—						—						(19)						—						—						—						—						(19)						—						—						19
Foreign currency translation adjustment			—						—						—						—						(1,035)						—						—						—						(1,035)						—						—						(135)
Unrealized gain (loss) on available for sale securities			—						—						—						—						(214)						—						—						—						(214)						—												—
Net income (loss)			—						—						—						(13,217)						—						—						—						(319)						(13,536)						—						—						(604)
Balance at September 30, 2020			2,539						$	3					$	290,674					$	(469,651)					$	(1,363)					(32)						$	(436)					$	312					$	(180,461)					19,120						$	476,446					$	2,962

6

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			Common Stock												Additional Paid-in Capital						Accumulated  Deficit						Accumulated Other Comprehensive Income (Loss)						Treasury Stock												Noncontrolling Interests in Consolidated Entities						Total						Convertible Preferred Stock												Redeemable Noncontrolling Interests
			Shares						Amount																								Shares						Amount																		Shares						Amount
Balance at December 31, 2019			2,203						$	2					$	285,825					$	(244,084)					$	(216)					(2)						$	(131)					$	628					$	42,024					19,120						$	474,060					$	4,131
Equity-based compensation			365						1						4,512						—						—						—						—						3						4,516						—						—						—
Forfeiture of restricted common shares			(28)						—						287						—						—						(28)						(287)						—						—						—						—						—
Purchase of treasury stock			(2)						—						—						—						—						(2)						(18)						—						(18)						—						—						—
Amortization of preferred stock discount			—						—						—						(2,386)						—						—						—						—						(2,386)						—						2,386						—
Dividends declared and undeclared - preferred stock			—						—						—						(23,800)						—						—						—						—						(23,800)						—						—						—
Deferred compensation plan distribution			1						—						8						—						—						—						—						—						8						—						—						—
Employee advances			—						—						79						—						—						—						—						—						79						—						—						—
Contributions from noncontrolling interests			—						—						—						—						—						—						—						457						457						—						—						—
Reallocation of carrying value			—						—						(37)						—						—						—						—						(19)						(56)						—						—						56
Redemption value adjustment			—						—						—						(528)						—						—						—						—						(528)						—						—						528
Foreign currency translation adjustment			—						—						—						—						(519)						—						—						—						(519)						—						—						(65)
Unrealized gain (loss) on available for sale securities			—						—						—						—						(1,014)						—						—						—						(1,014)						—												—
Reclassification for realized loss (gain) on available for sale securities			—						—						—						—						386						—						—						—						386						—												—
Net income (loss)			—						—						—						(198,853)						—						—						—						(757)						(199,610)						—						—						(1,688)
Balance at September 30, 2020			2,539						$	3					$	290,674					$	(469,651)					$	(1,363)					(32)						$	(436)					$	312					$	(180,461)					19,120						$	476,446					$	2,962

See Notes to Condensed Consolidated Financial Statements.

7

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ASHFORD INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

			Nine Months Ended September 30,
			2021						2020
Cash Flows from Operating Activities
Net income (loss)			$	(14,774)					$	(201,298)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization			28,942						34,438
Change in fair value of deferred compensation plan			1,190						(3,566)
Equity-based compensation			3,650						4,088
Equity in (earnings) loss in unconsolidated entities			160						(301)
Deferred tax expense (benefit)			(5,169)						(12,918)
Change in fair value of contingent consideration			23						751
Impairment			1,160						178,213
(Gain) loss on disposal of assets			1,321						6,556
Amortization of other assets			863						978
Amortization of loan costs			209						242
Realized loss on restricted investments			378						386
Other (gain) loss			(306)						145
Changes in operating assets and liabilities, exclusive of the effect of acquisitions:
Accounts receivable			(3,924)						3,276
Due from affiliates			(160)						249
Due from Ashford Trust			11,130						2,220
Due from Braemar			(274)						1,467
Inventories			(630)						73
Prepaid expenses and other			680						(709)
Investment in unconsolidated entities			68						—
Operating lease right-of-use assets			2,753						2,551
Other assets			38						(142)
Accounts payable and accrued expenses			(5,499)						3,273
Due to affiliates			(1,461)						(278)
Other liabilities			(3,338)						15,498
Operating lease liabilities			(2,760)						(2,522)
Deferred income			(1,908)						12,030
Net cash provided by (used in) operating activities			12,362						44,700
Cash Flows from Investing Activities
Additions to property and equipment			(3,394)						(2,383)
Proceeds from sale of property and equipment, net			2,205						4
Additional purchase price paid for Remington working capital adjustment			—						(1,293)
Investment in unconsolidated entity			(250)						—
Purchase of common stock of related parties			(873)						—
Acquisition of assets related to RED			(2,335)						(1,170)
Proceeds from sale of equity method investment			535						—
Issuance of note receivable			(2,881)						—
Net cash provided by (used in) investing activities			(6,993)						(4,842)
									(Continued)

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			Nine Months Ended September 30,
			2021						2020
Cash Flows from Financing Activities
Payments for dividends on preferred stock			(8,353)						(12,665)
Payments on revolving credit facilities			(620)						(12,200)
Borrowings on revolving credit facilities			469						10,412
Proceeds from notes payable			2,900						44,797
Payments on notes payable			(7,769)						(17,029)
Payments on finance lease liabilities			(255)						(637)
Payments of loan costs			(116)						(290)
Purchase of treasury stock			(121)						(18)
Employee advances			190						79
Payment of contingent consideration			—						(1,384)
Contributions from noncontrolling interest			367						457
Net cash provided by (used in) financing activities			(13,308)						11,522
Effect of foreign exchange rate changes on cash and cash equivalents			37						571
Net change in cash, cash equivalents and restricted cash			(7,902)						51,951
Cash, cash equivalents and restricted cash at beginning of period			82,666						53,249
Cash, cash equivalents and restricted cash at end of period			$	74,764					$	105,200
Supplemental Cash Flow Information
Interest paid			$	3,624					$	3,039
Income taxes paid (refunded), net			3,370						7,746
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Distribution from deferred compensation plan			39						8
Capital expenditures accrued but not paid			111						743
Finance lease additions			—						1,864
Acquisition of noncontrolling interest in consolidated entities			2,127						—
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period			$	45,270					$	35,349
Restricted cash at beginning of period			37,396						17,900
Cash, cash equivalents and restricted cash at beginning of period			$	82,666					$	53,249
Cash and cash equivalents at end of period			$	40,210					$	68,623
Restricted cash at end of period			34,554						36,577
Cash, cash equivalents and restricted cash at end of period			$	74,764					$	105,200

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Ashford Inc. (the “Company,” “we,” “us” or “our”) is a Nevada corporation that provides products and services primarily to clients in the hospitality industry, including Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Braemar Hotels & Resorts Inc. (“Braemar”). We became a public company in November 2014, and our common stock is listed on the NYSE American LLC (“NYSE American”).

We provide: (i) advisory services; (ii) asset management services; (iii) hotel management services; (iv) design and construction services; (v) event technology and creative communications solutions; (vi) mobile room keys and keyless entry solutions; (vii) watersports activities and other travel, concierge and transportation services; (viii) hypoallergenic premium room products and services; (ix) debt placement and related services; (x) real estate advisory and brokerage services; and (xi) wholesaler, dealer manager and other broker-dealer services. We conduct these activities and own substantially all of our assets primarily through Ashford Hospitality Advisors LLC (“Ashford LLC”), Ashford Hospitality Services LLC (“Ashford Services”) and their respective subsidiaries.

We are currently the advisor for Ashford Trust and Braemar. In our capacity as the advisor to Ashford Trust and Braemar, we are responsible for implementing the investment strategies and managing the day-to-day operations of Ashford Trust and Braemar and their respective hotels from an ownership perspective, in each case subject to the respective advisory agreements and the supervision and oversight of the respective boards of directors of Ashford Trust and Braemar. Ashford Trust is focused on investing in full-service hotels in the upscale and upper upscale segments in the United States that have revenue per available room (“RevPAR”) generally less than twice the national average. Braemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Each of Ashford Trust and Braemar is a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the common stock of each of Ashford Trust and Braemar is traded on the New York Stock Exchange (the “NYSE”).

We provide the personnel and services that we believe are necessary for each of Ashford Trust and Braemar to conduct their respective businesses. We may also perform similar functions for new or additional platforms. In our capacity as an advisor, we are not responsible for managing the day-to-day operations of the individual hotel properties owned by either Ashford Trust or Braemar, which duties are, and will continue to be, the responsibility of the hotel management companies that operate the hotel properties owned by Ashford Trust and Braemar. Additionally, Remington Lodging & Hospitality, LLC (“Remington”), a subsidiary of the Company, operates certain hotel properties owned by Ashford Trust and Braemar.

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, and subsequently spread to other regions of the world, which has resulted in significant travel restrictions and extended shutdown of numerous businesses throughout the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Our clients, Ashford Trust and Braemar, have reported that the negative impact on room demand within their respective portfolios stemming from COVID-19 is significant, which has resulted and is expected to result in significantly reduced occupancy and RevPAR. Furthermore, the prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry has experienced postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, the Company dramatically reduced staffing and expenses at its products and services businesses and at its corporate office. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. In addition, one or more possible recurrences of COVID-19 case surges could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash flow in 2021 and potentially beyond. As a result, in March 2020, the Company amended payment terms pursuant to certain hotel management agreements to better manage corporate working capital, reduced planned capital expenditures, significantly reduced operating expenses and reduced the cash compensation of its executive officers and other employees, including an arrangement pursuant to which Mr. Monty J. Bennett received his base salary in the form of common stock issued under the Company’s 2014 Incentive Plan, as amended. Additionally, the Company did not declare dividends which were due with respect to its Series D Convertible Preferred Stock for the second and fourth quarters of 2020 and the second quarter of 2021. As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

During the first quarter of 2021, base salaries for the Company’s executive officers and other employees were restored to pre-reduction levels and the arrangement by which Mr. Monty J. Bennett received his base salary in the form of common stock ended. Additionally, the Company declared $8.4 million in dividends in each of the first and third quarters of 2021 which were due with respect to its Series D Convertible Preferred Stock. The dividends were paid on April 15 and October 15, 2021, respectively.

When preparing financial statements, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In applying the accounting guidance, the Company considered its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its unconditional obligations due over the next 12 months.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in the inability of our portfolio companies to borrow unused amounts under their respective lines of credit. As of September 30, 2021, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements. Inspire Event Technologies Holdings, LLC (formerly Presentation Technologies, LLC), our subsidiary doing business as INSPIRE (formerly JSAV) (“INSPIRE”), executed a credit agreement amendment on December 31, 2020 (the “INSPIRE Amendment”), which extended the maturity date of the loan and includes a fixed charge coverage ratio covenant which commences with the quarter ending March 31, 2023. On September 22, 2021, the INSPIRE Amendment was further amended to reduce INSPIRE’s requirement to fund an operating reserve account from an initial amount of $3.0 million to $1.0 million. Additionally, INSPIRE’s results from operations exceeded management’s forecast for the third quarter of 2021. Primarily due to these factors, management has determined that INSPIRE is not reliant on Ashford Inc. to make contributions to cover INSPIRE’s interest and upcoming principal payments on its outstanding debt. All such contributions, if needed, are subject to the discretion of Ashford Inc. As such, the Company reclassified $19.3 million of INSPIRE’s outstanding loans from current “notes payable, net” to noncurrent “notes payable, net” in our condensed consolidated balance sheet as of September 30, 2021. See note 5 for additional details.

We cannot predict when hotel operating levels at our clients, Ashford Trust and Braemar, will return to normalized levels after the effects of the pandemic subside, whether our clients’ hotels will be forced to shut down operations again or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future. As a result of these factors resulting from the impact of the pandemic, we are unable to estimate future financial performance with certainty. However, based primarily on our assessment of the ability of our key clients, Ashford Trust and Braemar, to pay their obligations to the Company in accordance with the advisory agreements, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Additional factors considered in our assessment include our completed loan amendments, other agreements, our current cash on hand, our forecast of future operating results for the next 12 months from the date of this report and the actions we have taken to improve our liquidity. Facts and circumstances could change in the future that are outside of management’s control, such as changes in Ashford Trust’s and Braemar’s financial position and liquidity, additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19, which could subsequently change our assessment. See notes 5 and 13.

Other Developments

On December 31, 2020, we acquired all of the redeemable noncontrolling interest shares in INSPIRE for $150,000. As a result of the acquisition, our ownership in INSPIRE increased from approximately 88% to 100%.

During the first quarter of 2021, we paid the remainder of contingent consideration due to the sellers of BAV Services, Inc. (“BAV”) in connection with the acquisition of BAV, including $350,000 related to the earn-out which was paid on January 11, 2021, and the final stock collar consideration payments in the amounts of $870,000 and $888,000 which were paid on February 1, 2021 and March 4, 2021, respectively.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

In January 2021, Remington executed two new hotel management contracts with a third-party hotel owner. In conjunction, Remington loaned approximately $2.9 million to the hotel owner. The loan requires interest only payments each quarter at an annual rate of 10% commencing on March 31, 2021. The principal balance and any outstanding accrued interest on the loan is due and payable to Remington in full on December 31, 2022. The note receivable is recorded with “other assets” in our condensed consolidated balance sheet.

On January 14, 2021, the Company entered into the Second Amended and Restated Advisory Agreement with Ashford Trust. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement, dated June 10, 2015, as amended by the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of June 26, 2018 to, among other things (i) revise the term and termination rights; (ii) fix the percentage used to calculate the base fee thereunder at 0.70% per annum; (iii) update the list of peer group members; (iv) suspend the requirement that Ashford Trust maintain a minimum Consolidated Tangible Net Worth until the first fiscal quarter beginning after June 30, 2023; and (v) revise the criteria that would constitute a Company Change of Control of Ashford Trust in order to provide Ashford Trust additional flexibility to dispose of underperforming assets negatively impacted by COVID-19. In connection with the transactions contemplated by the Credit Agreement, dated as of January 15, 2021 (as amended, the “Credit Agreement”), by and among Ashford Trust, Oaktree Capital Management L.P. (“Oaktree”) and the lenders party thereto, on January 15, 2021, the Company entered into a Subordination and Non-Disturbance Agreement (the “SNDA”) with Ashford Trust and Oaktree pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement, (1) prior to the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of 80% of such fees paid during the fiscal year ended December 31, 2019 (the “Advisory Fee Cap”), (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder, and (3) any payments to Lismore Capital II LLC (formerly known as Lismore Capital LLC) (“Lismore”) in connection with the transactions contemplated by the Credit Agreement. On October 12, 2021, Ashford Trust entered into Amendment No. 1 to the Credit Agreement. See notes 3, 13 and 16.

On March 9, 2021, we acquired all of the redeemable noncontrolling interests in OpenKey, Inc. (“OpenKey”) for a purchase price of approximately $1.9 million. Pursuant to the agreement, the purchase price will be paid to the seller in equal monthly installments over a seven year term and will include interest in arrears at an annualized rate of 4.0%. The purchase price is payable in Ashford Inc. common stock, including a 10% premium, or cash at our sole discretion. As a result of the acquisition, our ownership in OpenKey increased to 74.76% with the remainder held by noncontrolling interest holders, including 17.07% and 7.97% owned by Ashford Trust and Braemar, respectively, as of March 9, 2021.

On May 3, 2021, we acquired shares in RED Hospitality & Leisure, LLC (“RED”) from a noncontrolling interest holder, increasing our ownership of RED from 84.21% to 97.87% effective retroactively on January 1, 2021, for a total purchase price of $200,000. The purchase price will be paid in the form of shares of the Company’s common stock, delivered quarterly in $25,000 increments, beginning on the closing date and ending November 15, 2022.

The accompanying condensed consolidated financial statements reflect the operations of our advisory and asset management business, hospitality products and services business, and entities that we consolidate. In this report, the terms the “Company,” “we,” “us” or “our” refers to Ashford Inc. and all entities included in its condensed consolidated financial statements.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation—The accompanying historical unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Ashford Inc., its majority-owned subsidiaries and entities which it controls. All significant intercompany accounts and transactions between these entities have been eliminated in these historical unaudited condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the condensed consolidated financial statements and related notes

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

should be read in conjunction with the financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2021.

A variable interest entity (“VIE”) must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and we reassess whether we are the primary beneficiary of a VIE on an ongoing basis. Our determination of whether we are the primary beneficiary of a VIE is based upon the facts and circumstances for each VIE and requires significant judgment.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Noncontrolling Interests—The following tables present information about noncontrolling interests in our consolidated subsidiaries, including those related to consolidated VIEs, as of September 30, 2021 and December 31, 2020 (in thousands):

			September 30, 2021
			Ashford Holdings												OpenKey(3)						Pure Wellness (4)						RED (5)
Ashford Inc. ownership interest			99.87		%										75.38		%				70.00		%				97.87		%
Redeemable noncontrolling interests(1) (2)			0.13		%										—		%				—		%				—		%
Noncontrolling interests in consolidated entities			—		%										24.62		%				30.00		%				2.13		%
			100.00		%										100.00		%				100.00		%				100.00		%
Carrying value of redeemable noncontrolling interests			$	60											n/a						n/a						n/a
Redemption value adjustment, year-to-date			81												n/a						n/a						n/a
Redemption value adjustment, cumulative			565												n/a						n/a						n/a
Carrying value of noncontrolling interests			n/a												283						154						2
Assets, available only to settle subsidiary’s obligations (6)(7)(9)			n/a												1,794						2,143						25,775
Liabilities (8)(9)			n/a												849						2,015						14,960
Notes payable (8)			n/a												—						—						8,843
Revolving credit facility (8)			n/a												—						100						—
			December 31, 2020
			Ashford Holdings												OpenKey(3)						Pure Wellness (4)						RED (5)
Ashford Inc. ownership interest			99.86		%										49.04		%				70.00		%				84.21		%
Redeemable noncontrolling interests(1) (2)			0.14		%										25.06		%				—		%				—		%
Noncontrolling interests in consolidated entities			—		%										25.90		%				30.00		%				15.79		%
			100.00		%										100.00		%				100.00		%				100.00		%
Carrying value of redeemable noncontrolling interests			$	35											$	1,799					n/a						n/a
Redemption value adjustment, year-to-date			371												466						n/a						n/a
Redemption value adjustment, cumulative			486												2,563						n/a						n/a
Carrying value of noncontrolling interests			n/a												164						89						(374)
Assets, available only to settle subsidiary’s obligations (6)(7)(9)			n/a												1,287						1,677						21,204
Liabilities (8)(9)			n/a												837						1,767						13,817
Notes payable (8)			n/a												—						—						7,627
Revolving credit facility (8)			n/a												—						100						247

________

(1)    Redeemable noncontrolling interests are included in the “mezzanine” section of our condensed consolidated balance sheets as they may be redeemed by the holder for cash or registered shares in certain circumstances outside of the Company’s control. The carrying value of the noncontrolling interests is based on the greater of the accumulated historical cost or the redemption value, which is generally fair value.

(2)    Redeemable noncontrolling interests in Ashford Holdings represent the members’ proportionate share of equity in earnings/losses of Ashford Holdings. Net income/loss attributable to the common unit holders is allocated based on the weighted average ownership percentage of the members’ interest.

(3)    Represents ownership interests in OpenKey, a VIE for which we are considered the primary beneficiary and therefore we consolidate it. OpenKey is a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms. On March 9, 2021, we acquired all of the redeemable noncontrolling interests in OpenKey for a purchase price of approximately $1.9 million. See also notes 1 and 5.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(4)    Represents ownership interests in PRE Opco, LLC (“Pure Wellness”), a VIE for which we are considered the primary beneficiary and therefore we consolidate it. Pure Wellness provides hypoallergenic premium rooms in the hospitality and commercial office industry. See also notes 1 and 9.

(5)    Represents ownership interests in RED, a VIE for which we are considered the primary beneficiary and therefore we consolidate it. On May 3, 2021, we acquired shares in RED from a noncontrolling interest holder, increasing our ownership of RED from 84.21% to 97.87%. RED is a provider of watersports activities and other travel and transportation services and includes RED’s operating subsidiaries that conduct RED’s legacy U.S. Virgin Islands and Turks and Caicos Islands operations and Sebago, a provider of watersports activities and excursion services based in Key West, Florida. We are provided a preferred return on our investment in RED which is accounted for in our income allocation based on the applicable partnership agreement. See also notes 1 and 9.

(6)    Total assets consist primarily of cash and cash equivalents, property and equipment, intangibles and other assets that can only be used to settle the subsidiaries’ obligations.

(7)    The assets of Sebago are not available to settle the obligations of RED’s operating subsidiaries that conduct RED’s legacy U.S. Virgin Islands and Turks and Caicos Islands operations.

(8)    Liabilities consist primarily of accounts payable, accrued expenses and notes payable for which creditors do not have recourse to Ashford Inc. except in the case of the term loan and line of credit held by RED’s operating subsidiary that conducts RED’s legacy U.S. Virgin Islands operations. See note 5.

(9)    See our condensed consolidated balance sheets for disclosure by line item of material assets and liabilities of the VIEs consolidated by the Company.

Investments in Unconsolidated Entities—We hold “investments in unconsolidated entities” in our condensed consolidated balance sheets, which are considered to be variable interests and voting interests in the underlying entities. Certain of our investments in variable interests are not consolidated because we have determined that we are not the primary beneficiary. Certain other investments are not consolidated as the underlying entity does not meet the definition of a VIE and we do not control more than 50% of the voting interests. We review our “investments in unconsolidated entities” for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. No such impairment was recorded during the three and nine months ended September 30, 2021 and 2020.

We held an investment in an unconsolidated variable interest entity with a carrying value of $500,000 at September 30, 2021 and December 31, 2020. We account for the investment at estimated fair value based on recent observable transactions as we do not exercise significant influence over the entity. No equity in earnings (loss) of unconsolidated entities due to a change in fair value of the investment was recognized during the three and nine months ended September 30, 2021 and 2020. In the event that the assumptions used to estimate fair value change in the future, we may be required to record an impairment charge related to this investment.

Our investment in Real Estate Advisory Holdings LLC (“REA Holdings”) is accounted for under the equity method as we have significant influence over the voting interest entity. We have an option to acquire an additional 50% of the ownership interests in REA Holdings for $12.5 million beginning on January 1, 2022. The following table summarizes our carrying value and ownership interest in REA Holdings (in thousands):

			September 30, 2021						December 31, 2020
Carrying value of the investment in REA Holdings			$	2,798					2,873
Ownership interest in REA Holdings			30		%				30		%

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes our equity in earnings (loss) in REA Holdings (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Equity in earnings (loss) in unconsolidated entities			$	(3)					$	48					$	(21)					$	301

Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents—Cash and cash equivalents include cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase.

Restricted Cash—Restricted cash was comprised of the following (in thousands):

			September 30, 2021						December 31, 2020
REIT Advisory:
Insurance claim reserves (1)			$	25,601					$	26,304
Remington:
Managed hotel properties’ reserves (2)			5,767						5,908
Insurance claim reserves (3)			944						1,532
Total Remington restricted cash			6,711						7,440
INSPIRE:
Debt service related operating reserves (4)			1,000						—
Marietta:
Capital improvement reserves (5)			442						2,852
Restricted cash held in escrow (6)			800						800
Total Marietta restricted cash			1,242						3,652
Total restricted cash			$	34,554					$	37,396

________

(1)    Ashford Inc.’s Risk Management department collects funds from the Ashford Trust and Braemar properties and their respective management companies in an amount equal to the actuarial forecast of that year’s expected casualty claims and associated fees. These funds are deposited into restricted cash and used to pay casualty claims throughout the year as they are incurred. The claim liability related to the restricted cash balance is included in current “other liabilities” in our condensed consolidated balance sheets.

(2)    Cash received from hotel properties managed by Remington is used to pay certain centralized operating expenses as well as hotel employee bonuses. The liability related to the restricted cash balance for centralized billing is primarily included as a payable which is presented net within “due from Ashford Trust” and “due from Braemar” in our condensed consolidated balance sheets. The liability related to the restricted cash balance for hotel employee bonuses is included in “accounts payable and accrued expenses.”

(3)    Cash reserves for health insurance claims are collected primarily from Remington’s managed properties as well as certain of Ashford Inc.’s other subsidiaries to cover employee health insurance claims. The liability related to this restricted cash balance is included in current “other liabilities.”

(4)    Cash is restricted due to operating reserves required under INSPIRE’s amended credit agreement to service interest expense and projected operating costs. See note 5.

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ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(5)    Includes cash reserves for capital improvements associated with renovations at the hotel leased by our consolidated subsidiary, Marietta Leasehold LP, (“Marietta”), which holds the leasehold rights to a single hotel and convention center property in Marietta, Georgia. The liability related to the restricted cash balance for the hotel’s renovations are included in “accounts payable and accrued expenses.”

(6)    Restricted cash is held in escrow in accordance with the Marietta lease agreement. The cash held in escrow is funded from hotel cash flows and can only be used for repairs and maintenance or capital improvements at the property.

Property and Equipment, net—Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. We record property and equipment at cost. As of September 30, 2021 and December 31, 2020, property and equipment, net of accumulated depreciation, included assets related to Marietta’s finance lease of $41.9 million and $42.8 million, enhanced return funding program (“ERFP”) assets of $13.3 million and $18.3 million, audio visual equipment at INSPIRE of $7.9 million and $11.6 million and marine vessels at RED of $12.0 million and $9.9 million, respectively.

Other Liabilities—As of September 30, 2021 and December 31, 2020, other liabilities included reserves in the amount of $25.6 million and $26.3 million, respectively, related primarily to Ashford Trust and Braemar properties’ insurance claims and related fees. The liability for casualty insurance claims and related fees is established based upon an analysis of historical data and actuarial estimates. We record the related funds received from Ashford Trust and Braemar in “restricted cash” in our condensed consolidated balance sheets. As of September 30, 2021 and December 31, 2020, other liabilities also included $918,000 and $1.5 million, respectively, relating to reserves for Remington health insurance claims, and reserves of $0 and $2.1 million, respectively, for the fair value of contingent consideration due to the sellers of BAV.

Revenue Recognition—See note 3.

Income Taxes—We are a taxable corporation for federal and state income tax purposes. Income tax expense includes U.S. federal and state income taxes, Mexico and Dominican Republic income taxes and U.S. Virgin Islands taxes. In accordance with authoritative accounting guidance, we account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between our consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.

The “Income Taxes” topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance requires us to determine whether tax positions we have taken or expect to take in a tax return are more likely than not to be sustained upon examination by the appropriate taxing authority based on the technical merits of the positions. Tax positions that do not meet the more likely than not threshold would be recorded as additional tax expense in the current period. We analyze all open tax years, as defined by the statute of limitations for each jurisdiction, which includes the federal jurisdiction and various states. We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our portfolio companies file income tax returns in the U.S. federal jurisdiction and various states and cities, beginning in 2017, in Mexico and the Dominican Republic and, beginning in 2018, in the U.S. Virgin Islands. Tax years 2017 through 2020 remain subject to potential examination by certain federal and state taxing authorities.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and includes certain income tax provisions relevant to our business. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended March 31, 2020. The CARES Act did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020. The Company filed a claim to carryback the 2018 tax net operating loss to a prior year as provided for by the CARES Act. The Company received the carryback amount of $1.0 million in March of 2021.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and extends several COVID-19 tax related measures passed as part of the CARES Act. Among these is the extension of the deferral period of the remittance of Social Security taxes. The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is the period ended December 31, 2020. The Company had deferred $2.5 million of Social Security taxes within “accounts payable and accrued expenses” in our consolidated balance sheets as of September 30, 2021 and December 31, 2020 related to the Consolidated Appropriations Act, 2021.

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Recently Issued Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”). ASU 2019-10 revised the mandatory adoption date for public business entities that meet the definition of a smaller reporting company to be effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact ASU 2016-13 and ASU 2019-10 may have on our condensed consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”) to provide guidance and relief for transitioning to alternative reference rates. ASU 2021 is effective immediately for all entities. We are currently evaluating the impact ASU 2020-04 and 2021-01 may have on our condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. We are currently evaluating the impact that ASU 2020-06 may have on our condensed consolidated financial statements and related disclosures.

3. Revenues

Revenue Recognition—Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, we satisfy a performance obligation

In determining the transaction price, we include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.

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The following provides detailed information on the recognition of our revenues from contracts with customers:

Advisory Services Fees Revenue

Advisory services fees revenue is reported within our REIT Advisory segment and primarily consists of advisory fees that are recognized when services have been rendered. Advisory fees consist of base fees and incentive fees. For Ashford Trust, prior to January 14, 2021, the base fee was paid monthly and ranged from 0.50% to 0.70% per annum of the total market capitalization ranging from greater than $10.0 billion to less than $6.0 billion plus the Net Asset Fee Adjustment, as defined in the Amended and Restated Advisory Agreement, subject to certain minimums. On January 14, 2021, the Company entered into the Second Amended and Restated Advisory Agreement with Ashford Trust. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement, dated June 10, 2015, as amended by the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of June 26, 2018 to, among other things, fix the percentage used to calculate the base fee thereunder at 0.70% per annum. In connection with the transactions contemplated by the Credit Agreement, the Company entered into the SNDA with Ashford Trust and Oaktree pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement, (1) prior to the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of the Advisory Fee Cap, (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder, and (3) any payments to Lismore in connection with the transactions contemplated by the Credit Agreement. See note 16.

Under the Second Amended and Restated Advisory Agreement, advisory fees earned each year from Ashford Trust in excess of the Advisory Fee Cap are a form of variable consideration that is constrained and deferred until such fees are probable of not being subject to significant reversal. The Advisory Fee Cap is $29.0 million each year as stated in the Credit Agreement. As a result, until the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full to Oaktree by Ashford Trust, base advisory fee revenue recognized each month is equal to the lesser of (1) base fees calculated as described above based on Ashford Trust’s market capitalization or (2) 1/12th of $29.0 million. Any cash received from Ashford Trust for base advisory fees in excess of revenue recognized is deferred until no longer constrained. Any portion of deferred advisory fees that becomes unconstrained during the same year in which the fees were earned will be recognized on a straight line basis over the remainder of the year with a cumulative catch-up in the interim period in which the constraint is resolved. Any portion of deferred advisory fees that becomes unconstrained in a year subsequent to the year in which the fees were earned will be recognized in the interim period in which the constraint is resolved.

For Braemar, the base fee is paid monthly and is fixed at 0.70% of Braemar’s total market capitalization plus the Net Asset Fee Adjustment, as defined in our advisory agreement with Braemar, as amended, subject to certain minimums.

Incentive advisory fees are measured annually in each year that Ashford Trust’s and/or Braemar’s annual total stockholder return exceeds the average annual total stockholder return for each company’s respective peer group, subject to the Fixed Charge Coverage Ratio Condition (the “FCCR Condition”), as defined in the respective advisory agreements. Incentive advisory fees are paid over a three-year period and each payment is subject to the FCCR Condition, which relates to the ratio of adjusted EBITDA to fixed charges for Ashford Trust or Braemar, as applicable. Incentive advisory fees are a form of variable consideration and therefore must be (i) deferred until such fees are probable of not being subject to significant reversal, and (ii) tied to a performance obligation in the contract with the customer so that revenue recognition depicts the transfer of the related advisory services to the customer. Accordingly, the Company does not record incentive advisory fee revenue in interim periods prior to the fourth quarter of the year in which the incentive fee is measured. The first year installment of incentive advisory fees will generally be recognized only upon measurement in the fourth quarter of the first year of the three year period. The second and third year installments of incentive advisory fees are recognized as revenue on a pro-rata basis each quarter subject to meeting the FCCR Condition. In the third quarter of 2020, the Company determined it was no longer probable Braemar would meet the minimum FCCR Condition requirement as stated in the Braemar advisory agreement. As such, the Company did not recognize any incentive fee revenue related to Braemar in the three months ended September 30, 2020. The three months ended September 30, 2020 additionally includes a reversal of $339,000 of incentive fee revenue recognized in the first two quarters of 2020 which the Company was not able to collect due to Braemar no longer meeting the FCCR Condition.

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Hotel Management Fees Revenue

Hotel management fees revenue is reported within our Remington segment and primarily consists of base management fees and incentive management fees. Base management fees and incentive management fees are recognized when services have been rendered. Remington receives base management fees of 3% of gross hotel revenue for managing the hotel employees and daily operations of the hotels, pursuant to Remington’s hotel management agreements, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index). Remington receives an incentive management fee equal to the lesser of 1% of each hotel’s annual gross revenue or the amount by which the respective hotel’s gross operating profit exceeds the hotel’s budgeted gross operating profit.

Design and Construction Fees Revenue

Design and construction fees revenue (formerly called project management revenue) primarily consists of revenue generated by our subsidiary, Premier Project Management LLC (“Premier”). Premier provides design and construction management services, capital improvements, refurbishment, project management, and other services such as purchasing, interior design, architectural services and freight management at properties. Premier receives fees for these services and recognizes revenue over time as services are provided to the customer.

Audio Visual Revenue

Audio visual revenue primarily consists of revenue generated within our INSPIRE segment by providing event technology services such as audio visual services, audio visual equipment rental, staging and meeting services and event-related communication systems as well as related technical support, to our customers in various venues including hotels and convention centers. Revenue is recognized in the period in which services are provided pursuant to the terms of the contractual arrangements with our customers. We also evaluate whether it is appropriate to present: (i) the gross amount that our customers pay for our services as revenue, and the related commissions paid to the venue as cost of revenue; or (ii) the net amount (gross revenue less the related commissions paid to the venue) as revenue. We are responsible for the delivery of the services, including providing the necessary labor and equipment to perform the services. We are generally subject to inventory risk, have latitude in establishing prices and selecting suppliers and, while in many cases the venue bills the end customer on our behalf, we bear the risk of collection from the customer. The venues’ commissions are not dependent on collections. As a result, our revenue is primarily reported on a gross basis. Cost of revenues for audio visual principally includes commissions paid to venues, direct labor costs, the cost of equipment sub-rentals, depreciation of equipment, amortization of signing bonuses, as well as other costs such as supplies, freight, travel and other overhead from our venue and customer facing operations and any losses on equipment disposal.

Other Revenue

Other revenue includes revenue provided by certain of our hospitality products and service businesses, including RED. RED’s revenue is primarily generated through the provision of watersports activities and ferry and excursion services. The revenue is recognized as services are provided based on contractual customer rates. Debt placement and related fees include revenue earned from providing placement, modifications, forbearances or refinancing of certain mortgage debt by Lismore. For certain agreements, the fees are recognized based on a stated percentage of the loan amount when services have been rendered and the subject loan is closed. For other agreements, deferred income related to the various Lismore fees will be recognized over the term of the agreement on a straight line basis as the service is rendered, only to the extent it is probable that a significant reversal of revenue will not occur. Constraints relating to variable consideration are resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price will be adjusted on a cumulative catch-up basis in the period a transaction or financing event closes.

Cost Reimbursement Revenue

Cost reimbursement revenue is recognized in the period we incur the related reimbursable costs. Under our advisory agreements, we are entitled to be reimbursed for certain costs we incur on behalf of Ashford Trust and Braemar, with no added mark-up. These costs primarily consist of expenses related to Ashford Securities, overhead, internal audit, risk management advisory services and asset management services, including compensation, benefits and travel expense reimbursements. We record cost reimbursement revenue for equity grants of Ashford Trust and Braemar common stock and LTIP units awarded to our officers and employees in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Prior to December 31, 2020, we additionally were reimbursed by Ashford Trust for expenses incurred by Ashford Investment Management, LLC (“AIM”) for managing Ashford Trust’s excess

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cash under an Investment Management Agreement with Ashford Trust. AIM was not compensated for its services but was reimbursed for all costs and expenses. Effective December 31, 2020, the Investment Management Agreement with Ashford Trust was terminated.

Under our project management agreements and hotel management agreements, we are entitled to be reimbursed for certain costs we incur on behalf of Ashford Trust, Braemar and other hotel owners, with no added mark-up. Project management costs primarily consist of costs for accounting, overhead and project manager services. Hotel management costs primarily consist of the properties’ payroll, payroll taxes and benefits related expenses at managed properties where we are the employer of the employees at the properties as provided for in our contracts with Ashford Trust, Braemar and other hotel owners.

We recognize revenue within “cost reimbursement revenue” in our condensed consolidated statements of operations when the amounts may be billed to Ashford Trust, Braemar and other hotel owners, and we recognize expenses within “reimbursed expenses” in our condensed consolidated statements of operations as they are incurred. This pattern of recognition results in temporary timing differences between the costs incurred for centralized software programs and the related reimbursements we receive from Ashford Trust and Braemar in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively.

Certain of our consolidated entities enter into contracts with customers that contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our consolidated entities’ overall pricing objectives taking into consideration market conditions and other factors, including the customer and the nature and value of the performance obligations within the applicable contracts.

Deferred Income and Contract Balances

Deferred income primarily consists of customer billings in advance of revenue being recognized from our advisory agreements and other hospitality products and services contracts. Generally, deferred income that will be recognized within the next twelve months is recorded as current deferred income and the remaining portion is recorded as noncurrent. The change in the deferred income balance is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred income balance at the beginning of the period.

The following tables summarize our consolidated deferred income activity (in thousands):

			Deferred Income
			2021						2020
Balance as of June 30			$	19,663					$	20,237
Increases to deferred income			5,154						10,786
Recognition of revenue (1)			(5,335)						(5,802)
Balance as of September 30			$	19,482					$	25,221

________

(1)    Deferred income recognized in the three months ended September 30, 2021, includes (a) $512,000 of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $296,000 of audio visual revenue, (c) $2.3 million of other revenue related to the Ashford Trust Agreement with Lismore (see note 13), and (d) $2.2 million of “other services” revenue earned by our hospitality products and services companies, excluding Lismore. Deferred income recognized in the three months ended September 30, 2020, includes (a) $554,000 of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $458,000 of audio visual revenue, (c) $4.0 million of other revenue related to the Ashford Trust Agreement and the Braemar Agreement with Lismore, which includes a $1.3 million cumulative catch-up adjustment to revenue which was previously considered constrained, and (d) $773,000 of “other services” revenue earned by our hospitality products and services companies, excluding Lismore.

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			Deferred Income
			2021						2020
Balance as of January 1			$	21,359					$	13,280
Increases to deferred income			15,373						22,457
Recognition of revenue (1)			(17,250)						(10,516)
Balance as of September 30			$	19,482					$	25,221

________

(1)    Deferred income recognized in the nine months ended September 30, 2021, includes (a) $1.6 million of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $1.5 million of audio visual revenue, (c) $8.9 million of other revenue primarily related to the Ashford Trust Agreement with Lismore, which includes a $1.1 million cumulative catch-up adjustment to revenue which was previously considered constrained (see note 13), and (d) $5.3 million of “other services” revenue earned by our hospitality products and services companies, excluding Lismore. Deferred income recognized in the nine months ended September 30, 2020, includes (a) $1.7 million of advisory revenue primarily related to our advisory agreements with Ashford Trust and Braemar, (b) $1.6 million of audio visual revenue, (c) $5.4 million of other revenue related to the Ashford Trust Agreement and the Braemar Agreement with Lismore and (d) $1.9 million of “other services” revenue earned by our hospitality products and services companies, excluding Lismore.

We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was primarily related to (i) reimbursed software costs that will be recognized evenly over the period the software is used to provide advisory services to Ashford Trust and Braemar, (ii) a $5.0 million cash payment received in June 2017 from Braemar in connection with our Fourth Amended and Restated Braemar Advisory Agreement, which is recognized evenly over the 10-year initial contract period that we are providing Braemar advisory services, and (iii) debt placement and related fees that will be recognized over the term of the agreement on a straight line basis as the service is rendered, only to the extent it is probable that a significant reversal of revenue will not occur. Constraints relating to variable consideration are resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price will be adjusted on a cumulative catch-up basis in the period a transaction or financing event closes. See note 13. Incentive advisory fees that are contingent upon future market performance are excluded as the fees are considered variable and not included in the transaction price at September 30, 2021.

The timing of revenue recognition may differ from the timing of payment by customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred income until the performance obligations are satisfied. We had receivables related to revenues from contracts with customers of $7.4 million and $3.5 million included in “accounts receivable, net” primarily related to our hospitality products and services segment, $2.1 million and $13.2 million in “due from Ashford Trust”, and $600,000 and $2.1 million included in “due from Braemar” related to REIT advisory services at September 30, 2021 and December 31, 2020, respectively. We had no significant impairments related to these receivables during the three and nine months ended September 30, 2021 and 2020. See note 13.

Disaggregated Revenue

Our revenues were comprised of the following for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands):

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			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Advisory services fees:
Base advisory fees			$	10,012					$	11,040					$	29,743					$	33,707
Incentive advisory fees			—						(339)						—						—
Other advisory revenue			131						131						389						391
Total advisory services fees revenue			10,143						10,832						30,132						34,098
Hotel management fees:
Base fees			6,166						3,777						15,331						13,592
Incentive fees			1,584						—						3,406						—
Total hotel management fees revenue			7,750						3,777						18,737						13,592
Design and construction fees revenue			2,202						1,790						5,611						7,780
Audio visual revenue			15,108						3,114						28,170						33,758
Other revenue:
Watersports, ferry and excursion services (1)			6,738						2,513						18,159						6,734
Debt placement and related fees (2)			3,224						4,017						9,802						5,480
Claims management services			28						55						61						184
Other services (3)			3,114						1,637						7,877						5,852
Total other revenue			13,104						8,222						35,899						18,250
Cost reimbursement revenue			54,048						28,133						136,079						127,830
Total revenues			$	102,355					$	55,868					$	254,628					$	235,308
REVENUES BY SEGMENT (4)
REIT advisory			$	17,936					$	16,790					$	49,749					$	53,297
Remington			52,324						24,800						131,709						117,715
Premier			3,047						2,277						7,421						10,173
INSPIRE			15,108						3,114						28,170						33,758
OpenKey			505						341						1,436						1,155
Corporate and other			13,435						8,546						36,143						19,210
Total revenues			$	102,355					$	55,868					$	254,628					$	235,308

________

(1)    Watersports, ferry and excursion services revenue is earned by RED, which includes the entity that conducts RED’s legacy U.S. Virgin Islands, the Turks and Caicos Islands operations and Sebago, a provider of watersports activities and excursion services based in Key West, Florida.

(2)    Debt placement and related fees are earned by Lismore for providing placement, modification, forbearance or refinancing services to Ashford Trust and Braemar.

(3)     Other services revenue relates primarily to other hotel services provided by our consolidated subsidiaries OpenKey and Pure Wellness, to Ashford Trust, Braemar and third parties, and the revenue of Marietta, which holds the leasehold rights to a single hotel and convention center property in Marietta, Georgia.

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(4)    We have five reportable segments: REIT Advisory, Remington, Premier, INSPIRE and OpenKey. We combine the operating results of RED, Marietta, Pure Wellness, Lismore and REA Holdings into an “all other” category, which we refer to as “Corporate and Other.” See note 15 for discussion of segment reporting.

Geographic Information

Our REIT Advisory, Remington, Premier, OpenKey, and Corporate and Other reporting segments, excluding RED, conduct their business primarily within the United States. Our INSPIRE reporting segment conducts business in the United States, Mexico, and the Dominican Republic. RED conducts business in the United States and the Turks and Caicos Islands, a territory of the United Kingdom.

The following table presents revenue from INSPIRE and RED geographically for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
INSPIRE:
United States			$	12,831					$	2,977					$	23,583					$	25,622
Mexico			1,430						54						3,101						6,563
Dominican Republic			847						83						1,486						1,573
Total audio visual revenue			$	15,108					$	3,114					$	28,170					$	33,758
RED:
United States			$	6,166					$	2,513					$	17,587					$	6,734
United Kingdom (Turks and Caicos Islands)			572						—						572						—
Total watersports, ferry and excursion services			$	6,738					$	2,513					$	18,159					$	6,734

4. Goodwill and Intangible Assets, net

Impairment of Goodwill and Intangible Assets —During the first quarter of 2020, as a result of our reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic, we recognized goodwill impairment charges of $170.6 million, of which $121.0 million related to our Remington segment, and $49.5 million related to our Premier segment. We engaged a third-party valuation expert to assist us in performing an interim quantitative assessment to determine whether it was more likely than not that the carrying value of goodwill in our reporting units was impaired as of March 31, 2020. The fair value estimates for all reporting units were based on a blended analysis of the present value of future cash flows and the market value approach. See note 6.

Based on our quantitative assessment as of March 31, 2020, we determined that the fair values of Remington and Premier were less than the carrying values of these reporting units. The carrying value of Remington was reduced by a $5.5 million impairment of the Remington trademarks prior to assessing goodwill for impairment. The excess carrying value of Remington and Premier over the estimate of fair value was recorded in “impairment” on our condensed consolidated statements of operations. No impairment charges or any other adjustments related to goodwill were recorded for the three and nine months ended September 30, 2021 or the three months ended September 30, 2020. As of September 30, 2021, our Remington segment had $54.6 million of goodwill remaining and our Premier and INSPIRE segments had no goodwill remaining.

Intangible Assets

During the third quarter of 2021, as a result of the strategic rebranding of our segment formerly known as JSAV to INSPIRE, we performed an impairment test and calculated the fair value of our indefinite-lived JSAV trademarks using the relief-from-royalty method which includes unobservable inputs including royalty rates and projected revenues for the time period that the Company is expected to benefit from the trademark. As a result of the evaluation, we recognized intangible asset impairment charges of $1.2 million, which was the full impairment of the indefinite-lived JSAV trademarks within the INSPIRE segment in the three and nine months ended September 30, 2021. See note 16.

During the first quarter of 2020, we engaged a third-party valuation expert to assist in determining the fair value of our indefinite-lived trademarks. We recognized intangible asset impairment charges of $7.6 million related to trademarks within our

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Remington and INSPIRE segments which resulted from changes in estimated future revenues based on a valuation using the relief-from-royalty method, which includes unobservable inputs including royalty rates and projected revenues. No impairment charges related to intangible assets were recorded for the three months ended September 30, 2020.

The carrying amount of goodwill as of September 30, 2021 is as follows (in thousands):

						Remington																		Corporate and Other (1)						Consolidated
Balance at September 30, 2021						$	54,605																	$	2,017					$	56,622

________

(1) Corporate and Other includes the goodwill acquired from RED’s acquisition of Sebago and the Company’s acquisition of Pure Wellness.

Intangible assets, net as of September 30, 2021 and December 31, 2020, are as follows (in thousands):

						September 30, 2021															December 31, 2020
						Gross Carrying Amount						Impairment			Accumulated Amortization			Net Carrying Amount						Gross Carrying Amount			Impairment			Accumulated Amortization			Net Carrying Amount
Definite-lived intangible assets:
Remington management contracts						$	107,600					$	—		$	(25,271)		$	82,329					$	107,600		$	—		$	(16,237)		$	91,363
Premier management contracts						194,000						—			(38,572)			155,428						194,000			—			(29,428)			164,572
INSPIRE customer relationships						9,319						—			(4,130)			5,189						9,319			—			(3,291)			6,028
RED boat slip rights						3,100						—			(341)			2,759						3,100			—			(225)			2,875
Pure Wellness customer relationships						175						—			(157)			18						175			—			(131)			44
Other						—						—			—			—						47			(37)			(10)			—
						$	314,194					$	—		$	(68,471)		$	245,723					$	314,241		$	(37)		$	(49,322)		$	264,882
						Gross Carrying Amount						Impairment			Net Carrying Amount									Gross Carrying Amount			Impairment			Net Carrying Amount
Indefinite-lived intangible assets:
Remington trademarks						$	4,900					$	—		$	4,900								$	10,400		$	(5,500)		$	4,900
INSPIRE trademarks (1)						1,160						(1,160)			—									3,641			(2,481)			1,160
RED trademarks						490						—			490									490			—			490
						$	6,550					$	(1,160)		$	5,390								$	14,531		$	(7,981)		$	6,550

________

(1) See explanation of impairment charges above.

Amortization expense for definite-lived intangible assets was $6.4 million and $19.2 million for the three and nine months ended September 30, 2021, respectively. Amortization expense for definite-lived intangible assets was $7.0 million and $20.7 million for the three and nine months ended September 30, 2020, respectively. The useful lives of our customer relationships range from 5 to 15 years. Our Remington management contracts, Premier management contracts and boat slip rights intangible assets were assigned useful lives of 22, 30, and 20 years, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. Notes Payable, net

Notes payable—Notes payable, net consisted of the following (in thousands):

Indebtedness						Borrower						Maturity						Interest Rate						September 30, 2021						December 31, 2020
Term loan (7)						Ashford Inc.						March 19, 2024						Base Rate (1) + 2.00% to 2.25% or LIBOR (2) (3) +3.00% to 3.25%						$	27,970					$	33,688
Note payable (10)						Ashford Inc.						February 29, 2028						4.00%						1,807						—
Term loan (5) (8)						INSPIRE						January 1, 2024						Prime Rate (4) + 1.50%						20,000						20,000
Revolving credit facility (5) (8)						INSPIRE						January 1, 2024						Prime Rate (4) + 1.50%						955						1,106
Revolving credit facility (5) (11)						Pure Wellness						On demand						Prime Rate (4) + 1.00%						100						100
Term loan (6) (17)						RED						October 5, 2025						Prime Rate (4) + 1.75%						—						571
Revolving credit facility (6) (12) (16)						RED						August 5, 2022						Prime Rate (4) + 1.75%						—						247
Draw term loan (6) (17)						RED						June 5, 2027						Prime Rate (4) + 1.75%						—						1,375
Term loan (6) (17)						RED						February 1, 2029						Prime Rate (4) + 2.00%						—						1,584
Term loan (5) (13)						RED						July 17, 2029						6.00% (13)						1,653						1,663
Term loan (5) (14)						RED						July 17, 2023						6.50%						671						859
Draw term loan (5) (16)						RED						August 5, 2028						Prime Rate (4) + 2.00%						—						1,575
Term loan (5) (15)						RED						August 5, 2029						Prime Rate (4) +2.00%						888						—
Term loan (5) (16)						RED						August 5, 2029						Prime Rate (4) + 2.00%						2,185						—
Term loan (6) (17)						RED						August 5, 2029						Prime Rate (4) + 1.75%						3,446						—
Notes payable																								59,675						62,768
Capitalized default interest, net (9)																								325						427
Deferred loan costs, net																								(559)						(499)
Notes payable including capitalized default interest and deferred loan costs, net																								59,441						62,696
Less current portion																								(5,868)						(5,347)
Notes payable, net - non-current																								$	53,573					$	57,349

__________________

(1)     Base Rate, as defined in the term loan agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate plus 0.50%, or (iii) LIBOR plus 1.00%.

(2)     Ashford Inc. may elect a 1, 2, 3 or 6 month LIBOR period for each borrowing.

(3)     The one-month LIBOR rate was 0.08% and 0.14% at September 30, 2021 and December 31, 2020, respectively.

(4)     Prime Rate was 3.25% and 3.25% at September 30, 2021 and December 31, 2020, respectively.

(5)     Creditors do not have recourse to Ashford Inc.

(6)    Creditors have recourse to Ashford Inc.

(7)    On March 29, 2021, the Company amended its Term Loan Agreement (the “Term Loan Agreement”) with Bank of America, N.A. (as so amended, the “Seventh Amendment”). The Seventh Amendment (a) increases the required amortization rate from 1.25% to 2.50% each quarter commencing July 1, 2021, (b) requires the Company to maintain a minimum liquidity of $15.0 million at all times, including pro forma for preferred dividends, and (c) restricts dividends and stock repurchases, other than preferred dividends, so long as there is no default under the Term Loan Agreement. Principal payment amounts are subject to maintaining a fixed charge coverage ratio below specified thresholds, which if not met, increase the principal payment due each quarter from 2.50% to 5.0% of the outstanding principal balance. Upon signing the Seventh Amendment, the Company made a $5.0 million prepayment to Bank of America, N.A. as consideration for their execution and delivery of the Seventh Amendment. The Company is also subject to certain financial covenants. See covenant compliance discussion below.

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(unaudited)

(8)    On December 31, 2020, INSPIRE amended its credit agreement dated as of November 1, 2017. As a result of the INSPIRE Amendment, the credit agreement revised the maximum borrowing capacity of the revolving credit facility from $3.5 million to $3.0 million. The INSPIRE Amendment additionally replaced INSPIRE’s previous term loan, draw term loan and equipment loans with a $20.0 million senior secured term loan. The INSPIRE Amendment also extended the maturity date of INSPIRE’s obligations under the revolving credit facility and term loan to January 1, 2024, with the potential for a further one-year extension at INSPIRE’s option subject to satisfaction of certain conditions, including a payment of a one-time, permanent principal reduction of the term loan of not less than $2.5 million and other fees as of the date of INSPIRE’s election to extend. Pursuant to the INSPIRE Amendment, INSPIRE’s obligations to comply with certain financial and other covenants was waived until March 31, 2023.

As a result of the INSPIRE Amendment, amounts borrowed under the revolving credit facility and the term loan will bear interest at the prime rate plus a margin of 1.25%, with the margin increasing by 0.25% beginning on July 1, 2021 and at the beginning of each successive quarter thereafter. INSPIRE will pay a commitment fee of 1.5% of the term loan in installments, with the possibility that the last $100,000 installment, scheduled to be paid on December 31, 2022, be forgiven if INSPIRE’s obligations under the INSPIRE Amendment have been satisfied in full in advance of that date. The INSPIRE Amendment suspended payments of principal under the term loan through December 2021. Commencing January 1, 2022, INSPIRE will be required to make monthly payments under the term loan of $200,000 through June 2022, $250,000 through December 2022 and $300,000 thereafter. On September 22, 2021, the INSPIRE Amendment was further amended to reduce INSPIRE’s requirement to fund an operating reserve account from an initial amount of $3.0 million to $1.0 million. In connection with the credit agreement dated as of November 1, 2017, INSPIRE entered into an interest rate cap with an initial notional amount totaling $5.0 million and a strike rate of 4.0%. The fair value of the interest rate cap at September 30, 2021 and December 31, 2020, was not material.

(9)    On December 31, 2020, the Company determined the INSPIRE Amendment was considered a troubled debt restructuring due to terms that allowed for deferred interest and the forgiveness of default interest and late charges. No gain or loss was recognized during the year ended December 31, 2020, as the carrying amount of the original loan was not greater than the undiscounted cash flows of the modified loans. Additionally, as a result of the troubled debt restructuring, $427,000 of accrued default interest and late charges were capitalized into the INSPIRE term loan balance at December 31, 2020, and are amortized over the remaining term of the loan using the effective interest method.

(10)    On March 9, 2021, we acquired all of the redeemable noncontrolling interests in OpenKey for a purchase price of approximately $1.9 million. Pursuant to the agreement, the purchase price will be paid to the seller in equal monthly installments over a seven year term and will include interest in arrears at an annualized rate of 4.0%. The purchase price is payable in Ashford Inc. common stock, including a 10% premium or cash at our sole discretion.

(11)    On April 6, 2017, Pure Wellness entered into a $100,000 line of credit. On July 20, 2020, Pure Wellness increased the line of credit to $250,000.

(12)    On July 23, 2021, RED renewed its $250,000 revolving credit facility.

(13)    On July 18, 2019, in connection with the acquisition of Sebago, RED entered into a term loan of $1.7 million. The interest rate for the term loan is 6.0% for the first five years. After five years, the interest rate is equal to the Prime Rate plus 0.5% with a floor of 6.0%.

(14)    On July 18, 2019, in connection with the acquisition of Sebago, RED entered into a term loan of $1.1 million.

(15)    On July 23, 2021, RED entered into a new term loan agreement with a maximum principal amount of $900,000. RED will not be required to make any payments of principal until May 5, 2022.

(16)    On July 23, 2021, RED consolidated the draw term loan previously maturing August 2028 and the outstanding balance for RED’s line of credit into a new term loan. RED will be required to pay monthly installments of principal and interest commencing September 5, 2021 until the maturity date.

(17)    On July 23, 2021, RED consolidated the draw term loan previously maturing June 2027 and two term loans previously maturing October 2025 and February 2029 into a new term loan. Commencing September 5, 2021, RED is required to pay monthly installments of principal and interest until the maturity date.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in the inability of our portfolio companies to borrow unused amounts under their respective lines of credit. As of September 30, 2021, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

6. Fair Value Measurements

Fair Value Hierarchy—Our assets and liabilities measured at fair value, either on a recurring or a non-recurring basis, are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:

•Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

•Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

•Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):

			Quoted Market Prices (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs  (Level 3)						Total
September 30, 2021
Assets
Restricted Investment:
Ashford Trust common stock			$	231		(1)			$	—					$	—					$	231
Braemar common stock			405			(1)			—						—						405
Total			$	636					$	—					$	—					$	636
Liabilities
Subsidiary compensation plan			$	—					$	(136)		(1)			$	—					$	(136)
Deferred compensation plan			(2,858)						—						—						(2,858)
Total			$	(2,858)					$	(136)					$	—					$	(2,994)
Net			$	(2,222)					$	(136)					$	—					$	(2,358)

__________________

(1) The restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through September 30, 2021, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

			Quoted Market Prices (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
December 31, 2020
Assets
Restricted Investment:
Ashford Trust common stock			$	88		(2)			$	—					$	—					$	88
Braemar common stock			202			(2)			—						—						202
Total			$	290					$	—					$	—					$	290
Liabilities
Contingent consideration			$	(1,735)		(1)			$	—					$	—					$	(1,735)
Subsidiary compensation plan			—						(89)			(2)			—						(89)
Deferred compensation plan			(1,707)						—						—						(1,707)
Total			$	(3,442)					$	(89)					$	—					$	(3,531)
Net			$	(3,152)					$	(89)					$	—					$	(3,241)

__________________

(1) Represents the fair value of the contingent consideration liability of $1.7 million related to the stock consideration collar associated with INSPIRE’s acquisition of BAV. The contingent consideration liabilities are reported as “other current liabilities” in our condensed consolidated balance sheets. See note 1.

(2) The restricted investment includes shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The compensation agreement liability is based on ratably accrued vested shares through December 31, 2020, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.

Assets Measured at Fair Value on a Non-recurring Basis

Our non-financial assets, such as goodwill, indefinite-lived intangible assets and long-lived assets are adjusted to fair value when an impairment charge is recognized. Such fair value measurements are based predominately on Level 3 inputs.

Goodwill

During the first quarter of 2020, as a result of our reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic, we recognized goodwill impairment charges of $170.6 million, of which $121.0 million related to our Remington segment, and $49.5 million related to our Premier segment. We engaged a third-party valuation expert to assist us in performing an interim quantitative assessment in which we compared the fair value of the reporting units to their carrying value. The fair value estimates for all reporting units were based on a blended analysis of the present value of future cash flows and the market value approach, Level 3 inputs. The significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows and the long-term rate of growth. Our cash flow assumptions were based on the actual historical performance of the reporting unit and took into account the recent severe and continued weakening of operating results as well as the anticipated rate of recovery due to the COVID-19 pandemic. The projected cash flows were based on management’s expectation of the timing of recovery from the economic downturn under various scenarios. The significant estimates used in the market approach model included identifying public companies engaged in businesses that are considered comparable to those of the reporting unit and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The excess of the reporting unit's carrying value over our estimate of the fair value was recorded as the goodwill impairment charge in the first quarter of 2020.

As of September 30, 2021, our Remington segment had $54.6 million of goodwill remaining and our Premier and INSPIRE segments had no goodwill remaining. No impairment charges or any other adjustments related to goodwill were recorded for the three and nine months ended September 30, 2021 or the three months ended September 30, 2020. Changes in circumstances due to the potential long-term economic impact and near-term financial impacts of the COVID-19 pandemic could result in additional impairment losses of all or a portion of our remaining goodwill and intangible asset balances. We will continue to monitor and evaluate our results and evaluate the likelihood of any potential impairment charges at our reporting units.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Indefinite-Lived Intangible Assets

During the third quarter of 2021, as a result of the strategic rebranding of our segment formerly known as JSAV to INSPIRE, we performed an impairment test and calculated the fair value of our indefinite-lived JSAV trademarks using the relief-from-royalty method which includes unobservable inputs including royalty rates and projected revenues for the time period that the Company is expected to benefit from the trademark. As a result of the evaluation, we recognized intangible asset impairment charges of $1.2 million, which was the full impairment of the indefinite-lived JSAV trademarks within the INSPIRE segment in the three and nine months ended September 30, 2021.

As a result of the negative impact of the COVID-19 pandemic on our business, we concluded that sufficient indicators existed to require us to perform an interim quantitative assessment of intangible assets as of March 31, 2020. During the first quarter of 2020, we engaged a third-party valuation expert to assist in determining the fair value of our indefinite-lived trademarks. We recognized intangible asset impairment charges of $7.6 million related to trademarks within our Remington and INSPIRE segments which resulted from changes in estimated future revenues based on a valuation using the relief-from-royalty method, which includes unobservable inputs including royalty rates and projected revenues. No impairment charges related to intangible assets were recorded for the three months ended September 30, 2020.

Effect of Fair Value Measured Assets and Liabilities on Our Condensed Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):

			Gain (Loss) Recognized
			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Assets
Restricted investment: (1)
Ashford Trust common stock			$	(5)					$	—					$	(336)					$	(200)
Braemar common stock			—						—						(42)						(186)
Goodwill			—						—						—						(170,572)
Intangible assets, net			(1,160)						—						(1,160)						(7,641)
Total			$	(1,165)					$	—					$	(1,538)					$	(178,599)
Liabilities
Contingent consideration (2)			$	—					$	(134)					$	(23)					$	(751)
Subsidiary compensation plan (3)			5						22						(268)						187
Deferred compensation plan (3)			1,611						869						(1,190)						3,566
Total			$	1,616					$	757					$	(1,481)					$	3,002
Net			$	451					$	757					$	(3,019)					$	(175,597)

__________________

(1)     Represents the realized gain (loss) on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees.

(2)     Represents the changes in fair value of the contingent consideration liabilities related to the level of achievement of certain performance targets and stock consideration collars associated with the acquisition of BAV. Changes in the fair value of contingent consideration are reported within “other” operating expense in our condensed consolidated statements of operations.

(3) Reported as a component of “salaries and benefits” in our condensed consolidated statements of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Restricted Investment

The historical cost and approximate fair values, together with gross unrealized gains and losses, of securities restricted for use in our subsidiary compensation plan are as follows (in thousands):

			Historical Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Available-for-sale securities:
September 30, 2021
Equity securities (1)			$	1,441					$	—					$	(805)					$	636

__________________

(1)     Distribution of $855,000 of available-for-sale securities occurred in the nine months ended September 30, 2021. Unrealized gains and losses associated with available-for-sale securities are included within “accumulated other comprehensive income” in our condensed consolidated balance sheets.

			Historical Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Available-for-sale securities:
December 31, 2020
Equity securities (1)			$	1,169					$	—					$	(879)					$	290

__________________

(1)     Distribution of $195,000 of available-for-sale securities had occurred as of December 31, 2020. Unrealized losses associated with available-for-sale securities are included within “accumulated other comprehensive income” in our condensed consolidated balance sheets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7. Summary of Fair Value of Financial Instruments

Certain of our financial instruments are not measured at fair value on a recurring basis. The estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled. The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

						September 30, 2021												December 31, 2020
						Carrying Value						Estimated Fair Value						Carrying Value						Estimated Fair Value
Financial assets measured at fair value:
Restricted investment						$	636					$	636					$	290					$	290
Financial liabilities measured at fair value:
Deferred compensation plan						$	2,858					$	2,858					$	1,707					$	1,707
Contingent consideration						—						—						1,735						1,735
Financial assets not measured at fair value:
Cash and cash equivalents						$	40,210					$	40,210					$	45,270					$	45,270
Restricted cash						34,554						34,554						37,396						37,396
Accounts receivable, net						7,369						7,369						3,458						3,458
Note receivable						2,881						2,881						—						—
Due from affiliates						513						513						353						353
Due from Ashford Trust						2,068						2,068						13,198						13,198
Due from Braemar						600						600						2,142						2,142
Investments in unconsolidated entities						3,548						3,548						3,687						3,687
Financial liabilities not measured at fair value:
Accounts payable and accrued expenses						$	34,120					$	34,120					$	40,378					$	40,378
Dividends payable						33,928						33,928						16,280						16,280
Due to affiliates						10						10						1,471						1,471
Other liabilities						26,590						26,590						28,170						28,170
Notes payable						59,675						56,691 to 62,659						62,768						59,629 to 65,906

Restricted investment. These financial assets are carried at fair value based on quoted market prices of the underlying investments. This is considered a Level 1 valuation technique.

Deferred compensation plan. The liability resulting from the deferred compensation plan is carried at fair value based on the closing prices of the underlying investments. This is considered a Level 1 valuation technique.

Contingent consideration. The liability associated with INSPIRE’s acquisition of BAV was carried at fair value based on the terms of the acquisition agreements and any changes to fair value are recorded in “other” operating expenses in our condensed consolidated statements of operations. This is considered a Level 1 valuation technique. See note 6.

Cash, cash equivalents and restricted cash. These financial assets bear interest at market rates and have maturities of less than 90 days. The carrying values approximate fair value due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Accounts receivable, net, due from affiliates, due from Ashford Trust, due from Braemar, note receivable, accounts payable and accrued expenses, dividends payable, due to affiliates and other liabilities. The carrying values of these financial instruments approximate their fair values due primarily to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Investments in unconsolidated entities. The carrying value of the asset resulting from investment in unconsolidated entities approximates fair value based on recent observable transactions. This is considered a level 2 valuation technique. See note 2.

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(unaudited)

Notes payable. The fair value of notes payable is based on credit spreads on observable transactions of a similar nature and is considered a Level 2 valuation technique.

8. Commitments and Contingencies

Purchase Commitment—As of September 30, 2021, we had approximately $11.4 million of remaining purchase commitments related to our Ashford Trust ERFP Agreement which, under the Extension Agreement, must be fulfilled by December 31, 2022.

Litigation—In June 2020, each of the Company, Braemar, Ashford Trust, and Lismore, a subsidiary of the Company (collectively with the Company, Braemar, Ashford Trust and Lismore, the “Ashford Companies”), received an administrative subpoena from the SEC. The Company’s administrative subpoena requires the production of documents and other information since January 1, 2018 relating to, among other things, (i) related party transactions among the Ashford Companies (including the Ashford Trust Agreement and the Braemar Agreement pursuant to which each of Ashford Trust and Braemar engaged Lismore to negotiate the refinancing, modification or forbearance of certain mortgage debt) or between any of the Ashford Companies and any officer, director or owner of the Ashford Companies or any entity controlled by any such person, and (ii) the Company’s accounting policies, procedures and internal controls related to such related party transactions. In addition, in October 2020, Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, received an administrative subpoena from the SEC requesting testimony and the production of documents and other information substantially similar to the requests in the subpoenas received by the Ashford Companies. The Company and Mr. Monty J. Bennett are responding to the administrative subpoenas.

On December 20, 2016, a class action lawsuit was filed against one of the Company’s subsidiaries in The Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees who were allegedly deprived of rest breaks as a result of the subsidiary’s previous written policy requiring employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees who were not paid for allegedly missed breaks upon separation from employment. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2021, no amounts have been accrued.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters, matters relating to compliance with applicable law (for example, the ADA and similar state laws), and other general matters. The likelihood of loss for these legal proceedings is based on definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow. However, our assessment may change depending upon the development of these legal proceedings, and final results of these legal proceedings cannot be predicted with certainty. If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

9. Equity (Deficit)

Noncontrolling Interests in Consolidated Entities—See note 2 for details regarding ownership interests, carrying values and allocations related to noncontrolling interests in our consolidated subsidiaries.

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The following table summarizes the (income) loss allocated to noncontrolling interests for each of our consolidated entities (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
(Income) loss allocated to noncontrolling interests:
OpenKey			$	215					$	181					$	626					$	420
RED			(14)						109						(52)						264
Pure Wellness			(21)						29						(65)						52
Other			—						—						—						21
Total net (income) loss allocated to noncontrolling interests			$	180					$	319					$	509					$	757

10. Mezzanine Equity

Redeemable Noncontrolling Interests—Redeemable noncontrolling interests are included in the mezzanine section of our condensed consolidated balance sheets as the ownership interests are redeemable for cash or registered shares outside of the Company’s control. See note 2 for tables summarizing the redeemable noncontrolling ownership interests and carrying values.

The following table summarizes the net (income) loss allocated to our redeemable noncontrolling interests (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Net (income) loss allocated to redeemable noncontrolling interests:
Ashford Holdings			$	13					$	35					$	56					$	396
INSPIRE			—						392						—						870
OpenKey			—						177						152						422
Total net (income) loss allocated to redeemable noncontrolling interests			$	13					$	604					$	208					$	1,688

Convertible Preferred Stock—Our convertible preferred stock is included in the mezzanine section of our condensed consolidated balance sheets as the ownership interests are redeemable for cash or registered shares outside of the Company’s control.

Each share of Series D Convertible Preferred Stock: (i) has a liquidation value of $25 per share; (ii) accrues cumulative dividends at the rate of: (a) 6.59% per annum until November 6, 2020; (b) 6.99% per annum from November 6, 2020 until November 6, 2021; and (c) 7.28% per annum thereafter; (iii) participates in any dividend or distribution on the common stock in addition to the preferred dividends; (iv) is convertible into voting common stock at $117.50 per share; and (v) provides for customary anti-dilution protections. In the event the Company fails to pay the dividends on the Series D Convertible Preferred Stock for two consecutive quarterly periods (a “Preferred Stock Breach”), then until such arrearage is paid in cash in full: (A) the dividend rate on the Series D Convertible Preferred Stock will increase to 10.00% per annum until no Preferred Stock Breach exists; (B) no dividends on the Company’s common stock may be declared or paid, and no other distributions or redemptions may be made, on the Company’s common stock; and (C) the Board will be increased by two seats and the holders of 55% of the outstanding Series D Convertible Preferred Stock will be entitled to fill such newly created seats. The Series D Convertible Preferred Stock is held primarily by Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, Mr. Archie Bennett, Jr., who is Mr. Monty J. Bennett’s father, one of our other executive officers and several other individuals.

To the extent not paid on April 15, July 15, October 15 and January 15 of each calendar year in respect of the quarterly periods ending on March 31, June 30, September 30 and December 31, respectively (each such date, a “Dividend Payment

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Date”), all accrued dividends on any share shall accumulate and compound on the applicable Dividend Payment Date whether or not declared by the Board and whether or not funds are legally available for the payment thereof. All accrued dividends shall remain accumulated, compounding dividends until paid in cash pursuant hereto or converted to common shares.

The Series D Convertible Preferred Stock is entitled to vote alongside our voting common stock on an as-converted basis, subject to applicable voting limitations.

So long as any shares of Series D Convertible Preferred Stock are outstanding, the Company is prohibited from taking specified actions without the consent of the holders of 55% of the outstanding Series D Convertible Preferred Stock, including: (i) modifying the terms, rights, preferences, privileges or voting powers of the Series D Convertible Preferred Stock; (ii) altering the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series D Convertible Preferred Stock; (iii) issuing any security senior to the Series D Convertible Preferred Stock, or any shares of Series D Convertible Preferred Stock other than pursuant to the Combination Agreement dated May 31, 2019 between us, the Bennetts, Remington Holdings, L.P. and certain other parties, as amended (the “Combination Agreement”); (iv) entering into any agreement that expressly prohibits or restricts the payment of dividends on the Series D Convertible Preferred Stock or the common stock of the Company or the exercise of the Change of Control Put Option (as defined in the Combination Agreement); or (v) other than the payment of dividends on the Series D Convertible Preferred Stock or payments to purchase any of the Series D Convertible Preferred Stock, transferring all or a substantial portion of the Company’s or its subsidiaries’ cash balances or other assets to a person other than the Company or its subsidiaries, other than by means of a dividend payable by the Company pro rata to the holders of the Company common stock (together with a corresponding dividend payable to the holders of the Series D Convertible Preferred Stock).

After June 30, 2026, we will have the option to purchase all or any portion of the Series D Convertible Preferred Stock, in $25.0 million increments, on a pro rata basis among all holders of the Series D Convertible Preferred Stock (subject to the ability of the holders to provide for an alternative allocation amongst themselves), at a price per share equal to: (i) $25.125; plus (ii) all accrued and unpaid dividends (provided any holder of Series D Convertible Preferred Stock shall be entitled to exercise its right to convert its shares of Series D Convertible Preferred Stock into common stock not fewer than five business days before such purchase is scheduled to close).

Under the applicable authoritative accounting guidance, the increasing dividend rate feature of the Series D Convertible Preferred Stock results in a discount that must be reflected in the fair value of the preferred stock, which was reflected in “Series D Convertible Preferred Stock, net of discount” on our condensed consolidated balance sheets. For the three and nine months ended September 30, 2021, we recorded $306,000 and $933,000, respectively, of amortization related to preferred stock discounts. For the three and nine months ended September 30, 2020, we recorded $781,000 and $2.4 million, respectively, of amortization related to preferred stock discounts.

The Company declared dividends which were due with respect to its Series D Convertible Preferred Stock of $8.4 million for each of the first and third quarters of 2021 which were paid on April 15, 2021 and October 15, 2021, respectively. The Company did not declare dividends with respect to its Series D Convertible Preferred Stock for the second quarter of 2021. As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021. All dividends, declared and undeclared, are recorded as a reduction in net income (loss) in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid dividends, declared and undeclared, totaling $33.9 million at September 30, 2021, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.” Declared convertible preferred stock cumulative dividends for all issued and outstanding shares were as follows (in thousands, except per share amounts):

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			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Preferred dividends - declared			$	8,353					$	7,875					$	16,706					$	15,815
Preferred dividends per share - declared			$	0.4369					$	0.4119					$	0.8737					$	0.8271

Aggregate undeclared convertible preferred stock cumulative dividends (in thousands, except per share amounts):

			September 30, 2021						December 31, 2020
Aggregate preferred dividends - undeclared			$	25,575					$	16,280
Aggregate preferred dividends - undeclared per share			$	1.3376					$	0.8515

11. Equity-Based Compensation

Equity-based compensation expense is primarily recorded in “salaries and benefits expense” and REIT equity-based compensation expense is primarily recorded in “reimbursed expenses” in our condensed consolidated statements of operations. The components of equity-based compensation expense for the three and nine months ended September 30, 2021 and 2020 are presented below by award type (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Equity-based compensation
Option amortization (1)			$	552					$	1,454					$	2,101					$	3,146
Employee equity grant expense (2)			363						221						904						573
Director and other non-employee equity grants expense (3)			(5)						100						645						369
Total equity-based compensation			$	910					$	1,775					$	3,650					$	4,088
Other equity-based compensation
REIT equity-based compensation (4)			$	5,499					$	4,088					$	13,676					$	13,288
			$	6,409					$	5,863					$	17,326					$	17,376

________

(1)    As of September 30, 2021, the Company had approximately $909,000 of total unrecognized compensation expense related to options that will be recognized over a weighted average period of 0.4 years. The nine months ended September 30, 2020, includes the forfeiture of 98,603 options from the voluntary resignation of Douglas A. Kessler, Senior Managing Director of the Company, in May of 2020.

(2)    As of September 30, 2021, the Company had approximately $2.2 million of total unrecognized compensation expense related to restricted shares that will be recognized over a weighted average period of 1.9 years. See note 1.

(3)    Grants of stock, restricted stock and stock units to independent directors and other non-employees are recorded at fair value based on the market price of our shares at grant date, and this amount is expensed in “general and administrative” expense.

(4)    REIT equity-based compensation expense is primarily recorded in “reimbursed expenses” and is associated with equity grants of Ashford Trust’s and Braemar’s common stock and LTIP units awarded to our officers and employees.

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12. Deferred Compensation Plan

We administer a non-qualified deferred compensation plan (“DCP”) for certain executive officers. The plan allowed participants to defer up to 100% of their base salary and bonus and select an investment fund for measurement of the deferred compensation obligation. For the periods the DCP was administered by Ashford Trust, the participants elected Ashford Trust common stock as their investment option. In accordance with the applicable authoritative accounting guidance, the deferred amounts and any dividends earned received equity treatment and were included in additional paid-in capital. In connection with our spin-off and the assumption of the DCP obligation by the Company, the DCP was modified to give the participants various investment options, including Ashford Inc. common stock, for measurement that can be changed by the participant at any time. These modifications resulted in the DCP obligation being recorded as a liability in accordance with the applicable authoritative accounting guidance. Distributions under the DCP are made in cash, unless the participant has elected Ashford Inc. common stock as the investment option, in which case any such distributions would be made in Ashford Inc. common stock. Additionally, the DCP obligation is carried at fair value with changes in fair value reflected in “salaries and benefits” in our condensed consolidated statements of operations and comprehensive income (loss).

The following table summarizes the DCP activity (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Change in fair value
Unrealized gain (loss)			$	1,611					$	869					$	(1,190)					$	3,566
Distributions
Fair value (1)			$	13					$	2					$	39					$	8
Shares (1)			1						—						3						1

________

(1)    Distributions made to one participant.

As of September 30, 2021 and December 31, 2020, the carrying value of the DCP liability was $2.9 million and $1.7 million, respectively.

13. Related Party Transactions

As an asset manager providing advisory services to Ashford Trust and Braemar, as well as holding an ownership interest in other businesses providing products and services to the hospitality industry, including Ashford Trust and Braemar, related party transactions are inherent in our business. Details of our related party transactions are presented below.

Ashford Trust—We are a party to an amended and restated advisory agreement, as amended, with Ashford Trust and its operating subsidiary, Ashford Hospitality Limited Partnership (“Ashford Trust OP”). On January 14, 2021, the Company entered into the Second Amended and Restated Advisory Agreement with Ashford Trust. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement, dated June 10, 2015, as amended by the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of June 26, 2018 to, among other things (i) revise the term and termination rights; (ii) fix the percentage used to calculate the base fee thereunder at 0.70% per annum; (iii) update the list of peer group members; (iv) suspend the requirement that Ashford Trust maintain a minimum Consolidated Tangible Net Worth until the first fiscal quarter beginning after June 30, 2023; and (v) revise the criteria that would constitute a Company Change of Control of Ashford Trust in order to provide Ashford Trust additional flexibility to dispose of underperforming assets negatively impacted by COVID-19. In connection with the transactions contemplated by the Credit Agreement, the Company entered into the SNDA with Ashford Trust and Oaktree pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement, (1) prior to the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of the Advisory Fee Cap, (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder, and (3) any payments to Lismore in connection with the transactions contemplated by the Credit Agreement. On

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October 12, 2021, Ashford Trust entered into Amendment No. 1 to the Credit Agreement. See note 16. See note 3 for discussion of the advisory services fees revenue recognition policy.

Premier is party to a master project management agreement with Ashford Trust OP and Ashford TRS Corporation, a subsidiary of Ashford Trust OP, and certain of its affiliates to provide comprehensive and cost-effective design, development, architectural, and project management services and a related mutual exclusivity agreement with Ashford Trust and Ashford Trust OP. On March 20, 2020, we amended the master project management agreement to provide that Premier’s fees shall be paid by Ashford Trust to Premier upon the completion of any work provided by third party vendors to Ashford Trust.

Remington is party to the Ashford Trust Master Hotel Management Agreement with Ashford Trust. Ashford Trust pays the Company a monthly hotel management fee equal to the greater of $14,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenue (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met and other general and administrative expense reimbursements. Under the original terms of the Ashford Trust Master Hotel Management Agreement, Ashford Trust paid us on the fifth day of each month for the base fees in the preceding month. On March 13, 2020, Ashford Trust entered into the Ashford Trust Hotel Management Letter Agreement with the Company. In order to allow the Company to better manage our corporate working capital and to ensure the continued efficient operation of the Ashford Trust hotels managed by Remington, Ashford Trust agreed to pay the base fee and to reimburse all expenses for Remington-managed hotels on a weekly basis for the preceding week, rather than on a monthly basis. The Ashford Trust Hotel Management Letter Agreement went into effect on March 13, 2020 and will continue until terminated by Ashford Trust.

On March 20, 2020, Lismore, a wholly owned subsidiary of the Company, entered into an agreement with Ashford Trust (the “Ashford Trust Agreement”). Pursuant to the Ashford Trust Agreement, Lismore shall, during the term of the agreement (which commenced on March 20, 2020 and shall end on the date that is twelve months following the commencement date, or upon it being terminated by Ashford Trust on not less than thirty days written notice) negotiate the refinancing, modification or forbearance of the existing mortgage debt on Ashford Trust’s hotels. For the purposes of the Ashford Trust Agreement, financing shall include, without limitation, senior or subordinate loan financing, provided in any single transaction or a combination of transactions, including, mortgage loan financing, mezzanine loan financing, or subordinate loan financing encumbering the applicable hotel or unsecured loan financing.

On July 1, 2020, Lismore and Ashford Trust amended and restated the Ashford Trust Agreement with an effective date of April 6, 2020. Pursuant to the amended and restated agreement, the term of the agreement was extended to 24 months following the commencement date. In connection with the services to be provided by Lismore under the amended and restated agreement, Lismore received a fee of $2.6 million in three equal installments of $857,000 per month beginning July 20, 2020, and ending on September 20, 2020. Lismore is also entitled to receive a fee that is calculated and payable as follows: (i) a fee equal to 25 basis points (0.25%) of the amount of a loan, payable upon the acceptance by the applicable lender of any forbearance or extension of such loan, or in the case where a third-party agent or contractor engaged by Ashford Trust has secured an extension of the maturity date equal to or greater than 12 months of any such loan, then the amount payable to Lismore shall be reduced to 10 basis points (0.10%); (ii) a fee equal to 75 basis points (0.75%) of the amount of any principal reduction of a loan upon the acceptance by any lender of any principal reduction of such loan; and (iii) a fee equal to 150 basis points (1.50%) of the implied conversion value (but in any case, no less than 50% of the face value of such loan or loans) of a loan upon the acceptance by any lender of any debt to equity conversion of such loan.

At the time of amendment, Lismore had been paid approximately $8.3 million, in the aggregate, pursuant to the original agreement. Under the amended and restated agreement, Ashford Trust is still entitled, in the event that Ashford Trust does not complete, for any reason, extensions or forbearances during the term of the agreement equal to or greater than approximately $4.1 billion, to offset, against any fees Ashford Trust or its affiliates owe pursuant to the advisory agreement, a portion of the fee previously paid by Ashford Trust to Lismore equal to the product of (x) approximately $4.1 billion minus the amount of extensions or forbearances completed during the term of the agreement multiplied by (y) 0.125%. For the three and nine months ended September 30, 2021, the Company recognized revenue of $2.3 million and $8.0 million, respectively. For the three and nine months ended September 30, 2020, the Company recognized revenue of $3.0 million and $3.6 million, respectively. As of September 30, 2021 and December 31, 2020, the Company recorded $4.7 million and $7.3 million, respectively, as deferred income. Additionally, the independent members of the Board accelerated approximately $506,000 in claw back credit due to Ashford Trust which, absent a waiver, would occur after the expiration of the Ashford Trust Agreement. Such claw back credit was due to Ashford Trust in connection with certain properties Ashford Trust no longer owns. This amount was offset against base advisory fees. Approximately $156,000 may be offset against fees under the agreement that are eligible for claw back under the agreement. The deferred income related to the various Lismore fees described above are being recognized over the 24

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month term of the agreement on a straight line basis as the service is rendered, only to the extent it is probable that a significant reversal of revenue will not occur. Constraints relating to variable consideration are resolved generally upon the closing of a transaction or financing event and the resulting change in the transaction price will be adjusted on a cumulative catch-up basis in the period a transaction or financing event closes. See the table below for details of the revenue recognized by the Company and note 3 for additional discussion of the related deferred income.

On January 4, 2021, the independent members of the board of directors (the “Board”) of Ashford Inc. agreed to: (i) defer Ashford Trust’s payment of the base advisory fees that were previously deferred for the months of October 2020, November 2020 and December 2020; (ii) defer approximately $2.8 million in base advisory fees with respect to the month of January 2021; (iii) defer Ashford Trust’s payment of Lismore success fees that were previously deferred for the months of October 2020, November 2020 and December 2020; and (iv) defer payment of Ashford Trust’s Lismore success fees for the month of January 2021. As a result, the foregoing payments became due on January 11, 2021. Additionally, the independent members of the Board waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the advisory agreement and Ashford Trust Agreement or any damages that may have arisen in absence of such fee deferrals.

On January 11, 2021, the independent members of the Board provided Ashford Trust an additional deferral of the base advisory fees and any Lismore success fees for the months of October 2020, November 2020, December 2020 and January 2021 that were previously deferred such that all such fees would be due and payable on the earlier of (x) January 18, 2021 and (y) immediately prior to the closing of Credit Agreement between Ashford Trust and Oaktree. Additionally, the Board waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the advisory agreement and Ashford Trust Agreement or any damages that may have arisen in absence of such fee deferral. In accordance with the terms of the previously disclosed deferrals, Ashford Trust paid the Company $14.4 million on January 15, 2021.

The following table summarizes the revenues and expenses related to Ashford Trust (in thousands):

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			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
REVENUES BY TYPE
Advisory services fees:
Base advisory fees (1)			$	7,254					$	8,653					$	21,762					$	26,127
Hotel management fees:
Base management fees			5,024						3,491						12,874						12,688
Incentive management fees			1,416						—						3,017						—
Total hotel management fees revenue (2)			6,440						3,491						15,891						12,688
Design and construction fees revenue (3)			810						722						1,847						4,642
Audio visual revenue (4)			—						—						—						—
Other revenue
Debt placement and related fees (5)			3,074						2,957						8,799						3,774
Claims management services (6)			25						42						55						88
Other services (7)			440						340						1,232						1,126
Total other revenue			3,539						3,339						10,086						4,988
Cost reimbursement revenue			42,653						23,155						108,775						111,175
Total revenues			$	60,696					$	39,360					$	158,361					$	159,620
REVENUES BY SEGMENT (8)
REIT advisory			$	11,454					$	12,457					$	33,212					$	38,419
Remington			44,376						22,049						112,122						108,323
Premier			1,351						1,020						2,994						6,281
OpenKey			29						49						89						178
Corporate and other			3,486						3,785						9,944						6,419
Total revenues			$	60,696					$	39,360					$	158,361					$	159,620
COST OF REVENUES
Cost of revenues for audio visual (4)			$	945					$	59					$	1,641					$	2,073
SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenue from guests at REIT properties (4)			$	2,118					$	133					$	3,691					$	4,737

________

(1)    Advisory fees earned from Ashford Trust during the three and nine months ended September 30, 2021, excluded $2.2 million and $5.4 million, respectively, of advisory fees that were constrained and deferred as a result of the $29.0 million annual Advisory Fee Cap. The deferred fees are included in deferred income in our condensed consolidated balance sheet. See note 3 for discussion of the advisory services fees revenue recognition policy.

(2)    Hotel management fees revenue is reported within our Remington segment. Base management fees are recognized when services have been rendered. Remington receives base management fees of 3% of gross hotel revenue for managing the hotel employees and daily operations of the hotels, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index). See note 3 for discussion of the hotel management fees revenue recognition policy.

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(3)    Design and construction fees revenue primarily consists of revenue generated within our Premier segment by providing design, development, architectural, and project management services for which Premier receives fees. See note 3 for discussion of the design and construction fees revenue recognition policy.

(4)    INSPIRE primarily contracts directly with customers to whom it provides audio visual services. INSPIRE recognizes the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Ashford Trust, are recognized in “cost of revenues for audio visual” in our condensed consolidated statements of operations. See note 3 for discussion of the audio visual revenue recognition policy.

(5)    Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services.

(6)    Claims management services include revenue earned from providing insurance claim assessment and administration services.

(7)    Other services revenue is primarily associated with other hotel products and services, such as mobile key applications and hypoallergenic premium rooms, provided to Ashford Trust by our consolidated subsidiaries, OpenKey and Pure Wellness.

(8)    See note 15 for discussion of segment reporting.

Braemar—We are also a party to an amended and restated advisory agreement with Braemar and its operating subsidiary Braemar Hospitality Limited Partnership (“Braemar OP”).

Premier is party to a master project management agreement with Braemar OP and Braemar TRS Yountville LLC, a wholly-owned subsidiary of Braemar OP to provide comprehensive and cost-effective design, development, architectural, and project management services and a related mutual exclusivity agreement with Braemar and Braemar OP. On March 20, 2020, we amended the project management agreement to provide that Premier’s fees shall be paid by Braemar to Premier upon the completion of any work provided by third party vendors to Braemar.

Remington is party to the Braemar Master Hotel Management Agreement with Braemar. Braemar pays the Company a monthly hotel management fee equal to the greater of $14,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenue (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met and other general and administrative expense reimbursements. Under the original terms of the Braemar Master Hotel Management Agreement, Braemar paid us on the fifth day of each month for the base fees in the preceding month. On March 13, 2020, Braemar entered into the Braemar Hotel Management Letter Agreement with the Company. In order to allow the Company to better manage its corporate working capital and to ensure the continued efficient operation of the Braemar hotels managed by Remington, Braemar agreed to pay the base fee and to reimburse all expenses for Remington-managed hotels on a weekly basis for the preceding week, rather than on a monthly basis. The Braemar Hotel Management Letter Agreement went into effect on March 13, 2020 and will continue until terminated by Braemar.

On March 20, 2020, Lismore entered into an agreement with Braemar to negotiate the refinancing, modification or forbearance of the existing mortgage and mezzanine debt on Braemar’s hotels (the “Braemar Agreement”). The Braemar Agreement was terminated effective March 20, 2021. Upon entering into the Braemar Agreement, Braemar made an initial payment of approximately $1.4 million. Braemar also paid the Company a total of $1.4 million in six equal installments beginning April 20, 2020 and ending September 20, 2020, of which $681,000 was subject to claw back and was set-off against the cash payment of Braemar’s base advisory fees upon the termination of the Braemar Agreement in March 2021. Braemar additionally paid the Company approximately $1.4 million in success fees in connection with signed forbearance or other agreements, of which no amounts were available for claw back. In total, Braemar paid approximately $4.1 million under the Braemar Agreement. For the three and nine months ended September 30, 2021, the Company recognized revenue of $0 and $853,000, respectively, related to the Braemar Agreement. For the three and nine months ended September 30, 2020, the Company recognized revenue of $1.0 million and $1.7 million related to the Braemar Agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes the revenues related to Braemar (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
REVENUES BY TYPE
Advisory services fees:
Base advisory fees			$	2,758					$	2,387					$	7,981					$	7,580
Incentive advisory fees (1)			—						(339)						—						—
Other advisory revenue (2)			131						131						389						391
Total advisory services fees revenue			2,889						2,179						8,370						7,971
Hotel management fees:
Base management fees			675						256						1,590						765
Incentive management fees			168						—						389						—
Total hotel management fees revenue (3)			843						256						1,979						765
Design and construction fees revenue (4)			508						362						1,129						1,817
Audio visual revenue (5)			—						—						—						—
Other revenue
Watersports, ferry and excursion services (6)			517						232						1,744						588
Debt placement and related fees (7)			150						1,060						1,003						1,706
Claims management services (8)			3						13						6						96
Other services (9)			50						68						137						187
Total other revenue			720						1,373						2,890						2,577
Cost reimbursement revenue			8,962						4,491						21,162						14,851
Total revenues			$	13,922					$	8,661					$	35,530					$	27,981
REVENUES BY SEGMENT (10)
REIT advisory			$	6,480					$	4,338					$	16,539					$	14,868
Remington			5,066						2,278						12,680						7,527
Premier			794						501						1,667						2,491
OpenKey			10						30						29						101
Corporate and other			1,572						1,514						4,615						2,994
Total revenues			$	13,922					$	8,661					$	35,530					$	27,981
COST OF REVENUES
Cost of revenues for audio visual (5)			$	402					$	20					$	501					$	467
Other (6)			98						48						314						137
SUPPLEMENTAL REVENUE INFORMATION
Audio visual revenues from guests at REIT properties (5)			$	856					$	87					$	1,069					$	1,092

________

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(unaudited)

(1)    In the third quarter of 2020, the Company determined it was no longer probable Braemar would meet the minimum FCCR Condition requirement as stated in the Braemar advisory agreement. As such, the Company did not recognize any incentive fee revenue related to Braemar in the three months ended September 30, 2020 for the 2018 measurement period. The three months ended September 30, 2020 additionally included a reversal of $339,000 of incentive fee revenue recognized in the first two quarters of 2020 which the Company did not collect due to Braemar no longer meeting the FCCR Condition. Incentive fee payments are subject to meeting the December 31 FCCR Condition each year, as defined in the Braemar advisory agreement. Braemar’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2020 and 2019 measurement periods. See note 3.

(2)    In connection with our Fourth Amended and Restated Braemar Advisory Agreement, a $5.0 million cash payment was made by Braemar upon approval by Braemar’s stockholders, which is recognized over the 10-year initial term.

(3)    Hotel management fees revenue is reported within our Remington segment. Base management fees are recognized when services have been rendered. Remington receives base management fees of 3% of gross hotel revenue for managing the hotel employees and daily operations of the hotels, subject to a specified floor (which is subject to increase annually based on increases in the consumer price index). See note 3 for discussion of the hotel management fees revenue recognition policy.

(4)    Design and construction fees revenue primarily consists of revenue generated within our Premier segment by providing design, development, architectural, and project management services for which Premier receives fees. See note 3 for discussion of the design and construction fees revenue recognition policy.

(5)    INSPIRE primarily contracts directly with customers to whom it provides audio visual services. INSPIRE recognizes the gross revenue collected from their customers by the hosting hotel or venue. Commissions retained by the hotel or venue, including Braemar, are recognized in “cost of revenues for audio visual” in our condensed consolidated statements of operations. See note 3 for discussion of the audio visual revenue recognition policy.

(6)    Watersports, ferry and excursion services revenue is earned by RED, which includes the entity that conducts RED’s legacy U.S. Virgin Islands, the Turks and Caicos Islands operations and Sebago, a provider of watersports activities and excursion services based in Key West, Florida. Commissions retained by the hotel, including Braemar, are recognized in “other” expense in our condensed consolidated statements of operations.

(7)    Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services.

(8)    Claims management services include revenue earned from providing insurance claim assessment and administration services.

(9)    Other services revenue is primarily associated with other hotel products and services, such as mobile key applications and hypoallergenic premium rooms, provided to Braemar by our consolidated subsidiaries, OpenKey and Pure Wellness.

(10)    See note 15 for discussion of segment reporting.

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(unaudited)

ERFP Commitments—On June 26, 2018, the Company entered into the Ashford Trust ERFP Agreement with Ashford Trust. The independent members of the board of directors of each of the Company and Ashford Trust, with the assistance of separate and independent legal counsel, engaged to negotiate the Ashford Trust ERFP Agreement on behalf of the Company and Ashford Trust, respectively. On January 15, 2019, the Company entered into the Braemar ERFP Agreement (collectively with the Ashford Trust ERFP Agreement, the “ERFP Agreements”) with Braemar. The independent members of the board of directors of each of the Company and Braemar, with the assistance of separate and independent legal counsel, engaged to negotiate the Braemar ERFP Agreement on behalf of the Company and Braemar, respectively. Under the ERFP Agreements, the Company agreed to provide $50 million (each, an “Aggregate ERFP Amount” and collectively, the “Aggregate ERFP Amounts”) to each of Ashford Trust and Braemar (collectively, the “REITs”), respectively, in connection with each such REIT’s acquisition of hotels recommended by us, with the option to increase each Aggregate ERFP Amount to up to $100 million upon mutual agreement by the parties to the respective ERFP Agreement. Under each of the ERFP Agreements, the Company will pay each REIT 10% of each acquired hotel’s purchase price in exchange for furniture, fixtures and equipment (“FF&E”) at a property owned by such REIT, which will be subsequently leased by us to such REIT rent-free. Each of the REITs must provide reasonable advance notice to the Company to request ERFP funds in accordance with the respective ERFP Agreement. The ERFP Agreements require that the Company acquire the related FF&E either at the time of the property acquisition or at any time generally within two years of the respective REITs’ acquisition of the hotel property. The Company recognizes the related depreciation tax deduction at the time such FF&E is purchased by the Company and placed into service at the respective REIT’s hotel properties. However, the timing of the FF&E being purchased and placed into service is subject to uncertainties outside of the Company’s control that could delay the realization of any tax benefit associated with the purchase of FF&E.

On March 13, 2020, the Company entered into the Extension Agreement related to the Ashford Trust ERFP Agreement. Under the terms of the Extension Agreement, the deadline to fund the remaining ERFP commitment under the Ashford Trust ERFP Agreement of $11.4 million, was extended from January 22, 2021 to December 31, 2022. As of September 30, 2021, the Company has no remaining ERFP commitment to Braemar under the Braemar ERFP Agreement. See note 8.

On August 19, 2020, Ashford Trust sold the Embassy Suites New York Manhattan Times Square. The hotel contained FF&E with a net book value of $6.4 million which was owned by the Company and leased to Ashford Trust rent-free pursuant to the Ashford Trust ERFP Agreement. On November 4, 2020, the independent members of the Board waived the requirement for Ashford Trust to provide replacement FF&E. As a result, the Company recorded a loss on disposal of FF&E of $6.4 million within “other” operating expense in our condensed consolidated statements of operations for the three and nine months ended September 30, 2020.

On November 25, 2020, the independent members of the Ashford Trust board of directors granted the Company, in its sole and absolute discretion, the right to set-off against the remaining ERFP commitment of $11.4 million, the fees pursuant to the advisory agreement and Ashford Trust Agreement that have been or may be deferred by Ashford Inc.

In the first quarter of 2021, Ashford Trust purchased FF&E from the Company at the fair market value of $82,000 upon expiration of the underlying leases of the FF&E under the Ashford Trust ERFP Agreement. The Company recorded a loss on sale of the FF&E of $107,000 which is included within “other” operating expense in our condensed consolidated statements of operations. Additionally, on January 20, 2021, Ashford Trust sold Le Meridian. The hotel contained FF&E with a net book value of $399,000 which was owned by the Company and leased to Ashford Trust rent-free pursuant to the Ashford Trust ERFP Agreement. Pursuant to the agreement, Ashford Trust provided replacement FF&E to the Company in the third quarter of 2021 with a fair market value of $128,000, equal to the fair market value of the sold FF&E. The Company recorded a loss on disposal of FF&E of $271,000 within “other” operating expense in our condensed consolidated statements of operations. The replacement FF&E was subsequently leased back to Ashford Trust rent-free.

During the second quarter of 2021, the Company purchased $1.6 million of FF&E from Braemar. The Company set-off the purchased FF&E against a $1.6 million outstanding receivable previously incurred by Braemar which was recorded in “due from Braemar” on our condensed consolidated balance sheets as of March 31, 2021. The FF&E purchased by the Company was subsequently leased back to Braemar rent-free.

In the second quarter of 2021, Braemar purchased FF&E from the Company at the fair market value of $144,000 upon expiration of the underlying leases of the FF&E under the Braemar ERFP Agreement. The Company recorded a loss on sale of the FF&E of $267,000 which is included within “other” operating expense in our condensed consolidated statements of operations.

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(unaudited)

On April 20, 2021, the Company received written notice from Ashford Trust of Ashford Trust’s intention not to renew the Ashford Trust ERFP Agreement. As a result, the Ashford Trust ERFP Agreement terminated in accordance with its terms on June 26, 2021. The expiration of the Ashford Trust ERFP Agreement will have no impact on the Extension Agreement, which continues in full force and effect in accordance with its terms.

Ashford Securities—On September 25, 2019, the Company announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise capital in order to grow the Company’s existing and future platforms. In conjunction with the formation of Ashford Securities, Ashford Trust and Braemar entered into a contribution agreement (the “Initial Contribution Agreement”) with Ashford Inc. pursuant to which Ashford Trust and Braemar agreed to a combined contribution of up to $15.0 million to fund the operations of Ashford Securities. These costs were allocated initially to Ashford Trust and Braemar based on an allocation percentage of 75% to Ashford Trust and 25% Braemar. Upon reaching the earlier of $400 million in aggregate non-listed preferred equity offerings raised or June 10, 2023, there will be a true up (the “Initial True-up Date”) between Ashford Trust and Braemar whereby the actual expense reimbursements paid by each company will be based on the actual amount of capital raised by Ashford Trust and Braemar, respectively.

On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by the Company, Ashford Trust and Braemar with respect to expenses to be reimbursed by Ashford Securities. The Initial True-Up Date did not occur, and beginning on the effective date of the Amended and Restated Contribution Agreement, costs will be allocated based upon an allocation percentage of 50% to the Company, 50% to Braemar and 0% to Ashford Trust. Upon reaching the earlier of $400 million in aggregate non-listed preferred equity offerings raised or June 10, 2023, there will be an Amended and Restated true up (the “Amended and Restated True-up Date”) among the Company, Ashford Trust and Braemar whereby the actual expense reimbursement paid by each company will be based on the actual amount of capital raised by the Company, Ashford Trust and Braemar, respectively. After the Amended and Restated True-Up Date, the expense reimbursements will be allocated among the Company, Ashford Trust and Braemar quarterly based on the actual capital raised through Ashford Securities. Additionally, Braemar’s aggregate capital contributions under the Initial Contribution Agreement and the Amended and Restated Contribution Agreement shall not exceed $3.8 million unless otherwise agreed to in writing by Braemar.

As of September 30, 2021, Ashford Trust and Braemar have funded approximately $3.5 million and $2.8 million, respectively. The Company recognized $538,000 and $1.7 million of cost reimbursement revenue from Ashford Trust for the three and nine months ended September 30, 2020, respectively, in our condensed consolidated statements of operations. The Company recognized $864,000 and $1.8 million of cost reimbursement revenue from Braemar for the three and nine months ended September 30, 2021, respectively, and $183,000 and $613,000 of cost reimbursement revenue from Braemar for the three and nine months ended September 30, 2020, respectively, in our condensed consolidated statements of operations.

Other Related Party Transactions—Ashford Inc.’s Risk Management department collects funds from the Ashford Trust and Braemar properties and their respective management companies in an amount equal to the actuarial forecast of that year’s expected casualty claims and associated fees. These funds are deposited into restricted cash and used to pay casualty claims throughout the year as they are incurred. The claim liability related to the restricted cash balance is included in current “other liabilities” in our condensed consolidated balance sheets. See note 2.

On July 12, 2021, Ashford Trust and Braemar invested $250,000 and $117,000, respectively, in OpenKey.

The Company or its affiliates provide to the Bennetts or their permitted designees certain services, including, but not limited to, accounting, tax and administrative services pursuant to that certain Transition Cost Sharing Agreement entered into on November 6, 2019 in connection with Company’s acquisition of Remington from the Bennetts. The gross amount of expenses and reimbursements for these transition services for the three and nine months ended September 30, 2021 was $110,000 and $311,000, respectively. The gross amount of expenses and reimbursements for these transition services for the three and nine months ended September 30, 2020 was $101,000 and $254,000, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

14. Income (Loss) Per Share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Net income (loss) attributable to common stockholders – basic and diluted:
Net income (loss) attributable to the Company			$	(163)					$	(13,217)					$	(14,057)					$	(198,853)
Less: Dividends on preferred stock, declared and undeclared (1)			(8,762)						(7,985)						(26,001)						(23,800)
Less: Amortization of preferred stock discount			(306)						(781)						(933)						(2,386)
Undistributed net income (loss) allocated to common stockholders			(9,231)						(21,983)						(40,991)						(225,039)
Distributed and undistributed net income (loss) - basic			$	(9,231)					$	(21,983)					$	(40,991)					$	(225,039)
Effect of deferred compensation plan			(1,611)						—						—						—
Distributed and undistributed net income (loss) - diluted			$	(10,842)					$	(21,983)					$	(40,991)					$	(225,039)
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic			2,785						2,306						2,746						2,259
Effect of deferred compensation plan shares			197						—						—						—
Weighted average common shares outstanding – diluted			2,982						2,306						2,746						2,259
Income (loss) per share – basic:
Net income (loss) allocated to common stockholders per share			$	(3.31)					$	(9.53)					$	(14.93)					$	(99.62)
Income (loss) per share – diluted:
Net income (loss) allocated to common stockholders per share			$	(3.64)					$	(9.53)					$	(14.93)					$	(99.62)

________

(1)    Undeclared dividends were deducted to arrive at net income attributable to common stockholders. See note 10.

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Net income (loss) allocated to common stockholders is not adjusted for:
Net income (loss) attributable to redeemable noncontrolling interests in Ashford Holdings			$	(13)					$	(35)					$	(56)					$	(396)
Net income (loss) attributable to redeemable noncontrolling interests in subsidiary common stock			—						(569)						(152)						(1,292)
Dividends on preferred stock, declared and undeclared			8,762						7,985						26,001						23,800
Amortization of preferred stock discount			306						781						933						2,386
Total			$	9,055					$	8,162					$	26,726					$	24,498
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares			160						14						101						27
Effect of assumed conversion of Ashford Holdings units			4						4						4						4
Effect of incremental subsidiary shares			140						835						152						598
Effect of assumed conversion of preferred stock			4,284						4,136						4,246						4,091
Total			4,588						4,989						4,503						4,720

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

15. Segment Reporting

Our operating segments include: (a) REIT Advisory, which provides asset management and advisory services to other entities, (b) Remington, which provides hotel management services, (c) Premier, which provides comprehensive and cost-effective design, development, architectural, and project management services, (d) INSPIRE, which provides event technology and creative communications solutions services, (e) OpenKey, a hospitality focused mobile key platform that provides a universal smartphone app for keyless entry into hotel guest rooms, (f) RED, a provider of watersports activities and other travel and transportation services, (g) Marietta, which holds the leasehold rights to a single hotel and convention center property in Marietta, Georgia, (h) Pure Wellness, which provides hypoallergenic premium rooms in the hospitality and commercial office industry, and (i) Lismore and REA Holdings, which provide debt placement and related services, real estate advisory services and brokerage services. For 2021, OpenKey, RED, Marietta, Pure Wellness and Lismore and REA Holdings do not meet aggregation criteria or the quantitative thresholds to individually qualify as reportable segments. However, we have elected to disclose OpenKey as a reportable segment. Accordingly, we have five reportable segments: REIT Advisory, Remington, Premier, INSPIRE and OpenKey. We combine the operating results of RED, Marietta, Pure Wellness and Lismore and REA Holdings into an “all other” sixth reportable segment, which we refer to as “Corporate and Other.” See footnote 3 for details of our segments’ material revenue generating activities.

Our chief operating decision maker (“CODM”) uses multiple measures of segment profitability for assessing performance of our business. Our reported measure of segment profitability is net income, although the CODM also focuses on adjusted EBITDA and adjusted net income, which exclude certain gains, losses and charges, to assess performance and allocate resources. Our CODM currently reviews assets at the corporate (consolidated) level and does not currently review segment assets to make key decisions on resource allocations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Certain information concerning our segments for the three and nine months ended September 30, 2021 and 2020 are presented in the following tables (in thousands). Consolidated subsidiaries are reflected as of their respective acquisition dates or as of the date we were determined to be the primary beneficiary of variable interest entities.

			Three Months Ended September 30, 2021
			REIT Advisory						Remington						Premier						INSPIRE						OpenKey						Corporate and Other						Ashford Inc. Consolidated
REVENUE
Advisory services fees			$	10,143					$	—					$	—					$	—					$	—					$	—					$	10,143
Hotel management fees			—						7,750						—						—						—						—						7,750
Design and construction fees			—						—						2,202						—						—						—						2,202
Audio visual			—						—						—						15,108						—						—						15,108
Other			28						—						—						—						505						12,571						13,104
Cost reimbursement revenue (1)			7,765						44,574						845						—						—						864						54,048
Total revenues			17,936						52,324						3,047						15,108						505						13,435						102,355
EXPENSES
Depreciation and amortization			980						3,036						3,058						471						4						507						8,056
Impairment			—						—						—						1,160						—						—						1,160
Other operating expenses (2)			26						3,748						2,250						14,819						1,373						16,305						38,521
Reimbursed expenses (1)			7,708						44,574						845						—						—						864						53,991
Total operating expenses			8,714						51,358						6,153						16,450						1,377						17,676						101,728
OPERATING INCOME (LOSS)			9,222						966						(3,106)						(1,342)						(872)						(4,241)						627
Equity in earnings (loss) of unconsolidated entities			—						15						—						—						—						(3)						12
Interest expense			—						—						—						(222)						—						(1,068)						(1,290)
Amortization of loan costs			—						—						—						(43)						—						(35)						(78)
Interest income			—						72						—						—						—						—						72
Realized gain (loss) on investments			—						370						—						—						—						—						370
Other income (expense)			—						9						—						81						—						(61)						29
INCOME (LOSS) BEFORE INCOME TAXES			9,222						1,432						(3,106)						(1,526)						(872)						(5,408)						(258)
Income tax (expense) benefit			(2,011)						(469)						728						350						—						1,304						(98)
NET INCOME (LOSS)			$	7,211					$	963					$	(2,378)					$	(1,176)					$	(872)					$	(4,104)					$	(356)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $2.4 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

			Nine Months Ended September 30, 2021
			REIT Advisory						Remington						Premier						INSPIRE						OpenKey						Corporate and Other						Ashford Inc. Consolidated
REVENUE
Advisory services fees			$	30,132					$	—					$	—					$	—					$	—					$	—					$	30,132
Hotel management fees			—						18,737						—						—						—						—						18,737
Design and construction fees			—						—						5,611						—						—						—						5,611
Audio visual			—						—						—						28,170						—						—						28,170
Other			61						20						—						—						1,436						34,382						35,899
Cost reimbursement revenue (1)			19,556						112,952						1,810						—						—						1,761						136,079
Total revenues			49,749						131,709						7,421						28,170						1,436						36,143						254,628
EXPENSES
Depreciation and amortization			3,053						9,104						9,171						1,408						12						1,706						24,454
Impairment			—						—						—						1,160						—						—						1,160
Other operating expenses (2)			645						10,370						6,203						31,664						3,934						52,440						105,256
Reimbursed expenses (1)			19,293						112,952						1,810						—						—						1,761						135,816
Total operating expenses			22,991						132,426						17,184						34,232						3,946						55,907						266,686
OPERATING INCOME (LOSS)			26,758						(717)						(9,763)						(6,062)						(2,510)						(19,764)						(12,058)
Equity in earnings (loss) of unconsolidated entities			—						(139)						—						—						—						(21)						(160)
Interest expense			—						—						—						(635)						—						(3,210)						(3,845)
Amortization of loan costs			—						—						—						(87)						—						(122)						(209)
Interest income			—						205						—						—						—						2						207
Realized gain (loss) on investments			—						(3)						—						—						—						—						(3)
Other income (expense)			—						10						—						(26)						(1)						(239)						(256)
INCOME (LOSS) BEFORE INCOME TAXES			26,758						(644)						(9,763)						(6,810)						(2,511)						(23,354)						(16,324)
Income tax (expense) benefit			(6,144)						(1,132)						2,048						1,427						—						5,351						1,550
NET INCOME (LOSS)			$	20,614					$	(1,776)					$	(7,715)					$	(5,383)					$	(2,511)					$	(18,003)					$	(14,774)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $6.5 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

			Three Months Ended September 30, 2020
			REIT Advisory												Remington						Premier						INSPIRE						OpenKey						Corporate and Other						Ashford Inc. Consolidated
REVENUE
Advisory services fees			$	10,832											$	—					$	—					$	—					$	—					$	—					$	10,832
Hotel management fees			—												3,777						—						—						—						—						3,777
Design and construction fees			—												—						1,790						—						—						—						1,790
Audio visual			—												—						—						3,114						—						—						3,114
Other			55												—						—						—						341						7,826						8,222
Cost reimbursement revenue (1)			5,903												21,023						487						—						—						720						28,133
Total revenues			16,790												24,800						2,277						3,114						341						8,546						55,868
EXPENSES
Depreciation and amortization			2,128												3,514						3,157						494						5						796						10,094
Other operating expenses (2)			6,430												3,101						1,662						6,033						1,035						14,075						32,336
Reimbursed expenses (1)			5,841												21,023						487						—						—						721						28,072
Total operating expenses			14,399												27,638						5,306						6,527						1,040						15,592						70,502
OPERATING INCOME (LOSS)			2,391												(2,838)						(3,029)						(3,413)						(699)						(7,046)						(14,634)
Equity in earnings (loss) of unconsolidated entities			—												—						—						—						—						48						48
Interest expense			—												—						—						(187)						—						(1,072)						(1,259)
Amortization of loan costs			—												—						—						(14)						—						(72)						(86)
Other income (expense)			—												—						—						(8)						—						(36)						(44)
INCOME (LOSS) BEFORE INCOME TAXES			2,391												(2,838)						(3,029)						(3,622)						(699)						(8,178)						(15,975)
Income tax (expense) benefit			(505)												(502)						624						816						—						1,402						1,835
NET INCOME (LOSS)			$	1,886											$	(3,340)					$	(2,405)					$	(2,806)					$	(699)					$	(6,776)					$	(14,140)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $1.8 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.

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Table of Contents

ASHFORD INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

			Nine Months Ended September 30, 2020
			REIT Advisory												Remington						Premier						INSPIRE						OpenKey						Corporate and Other						Ashford Inc. Consolidated
REVENUE
Advisory services fees			$	34,098											$	—					$	—					$	—					$	—					$	—					$	34,098
Hotel management fees			—												13,592						—						—						—						—						13,592
Design and construction fees			—												—						7,780						—						—						—						7,780
Audio visual			—												—						—						33,758						—						—						33,758
Other			195												—						—						—						1,155						16,900						18,250
Cost reimbursement revenue (1)			19,004												104,123						2,393						—						—						2,310						127,830
Total revenues			53,297												117,715						10,173						33,758						1,155						19,210						235,308
EXPENSES
Depreciation and amortization			7,004												10,425						9,471						1,486						15						1,771						30,172
Impairment			—												126,548						49,524						2,141						—						—						178,213
Other operating expenses (2)			6,430												10,753						6,549						37,478						2,757						39,542						103,509
Reimbursed expenses (1)			18,811												104,123						2,393						—						—						2,311						127,638
Total operating expenses			32,245												251,849						67,937						41,105						2,772						43,624						439,532
OPERATING INCOME (LOSS)			21,052												(134,134)						(57,764)						(7,347)						(1,617)						(24,414)						(204,224)
Equity in earnings (loss) of unconsolidated entities			—												—						—						—						—						301						301
Interest expense			—												—						—						(628)						—						(3,053)						(3,681)
Amortization of loan costs			—												—						—						(43)						—						(199)						(242)
Interest income			—												—						—						—						—						29						29
Realized gain (loss) on investments			—												(386)						—						—						—						—						(386)
Other income (expense)			—												26						—						(321)						(6)						(198)						(499)
INCOME (LOSS) BEFORE INCOME TAXES			21,052												(134,494)						(57,764)						(8,339)						(1,623)						(27,534)						(208,702)
Income tax (expense) benefit			(4,928)												1,212						1,351						1,853						—						7,916						7,404
NET INCOME (LOSS)			$	16,124											$	(133,282)					$	(56,413)					$	(6,486)					$	(1,623)					$	(19,618)					$	(201,298)

________

(1)    Our segments are reported net of eliminations upon consolidation. Approximately $7.6 million of hotel management fees revenue, cost reimbursement revenue and reimbursed expenses were eliminated in consolidation primarily for overhead expenses reimbursed to Remington including rent, payroll, office supplies, travel and accounting.

(2)    Other operating expenses includes salaries and benefits, costs of revenues for design and construction, cost of revenues for audio visual, general and administrative expenses and other expenses.

16. Subsequent Events

On October 1, 2021, the Company announced that JSAV completed a strategic rebranding and is now named INSPIRE. INSPIRE is a global event solution company specializing in audio-visual, staging and production.

On October 12, 2021, Ashford Trust entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”) with certain funds and accounts managed by Oaktree Capital Management, L.P., as lenders, and Oaktree, as administrative agent. Amendment No. 1, subject to the conditions set forth therein, among other things, suspends Ashford Trust’s obligation to subordinate fees due under the advisory agreement if at any point there is no accrued interest outstanding or any accrued dividends on any of Ashford Trust’s preferred stock and Ashford Trust has sufficient unrestricted cash to repay in full all outstanding loans under the Credit Agreement, as amended.

On November 8, 2021, the Company delivered written notice to Braemar of the Company’s intention not to renew the Braemar ERFP Agreement. As a result, the Braemar ERFP Agreement will terminate in accordance with its terms at the end of the current term on January 15, 2022 (the “Expiration Date”). Following the Expiration Date, Braemar and the Company will continue to be parties to the Fifth Amended and Restated Advisory Agreement, dated April 23, 2018, as amended, and the Company will continue to serve as advisor to Braemar.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” and the “Company” refer to Ashford Inc., a Nevada corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Advisors LLC, a Delaware limited liability company, which we refer to as “Ashford LLC” or “our operating company” Ashford Hospitality Holdings LLC, a Delaware limited liability company, which we refer to as “Ashford Holdings” Ashford Hospitality Services LLC, a Delaware limited liability company, which we refer to as “Ashford Services” Premier Project Management LLC, a Maryland limited liability company, which we refer to as “Premier Project Management,” or “Premier” and Remington Lodging & Hospitality, LLC, a Delaware limited liability company, which we refer to as “Remington.”“Braemar” refers to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “Braemar OP.” “Ashford Trust” or “AHT” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.”    

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature: 

•the impact of the COVID-19 pandemic and numerous governmental travel restrictions and other orders on our clients’ and our business, including one or more possible recurrences of COVID-19 case surges that could cause state and local governments to reinstate travel restrictions;

•our business and investment strategy;

•our projected operating results;

•our ability to obtain future financing arrangements;

•our ability to maintain compliance with the NYSE American LLC (the “NYSE American”) continued listing standards;

•our understanding of our competition;

•market trends;

•the future success of recent acquisitions, including the 2018 acquisition of Premier and the 2019 acquisition of Remington;

•the future success of recent business initiatives with Ashford Trust and Braemar;

•projected capital expenditures; and

•the impact of technology on our operations and business.

Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, taking into account all information currently available to us, our actual results and performance could differ materially from those set forth in our forward-looking statements. Factors that could have a material adverse effect on our forward-looking statements include, but are not limited to:

•the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2021, including under the sections captioned “Item 1. Business,” “Item 1A. Risk Factors,” “Item 3. Legal Proceedings,” and “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations;”

•adverse effects of the COVID-19 pandemic, including a significant reduction in business and personal travel and potential travel restrictions in regions where our clients’ hotels are located, and one or more possible recurrences of COVID-19 case surges causing a further reduction in business and personal travel and potential reinstatement of travel restrictions by state or local governments;

•actions by our clients’ lenders to accelerate loan balances and foreclose on our clients’ hotel properties that are security for our clients’ loans that are in default;

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•uncertainty associated with the ability of the Company to remain in compliance with all covenants in our Term Loan Agreement (as defined below) and our subsidiaries to remain in compliance with the covenants of their debt and related agreements;

•general volatility of the capital markets, the general economy or the hospitality industry, whether the result of market events or otherwise, and the market price of our common stock;

•availability, terms and deployment of capital;

•changes in our industry and the market in which we operate, interest rates or the general economy;

•risks from climate change that impact our operations;

•the degree and nature of our competition;

•actual and potential conflicts of interest with or between Ashford Trust and Braemar, our executive officers and our non-independent directors;

•availability of qualified personnel;

•changes in governmental regulations, accounting rules, tax rates and similar matters;

•legislative and regulatory changes;

•the timing and outcome of the SEC investigation;

•the possibility that we may not realize any or all of the anticipated benefits from transactions to acquire businesses, including the 2018 acquisition of Premier and the 2019 acquisition of Remington, and the possibility we will be required to record additional goodwill impairments relating to Remington as a result of the impact of the COVID-19 pandemic on our clients’, and our business;

•the possibility that the lodging industry may not fully recover to pre-pandemic levels as a result of the acceptance of “work-from-home” business practices and potentially lasting increased adoption of remote meeting and collaboration technologies;

•the possibility that we may not realize any or all of the anticipated benefits from our business initiatives, including the ERFP Agreement with Braemar;

•the failure to make full dividend payments on our Series D Convertible Preferred Stock in consecutive quarters, which would result in a higher interest rate and the right of Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. to each have the right to appoint one member to the Board until such arrearages are paid in full;

•disruptions relating to the acquisition or integration of Premier, Remington or any other business we invest in or acquire, which may harm relationships with customers, employees and regulators; and

•unexpected costs of further goodwill impairments relating to the acquisition or integration of Remington or any other business we invest in or acquire.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements under “Item 1A. Risk Factors” of our Annual Report and this Quarterly Report, the discussion in this Management’s Discussion and Analysis of Financial Conditions and Results of Operations, and elsewhere which could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law.

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Overview

Ashford Inc. is a Nevada corporation that provides products and services primarily to clients in the hospitality industry, including Ashford Trust and Braemar. We became a public company in November 2014, and our common stock is listed on the NYSE American. As of November 10, 2021, Mr. Monty J. Bennett, Ashford Inc.’s Chairman and Chief Executive Officer and the Chairman of Ashford Trust and Braemar, and his father, Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Trust, owned approximately 609,413 shares of our common stock, which represented an approximately 20.2% ownership interest in Ashford Inc., and owned 18,758,600 shares of our Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”), which is exercisable (at an exercise price of $117.50 per share) into an additional approximate 3,991,191 shares of Ashford Inc. common stock, which if exercised as of November 10, 2021 would have increased Mr. Monty J. Bennett and Mr. Archie Bennett, Jr.’s ownership interest in Ashford Inc. to 65.6%.

We provide: (i) advisory services; (ii) asset management services; (iii) hotel management services; (iv) design and construction services; (v) event technology and creative communications solutions; (vi) mobile room keys and keyless entry solutions; (vii) watersports activities and other travel, concierge and transportation services; (viii) hypoallergenic premium room products and services; (ix) debt placement and related services; (x) real estate advisory and brokerage services; and (xi) wholesaler, dealer manager and other broker-dealer services. We conduct these activities and own substantially all of our assets primarily through Ashford LLC, Ashford Services and their respective subsidiaries.

We seek to grow through the implementation of two primary strategies: (i) increasing our assets under management; and (ii) pursuing third-party business to grow our other products and services businesses.

We are currently the advisor for Ashford Trust and Braemar. In our capacity as the advisor to Ashford Trust and Braemar, we are responsible for implementing the investment strategies and managing the day-to-day operations of Ashford Trust and Braemar and their respective hotels from an ownership perspective, in each case subject to the respective advisory agreements and the supervision and oversight of the respective boards of directors of Ashford Trust and Braemar. Ashford Trust is focused on investing in full-service hotels in the upscale and upper upscale segments in the United States that have RevPAR generally less than twice the national average. Braemar invests primarily in luxury hotels and resorts with RevPAR of at least twice the U.S. national average. Each of Ashford Trust and Braemar is a REIT as defined in the Internal Revenue Code, and the common stock of each of Ashford Trust and Braemar is traded on the NYSE.

Recent Developments

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, and subsequently spread to other regions of the world, which has resulted in significant travel restrictions and extended shutdown of numerous businesses throughout the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Our clients, Ashford Trust and Braemar, have reported that the negative impact on room demand within their respective portfolios stemming from COVID-19 is significant, which has resulted and is expected to result in significantly reduced occupancy and RevPAR. Furthermore, the prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry has experienced postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, the Company dramatically reduced staffing and expenses at its products and services businesses and at its corporate office. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. In addition, one or more possible recurrences of COVID-19 case surges could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash flow in 2021 and potentially beyond. As a result, in March 2020, the Company amended payment terms pursuant to certain hotel management agreements to better manage corporate working capital, reduced planned capital expenditures, significantly reduced operating expenses and reduced the cash compensation of its executive officers and other employees, including an arrangement pursuant to which Mr. Monty J. Bennett received his base salary in the form of common stock issued under the Company’s 2014 Incentive Plan, as amended. Additionally, the Company did not declare dividends which were due with respect to its Series D Convertible Preferred Stock for the second and fourth quarters of 2020 and the second quarter of 2021. As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021.

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During the first quarter of 2021, base salaries for the Company’s executive officers and other employees were restored to pre-reduction levels and the arrangement by which Mr. Monty J. Bennett received his base salary in the form of common stock ended. Additionally, the Company declared $8.4 million in dividends in each of the first and third quarters of 2021 which were due with respect to its Series D Convertible Preferred Stock. The dividends were paid on April 15 and October 15, 2021, respectively.

When preparing financial statements, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In applying the accounting guidance, the Company considered its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its unconditional obligations due over the next 12 months.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in the inability of our portfolio companies to borrow unused amounts under their respective lines of credit. As of September 30, 2021, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements. INSPIRE executed the INSPIRE Amendment on December 31, 2020, which extended the maturity date of the loan and includes a fixed charge coverage ratio covenant which commences with the quarter ending March 31, 2023. On September 22, 2021, the INSPIRE Amendment was further amended to reduce INSPIRE’s requirement to fund an operating reserve account from an initial amount of $3.0 million to $1.0 million. Additionally, INSPIRE’s results from operations exceeded management’s forecast for the third quarter of 2021. Primarily due to these factors, management has determined that INSPIRE is not reliant on Ashford Inc. to make contributions to cover INSPIRE’s interest and upcoming principal payments on its outstanding debt. All such contributions, if needed, are subject to the discretion of Ashford Inc. As such, the Company reclassified $19.3 million of INSPIRE’s outstanding loans from current “notes payable, net” to noncurrent “notes payable, net” in our condensed consolidated balance sheet as of September 30, 2021.

We cannot predict when hotel operating levels at our clients, Ashford Trust and Braemar, will return to normalized levels after the effects of the pandemic subside, whether our clients’ hotels will be forced to shut down operations again or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future. As a result of these factors resulting from the impact of the pandemic, we are unable to estimate future financial performance with certainty. However, based primarily on our assessment of the ability of our key clients, Ashford Trust and Braemar, to pay their obligations to the Company in accordance with the advisory agreements, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Additional factors considered in our assessment include our completed loan amendments, other agreements, our current cash on hand, our forecast of future operating results for the next 12 months from the date of this report and the actions we have taken to improve our liquidity. Facts and circumstances could change in the future that are outside of management’s control, such as changes in Ashford Trust’s and Braemar’s financial position and liquidity, additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19, which could subsequently change our assessment. See notes 5 and 13 to our condensed consolidated financial statements.

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Other Developments

On August 10, 2021, the Company issued a press release announcing that on August 9, 2021 it had received a notification letter from the NYSE American that the Company has regained compliance with all of the NYSE American continued listing standards set forth in Part 10, Section 1003 of the NYSE American Company Guide (the “Company Guide”). The Company previously received a notification letter (the “Letter”) from the NYSE American on August 26, 2020, which indicated that the Company was not in compliance with the standards of Sections 1003(a)(i) and 1003(a)(ii) of the Company Guide. Pursuant to these Sections, the NYSE American will normally consider suspending dealings in, or removing from the list, securities of a listed company whose stockholders’ equity is less than (i) $2.0 million if it has reported losses from continuing operations or net losses in two of its three most recent fiscal years and (ii) $4.0 million if it has reported losses from continuing operations or net losses in three of its four most recent fiscal years (together, the “Stockholders’ Equity Standards”). However, Section 1003(a) of the Company Guide also states that the NYSE American will not normally consider suspending dealings in, or removing from the list, the securities of a listed company that falls below the Stockholders’ Equity Standards if the listed company is in compliance with the following two standards: (1) total value of market capitalization of at least $50 million or total assets and revenue of $50 million each in its last fiscal year, or in two of its last three fiscal years (the “First Standard”), and (2) the listed company has at least 1.1 million shares publicly held, a market value of publicly held shares of at least $15.0 million and 400 round lot shareholders (the “Second Standard”).

When the Company received the Letter, it was not in compliance with the Stockholders’ Equity Standards, but it was in compliance with the First Standard because it had total assets and total revenue of at least $50 million in its last fiscal year and was in compliance with the Second Standard, except that the current market value of publicly held shares was below $15.0 million. On September 24, 2020, the Company submitted to the NYSE American a compliance plan which detailed how it intended to regain compliance with Section 1003(a) by increasing the current market value of the publicly held shares above $15.0 million while maintaining compliance with all other requirements of the First and Second Standards. As a result of management’s efforts, the Company has come into compliance with the First and Second Standards, and the NYSE American has informed the Company that it has cured the previously cited deficiencies and is in full compliance with the continued listing standards set forth in Part 10, Section 1003 of the Company Guide. Effective at the start of trading on August 10, 2021, the “.BC” designation, signifying noncompliance with the NYSE American’s listing standards, was removed from the “AINC” trading symbol.

On October 1, 2021, the Company announced that JSAV completed a strategic rebranding and is now named INSPIRE. INSPIRE is a global event solution company specializing in audio-visual, staging and production.

On October 12, 2021, Ashford Trust entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”) with certain funds and accounts managed by Oaktree Capital Management, L.P., as lenders, and Oaktree, as administrative agent. Amendment No. 1, subject to the conditions set forth therein, among other things, suspends Ashford Trust’s obligation to subordinate fees due under the advisory agreement if at any point there is no accrued interest outstanding or any accrued dividends on any of Ashford Trust’s preferred stock and Ashford Trust has sufficient unrestricted cash to repay in full all outstanding loans under the Credit Agreement, as amended.

Discussion of Presentation

The discussion below relates to the financial condition and results of operations of Ashford Inc. and entities which it controls. The historical financial information is not necessarily indicative of our future results of operations, financial position and cash flows.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

The following table summarizes the changes in key line items from our condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020 (in thousands):

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						Three Months Ended September 30,												Favorable (Unfavorable)
						2021						2020						$ Change						% Change
REVENUE
Advisory services fees						$	10,143					$	10,832					$	(689)					(6.4)		%
Hotel management fees						7,750						3,777						3,973						105.2		%
Design and construction fees						2,202						1,790						412						23.0		%
Audio visual						15,108						3,114						11,994						385.2		%
Other						13,104						8,222						4,882						59.4		%
Cost reimbursement revenue						54,048						28,133						25,915						92.1		%
Total revenues						102,355						55,868						46,487						83.2		%
EXPENSES
Salaries and benefits						13,793						13,820						27						0.2		%
Cost of revenues for design and construction						1,032						703						(329)						(46.8)		%
Cost of revenues for audio visual						11,353						3,126						(8,227)						(263.2)		%
Depreciation and amortization						8,056						10,094						2,038						20.2		%
General and administrative						7,585						5,540						(2,045)						(36.9)		%
Impairment						1,160						—						(1,160)
Other						4,758						9,147						4,389						48.0		%
Reimbursed expenses						53,991						28,072						(25,919)						(92.3)		%
Total expenses						101,728						70,502						(31,226)						(44.3)		%
OPERATING INCOME (LOSS)						627						(14,634)						15,261						104.3		%
Equity in earnings (loss) of unconsolidated entities						12						48						(36)						(75.0)		%
Interest expense						(1,290)						(1,259)						(31)						(2.5)		%
Amortization of loan costs						(78)						(86)						8						9.3		%
Interest income						72						—						72
Realized gain (loss) on investments						370						—						370
Other income (expense)						29						(44)						73						165.9		%
INCOME (LOSS) BEFORE INCOME TAXES						(258)						(15,975)						15,717						98.4		%
Income tax (expense) benefit						(98)						1,835						(1,933)						(105.3)		%
NET INCOME (LOSS)						(356)						(14,140)						13,784						97.5		%
(Income) loss from consolidated entities attributable to noncontrolling interests						180						319						(139)						(43.6)		%
Net (income) loss attributable to redeemable noncontrolling interests						13						604						(591)						(97.8)		%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY						(163)						(13,217)						13,054						98.8		%
Preferred dividends, declared and undeclared						(8,762)						(7,985)						(777)						(9.7)		%
Amortization of preferred stock discount						(306)						(781)						475						60.8		%
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS						$	(9,231)					$	(21,983)					$	12,752					58.0		%

Net Income (Loss) Attributable to Common Stockholders. Net income (loss) attributable to common stockholders changed $12.8 million, or 58.0%, to a $9.2 million loss for the three months ended September 30, 2021 (“the 2021 quarter”) compared to the three months ended September 30, 2020 (“the 2020 quarter”) as a result of the factors discussed below.

Total Revenues. Total revenues increased $46.5 million, or 83.2%, to $102.4 million for the 2021 quarter compared to the 2020 quarter due to the following (in thousands):

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			Three Months Ended September 30,												Favorable (Unfavorable)
			2021						2020						$ Change						% Change
Advisory services fees:
Base advisory fees (1)			$	10,012					$	11,040					$	(1,028)					(9.3)		%
Incentive advisory fees (2)			—						(339)						339						100.0		%
Other advisory revenue (3)			131						131						—						—		%
Total advisory services fees revenue			10,143						10,832						(689)						(6.4)		%
Hotel management fees:
Base management fees			6,166						3,777						2,389						63.3		%
Incentive management fees			1,584						—						1,584
Total hotel management fees revenue (4)			7,750						3,777						3,973						105.2		%
Design and construction fees revenue (5)			2,202						1,790						412						23.0		%
Audio visual revenue (6)			15,108						3,114						11,994						385.2		%
Other revenue:
Watersports, ferry and excursion services (7)			6,738						2,513						4,225						168.1		%
Debt placement and related fees (8)			3,224						4,017						(793)						(19.7)		%
Claims management services (9)			28						55						(27)						(49.1)		%
Other services (10)			3,114						1,637						1,477						90.2		%
Total other revenue			13,104						8,222						4,882						59.4		%
Cost reimbursement revenue (11)			54,048						28,133						25,915						92.1		%
Total revenues			$	102,355					$	55,868					$	46,487					83.2		%
REVENUES BY SEGMENT (12)
REIT advisory			$	17,936					$	16,790					$	1,146					6.8		%
Remington			52,324						24,800						27,524						111.0		%
Premier			3,047						2,277						770						33.8		%
INSPIRE			15,108						3,114						11,994						385.2		%
OpenKey			505						341						164						48.1		%
Corporate and other			13,435						8,546						4,889						57.2		%
Total revenues			$	102,355					$	55,868					$	46,487					83.2		%

________

(1)The decrease in base advisory fee is primarily due to lower revenue of $1.4 million from Ashford Trust partially offset by higher revenue of $371,000 from Braemar. Advisory fees earned from Ashford Trust excluded $2.2 million of advisory fees that were constrained and deferred as a result of the $29.0 million annual Advisory Fee Cap. The deferred fees are included in deferred income in our condensed consolidated balance sheet. See note 3 of our condensed consolidated financial statements for discussion of the advisory services fees revenue recognition policy.

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(2)    In the third quarter of 2020, the Company determined it was no longer probable Braemar would meet the minimum FCCR Condition requirement as stated in the Braemar advisory agreement. As such, the Company did not recognize any incentive fee revenue related to Braemar in the three months ended September 30, 2020 for the 2018 measurement period. The three months ended September 30, 2020 additionally included a reversal of $339,000 of incentive fee revenue recognized in the first two quarters of 2020 which the Company did not collect due to Braemar no longer meeting the FCCR Condition. Incentive fee payments are subject to meeting the December 31 FCCR Condition each year, as defined in our advisory agreements. Ashford Trust’s annual total stockholder return did not meet the relevant incentive fee thresholds subsequent to the 2016 measurement period. Braemar’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2020 and 2019 measurement periods.

(3)     Other advisory revenue remained steady. Other advisory revenue from Braemar is a result of the $5.0 million cash payment received upon stockholder approval of the Fourth Amended and Restated Braemar Advisory Agreement in June 2017. The payment is included in “deferred income” on our condensed consolidated balance sheet and is being recognized on a quarterly basis over the initial ten-year term of the agreement.

(4)     The increase in hotel management fees revenue is due to higher base management fees from Ashford Trust and Braemar of $1.5 million and $419,000, respectively, and incentive management fees of $1.4 million and $168,000 from Ashford Trust and Braemar, respectively, due to increased room demand within their respective portfolios compared to the 2020 quarter as the industry recovers from COVID-19.

(5)     The increase in design and construction fees revenue is due to higher revenue from Ashford Trust and Braemar of $88,000 and $146,000, respectively. Design and construction fees revenue additionally includes an increase in revenue from third parties of $178,000.

(6)     The $12.0 million increase in audio visual revenue is due to increased demand for event technology services at hotels and convention centers as the U.S. travel and hospitality industry continues to recover from COVID-19.

(7)     The $4.2 million increase in watersports, ferry and excursion services revenue is due to $572,000 in revenue from RED’s expansion in the Turks and Caicos Islands in the 2021 quarter and increased demand for RED’s recreational services as the U.S. travel and hospitality industry continues to recover from COVID-19.

(8)     The decrease in debt placement and related fee revenue is due to higher revenue of $117,000 from Ashford Trust offset by lower revenue of $910,000 from Braemar. Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services. The change is primarily due to Lismore’s agreement with Ashford Trust for providing modifications, forbearances or refinancing of Ashford Trust’s loans as a result of the financial impact from COVID-19. Lismore’s agreement with Braemar expired in March 2021.

(9)     Claims management services include revenue earned from providing insurance claim assessment and administration services to Ashford Trust and Braemar.

(10)     The increase in other services revenue is primarily due to higher revenue from Marietta of $1.1 million due to increased room demand. Other services revenue primarily relates to other hotel services provided by our consolidated subsidiaries; OpenKey, PRE Opco, LLC (“Pure Wellness”) and Marietta, to Ashford Trust, Braemar and other third parties.

(11)     The increase in cost reimbursement revenue is primarily due to increased cost reimbursement revenue in the 2021 quarter of $23.6 million from Remington due to increased room demand within the hotel industry compared to the 2020 quarter and increased cost reimbursement revenue of $1.9 million from our REIT Advisory segment related to reimbursable advisory expenses for Ashford Trust and Braemar compared to the 2020 quarter.

(12)     See note 15 to our condensed consolidated financial statements for discussion of segment reporting.

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Salaries and Benefits Expense. Salaries and benefits expense decreased $27,000, or 0.2%, to $13.8 million for the 2021 quarter compared to the 2020 quarter. The change in salaries and benefits expense consisted of the following (in thousands):

			Three Months Ended September 30,
			2021						2020						$ Change
Cash salaries and benefits:
Salary expense			$	9,479					$	7,582					$	1,897
Bonus expense			3,665						4,296						(631)
Benefits related expenses			1,345						1,136						209
Total cash salaries and benefits (1)			14,489						13,014						1,475
Non-cash equity-based compensation:
Stock option grants (2)			552						1,454						(902)
Employee equity grant expense			363						221						142
Total non-cash equity-based compensation			915						1,675						(760)
Non-cash (gain) loss in deferred compensation plan (3)			(1,611)						(869)						(742)
Total salaries and benefits			$	13,793					$	13,820					$	(27)

________

(1)The change in cash salaries and benefits expense is primarily due to fluctuations in the number of employees, salary and bonus awards, group insurance costs, payroll taxes and employee participation in the benefits offered which were reduced as a result of cost control efforts in the 2020 quarter due to COVID-19.

(2)The decrease in stock option grant related expense in the 2021 quarter primarily relates to the Company not issuing any stock option grants during fiscal years 2020 and 2021 (when the Company began to issue restricted stock in lieu of stock options under its equity incentive program).

(3)    The DCP obligation is recorded as a liability at fair value with changes in fair value reflected in earnings. The gain in both the 2021 quarter and the 2020 quarter are primarily attributable to a decrease in the fair value of the DCP obligation. See note 12 to our condensed consolidated financial statements.

Cost of Revenues for Design and Construction. Cost of revenues for design and construction increased $329,000, or 46.8%, to $1.0 million during the 2021 quarter compared to $703,000 for the 2020 quarter. See the discussion of design and construction fees revenue above.

Cost of Revenues for Audio Visual. Cost of revenues for audio visual increased $8.2 million, or 263.2%, to $11.4 million during the 2021 quarter compared to $3.1 million for the 2020 quarter, primarily due to increased demand for event technology services at hotels and convention centers as the U.S. travel and hospitality industry continues to recover from COVID-19.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased $2.0 million, or 20.2%, to $8.1 million for the 2021 quarter compared to the 2020 quarter, primarily due to the write-off of $6.4 million of furniture, fixtures and equipment (“FF&E”) in the third quarter of 2020 related to FF&E formerly leased to Ashford Trust under the Ashford Trust ERFP Agreement upon Ashford Trust’s sale of the Embassy Suites New York Manhattan Times Square and the sale of FF&E in the fourth quarter of 2020 to Braemar for FF&E formerly leased to Braemar under the Braemar ERFP Agreement at the expiration of the lease. Depreciation and amortization expense for the 2021 quarter and the 2020 quarter excludes depreciation expense related to audio visual equipment of $1.2 million and $1.3 million, respectively, which is included in “cost of revenues for audio visual”, and also excludes depreciation expense for the 2021 quarter and the 2020 quarter related to marine vessels in the amount of $262,000 and $201,000, respectively, which are included in “other” operating expense.

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General and Administrative Expense. General and administrative expenses increased $2.0 million, or 36.9%, to $7.6 million for the 2021 quarter compared to the 2020 quarter. The change in general and administrative expense consisted of the following (in thousands):

			Three Months Ended September 30,
			2021						2020						$ Change
Professional fees (1)			$	2,972					$	1,981					$	991
Office expense			2,186						1,545						641
Public company costs			87						51						36
Director costs			337						306						31
Travel and other expense			1,986						1,626						360
Non-capitalizable - software costs			17						31						(14)
Total general and administrative			$	7,585					$	5,540					$	2,045

________

(1)    The increase in professional fees in the 2021 quarter is primarily due to $541,000 of expenses related to Ashford Securities to raise capital in order to grow the Company’s existing and future platforms. Expenses are allocated to the Company per the Amended and Restated Contribution Agreement entered into on December 31, 2020. See note 13 in our condensed consolidated financial statements.

Impairment. During the 2021 quarter, as a result of the strategic rebranding of our segment formerly known as JSAV to INSPIRE, we performed an impairment test and calculated the fair value of our indefinite-lived JSAV trademarks using the relief-from-royalty method which includes unobservable inputs including royalty rates and projected revenues for the time period that the Company is expected to benefit from the trademark. As a result of the evaluation, we recognized intangible asset impairment charges of $1.2 million, which was the full impairment of the indefinite-lived JSAV trademarks within the INSPIRE segment for the 2021 quarter.

Other. Other operating expense decreased $4.4 million, or 48.0%, to $4.8 million for the 2021 quarter compared to the 2020 quarter. The decrease was primarily driven by a loss of $6.4 million due to the write-off of FF&E in the 2020 quarter related to FF&E formerly leased to Ashford Trust under the Ashford Trust ERFP Agreement upon Ashford Trust’s sale of the Embassy Suites New York Manhattan Times Square. The decrease in other operating expense in the 2021 quarter was offset by an increase in operating expenses from RED of $1.8 million compared to the 2020 quarter due to increased demand for RED’s recreational services. Other operating expense includes cost of goods sold, royalties and operating expenses associated with OpenKey, RED, Pure Wellness and Marietta.

Reimbursed Expenses. Reimbursed expenses increased $25.9 million to $54.0 million during the 2021 quarter compared to $28.1 million for the 2020 quarter primarily due to increased hotel management expenses incurred by Remington due to the increase in hotel room demand.

Reimbursed expenses recorded may vary from cost reimbursement revenue recognized in the period due to timing differences between the costs we incur for centralized software programs and the related reimbursements we receive from Ashford Trust and Braemar. Over the long term, these timing differences are not designed to impact our economics, either positively or negatively. The timing differences consisted of the following (in thousands):

			Three Months Ended September 30,
			2021						2020						$ Change
Cost reimbursement revenue			$	54,048					$	28,133					$	25,915
Reimbursed expenses			53,991						28,072						25,919
Net total			$	57					$	61					$	(4)

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities changed $36,000 for the 2021 quarter. See notes 1 and 2 to our condensed consolidated financial statements.

Interest Expense. Interest expense was $1.3 million and $1.3 million for the 2021 quarter and the 2020 quarter, respectively. Interest expense includes interest for the Company’s balances outstanding on our Term Loan Agreement and notes

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payable, lines of credit and finance leases held by our consolidated subsidiaries. See notes 2 and 5 to our condensed consolidated financial statements.

Amortization of Loan Costs. Amortization of loan costs was $78,000 and $86,000 for the 2021 quarter and the 2020 quarter, respectively, related to the notes payable and lines of credit held by our consolidated subsidiaries. See notes 2 and 5 to our condensed consolidated financial statements.

Interest Income. Interest income was $72,000 and $0 for the 2021 quarter and the 2020 quarter, respectively. The increase in the 2021 quarter is primarily due to interest income from Remington’s note receivable from a third party hotel owner. See note 1 to our condensed consolidated financial statements.

Realized Gain (Loss) on Investments. Realized gain on investments was $370,000 and $0 for the 2021 quarter and the 2020 quarter, respectively. The realized gain on investments relates to the sale of an unconsolidated equity investment previously held by Remington accounted for under the equity method.

Other Income (Expense). Other income (expense) was $29,000 of income in the 2021 quarter and $44,000 of expense in the 2020 quarter.

Income Tax (Expense) Benefit. Income tax (expense) benefit changed by $1.9 million, from a benefit of $1.8 million in the 2020 quarter to an expense of $98,000 in the 2021 quarter. Current income tax expense changed by $75,000, from $3.0 million of expense in the 2020 quarter to $3.1 million of expense in the 2021 quarter. Deferred income tax benefit changed by $1.9 million from a $4.8 million benefit in the 2020 quarter to a $2.9 million benefit in the 2021 quarter. The difference in income tax (expense) benefit is related to a change in accrued liabilities and an increase in operations.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in consolidated entities were allocated a loss of $180,000 in the 2021 quarter and a loss of $319,000 in the 2020 quarter. See notes 2, 9 and 13 to our condensed consolidated financial statements for more details regarding ownership interests, carrying values and allocations.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. The redeemable noncontrolling interests were allocated a loss of $13,000 in the 2021 quarter and a loss of $604,000 in the 2020 quarter. Redeemable noncontrolling interests represented ownership interests in Ashford Holdings and certain of our consolidated subsidiaries. See note 1 to our condensed consolidated financial statements. For a summary of ownership interests, carrying values and allocations, see notes 2, 10, and 13 to our condensed consolidated financial statements.

Preferred Dividends, Declared and Undeclared. Preferred dividends increased $777,000, or 9.7%, to $8.8 million during the 2021 quarter compared to $8.0 million for the 2020 quarter, due to the increase in the dividend rate of the Series D Convertible Preferred Stock on November 6, 2020, from 6.59% to 6.99% and due to accumulating and compounding dividends related to undeclared preferred stock dividends. See note 10 to our condensed consolidated financial statements.

Amortization of Preferred Stock Discount. The amortization of preferred stock discount decreased $475,000, or 60.8%, to $306,000 during the 2021 quarter compared to $781,000 for the 2020 quarter, primarily due to the increase in the dividend rate of the Series D Convertible Preferred Stock on November 6, 2020, from 6.59% to 6.99%. See note 10 to our condensed consolidated financial statements.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

The following table summarizes the changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2021 and 2020 (in thousands):

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			Nine Months Ended September 30,																		Favorable (Unfavorable)
			2021						2020												$ Change						% Change
REVENUE
Advisory services fees			$	30,132					$	34,098											$	(3,966)					(11.6)		%
Hotel management fees			18,737						13,592												5,145						37.9		%
Design and construction fees			5,611						7,780												(2,169)						(27.9)		%
Audio visual			28,170						33,758												(5,588)						(16.6)		%
Other			35,899						18,250												17,649						96.7		%
Cost reimbursement revenue			136,079						127,830												8,249						6.5		%
Total revenues			254,628						235,308												19,320						8.2		%
EXPENSES
Salaries and benefits			46,961						43,807												(3,154)						(7.2)		%
Cost of revenues for design and construction			2,812						3,032												220						7.3		%
Cost of revenues for audio visual			22,611						25,872												3,261						12.6		%
Depreciation and amortization			24,454						30,172												5,718						19.0		%
General and administrative			19,444						16,064												(3,380)						(21.0)		%
Impairment			1,160						178,213												177,053						99.3		%
Other			13,428						14,734												1,306						8.9		%
Reimbursed expenses			135,816						127,638												(8,178)						(6.4)		%
Total expenses			266,686						439,532												172,846						39.3		%
OPERATING INCOME (LOSS)			(12,058)						(204,224)												192,166						94.1		%
Equity in earnings (loss) of unconsolidated entities			(160)						301												(461)						(153.2)		%
Interest expense			(3,845)						(3,681)												(164)						(4.5)		%
Amortization of loan costs			(209)						(242)												33						13.6		%
Interest income			207						29												178						613.8		%
Realized gain (loss) on investments			(3)						(386)												383						99.2		%
Other income (expense)			(256)						(499)												243						48.7		%
INCOME (LOSS) BEFORE INCOME TAXES			(16,324)						(208,702)												192,378						92.2		%
Income tax (expense) benefit			1,550						7,404												(5,854)						(79.1)		%
NET INCOME (LOSS)			(14,774)						(201,298)												186,524						92.7		%
(Income) loss from consolidated entities attributable to noncontrolling interests			509						757												(248)						(32.8)		%
Net (income) loss attributable to redeemable noncontrolling interests			208						1,688												(1,480)						(87.7)		%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY			(14,057)						(198,853)												184,796						92.9		%
Preferred dividends, declared and undeclared			(26,001)						(23,800)												(2,201)						(9.2)		%
Amortization of preferred stock discount			(933)						(2,386)												1,453						60.9		%
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS			$	(40,991)					$	(225,039)											$	184,048					81.8		%

Net Income (Loss) Attributable to Common Stockholders. Net loss attributable to common stockholders decreased $184.0 million to a $41.0 million loss for the nine months ended September 30, 2021 (“the 2021 period”) compared to the nine months ended September 30, 2020 (“the 2020 period”) as a result of the factors discussed below.

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Total Revenues. Total revenues increased by $19.3 million, or 8.2%, to $254.6 million for the 2021 period compared to the 2020 period due to the following (in thousands):

			Nine Months Ended September 30,																		Favorable (Unfavorable)
			2021						2020												$ Change						% Change
Advisory services fees:
Base advisory fees (1)			$	29,743					$	33,707											$	(3,964)					(11.8)		%
Incentive advisory fees (2)			—						—												—
Other advisory revenue (3)			389						391												(2)						(0.5)		%
Total advisory services fees revenue			30,132						34,098												(3,966)						(11.6)		%
Hotel management fees:
Base management fees			15,331						13,592												1,739						12.8		%
Incentive management fees			3,406						—												3,406
Total hotel management fees revenue (4)			18,737						13,592												5,145						37.9		%
Design and construction fees revenue (5)			5,611						7,780												(2,169)						(27.9)		%
Audio visual revenue (6)			28,170						33,758												(5,588)						(16.6)		%
Other revenue:
Watersports, ferry and excursion services (7)			18,159						6,734												11,425						169.7		%
Debt placement and related fees (8)			9,802						5,480												4,322						78.9		%
Claims management services (9)			61						184												(123)						(66.8)		%
Other services (10)			7,877						5,852												2,025						34.6		%
Total other revenue			35,899						18,250												17,649						96.7		%
Cost reimbursement revenue (11)			136,079						127,830												8,249						6.5		%
Total revenues			$	254,628					$	235,308											$	19,320					8.2		%
REVENUES BY SEGMENT (12)
REIT advisory			$	49,749					$	53,297											$	(3,548)					(6.7)		%
Remington			131,709						117,715												13,994						11.9		%
Premier			7,421						10,173												(2,752)						(27.1)		%
INSPIRE			28,170						33,758												(5,588)						(16.6)		%
OpenKey			1,436						1,155												281						24.3		%
Corporate and other			36,143						19,210												16,933						88.1		%
Total revenues			$	254,628					$	235,308											$	19,320					8.2		%

________

(1)The decrease in base advisory fee is primarily due to lower revenue of $4.4 million from Ashford Trust offset by higher revenue of $401,000 from Braemar. Advisory fees earned from Ashford Trust excluded $5.4 million of advisory fees that were constrained and deferred as a result of the $29.0 million annual Advisory Fee Cap. The deferred fees are included in deferred income in our condensed consolidated balance sheet. See note 3 of our condensed consolidated financial statements for discussion of the advisory services fees revenue recognition policy.

(2)    In the third quarter of 2020, the Company determined it was no longer probable Braemar would meet the minimum FCCR Condition requirement as stated in the Braemar advisory agreement. As such, the Company did not recognize any incentive fee revenue related to Braemar in the three months ended September 30, 2020 for the 2018 incentive period. The three months ended September 30, 2020 additionally includes a reversal of $339,000 of incentive fee revenue recognized in the first two quarters of 2020 which the Company was no longer able to collect due to Braemar no longer meeting the FCCR

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Condition. Ashford Trust’s annual total stockholder return has not met the incentive fee threshold in any of the annual measurement periods subsequent to the 2016 measurement period. Braemar’s annual total stockholder return did not meet the relevant incentive fee thresholds during the 2020 and 2019 measurement periods.

(3)     Other advisory revenue remained steady. Other advisory revenue from Braemar is a result of the $5.0 million cash payment received upon stockholder approval of the Fourth Amended and Restated Braemar Advisory Agreement in June 2017. The payment is included in “deferred income” on our condensed consolidated balance sheet and is being recognized evenly over the initial ten-year term of the agreement.

(4)     The increase in hotel management fees revenue is primarily due to increases in incentive management fees of $3.0 million and $389,000 from Ashford Trust and Braemar, respectively, and higher base management fees from Ashford Trust and Braemar of $186,000 and $825,000, respectively due to increased room demand within their respective portfolios compared to the 2020 period as the industry recovers from COVID-19.

(5)     The decrease in design and construction fees revenue is due to lower revenue from Ashford Trust and Braemar of $2.8 million and $688,000, respectively, due to reduced capital expenditures as a result of COVID-19, offset by an increase in design and construction fees revenue from third parties of $1.3 million.

(6)     The $5.6 million decrease in audio visual revenue is due to the timing of the arrival of COVID-19 in March 2020 partially offset by a recovery in operations in the second and third quarters of 2021 compared to the second and third quarters of 2020.

(7)     The $11.4 million increase in watersports, ferry and excursion services revenue is due to $572,000 in revenue from RED’s expansion in the Turks and Caicos Islands in the third quarter of 2021 and increased demand for RED’s recreational services in the U.S. Virgin Islands and Key West, Florida as the U.S. travel and hospitality industry continues to recover from COVID-19.

(8)     The increase in debt placement and related fee revenue is due to higher revenue of $5.0 million from Ashford Trust and lower revenue of $703,000 from Braemar. Debt placement and related fees are earned by Lismore for providing debt placement, modification, forbearance and refinancing services. The change is primarily due to Lismore’s agreement with Ashford Trust for providing modifications, forbearances or refinancing of Ashford Trust’s loans due to the financial impact from COVID-19. Lismore’s agreement with Braemar expired in March 2021.

(9)    Claims management services include revenue earned from providing insurance claim assessment and administration services to Ashford Trust and Braemar.

(10)     The increase in other services revenue is primarily due to higher revenue of $1.1 million and $664,000 in the 2021 period from Marietta and Pure Wellness, respectively, due to a recovery in operations in the second and third quarters of 2021 compared to the second and third quarters of 2020. Other services revenue primarily relates to other hotel services provided by our consolidated subsidiaries, OpenKey, Pure Wellness and Marietta, to Ashford Trust, Braemar and other third parties.

(11)     The increase in cost reimbursement revenue is primarily due to a increase in Remington’s cost reimbursement revenue of $8.8 million in the 2021 period due a recovery in operations in the second and third quarters of 2021 compared to the second and third quarters of 2020 and an increase of $552,000 in cost reimbursement revenue in the 2021 period related to reimbursable advisory expenses for Ashford Trust and Braemar. These increases were partially offset by decreases in the 2021 period in our Premier and Corporate and Other segments.

(12)     See note 15 to our condensed consolidated financial statements for discussion of segment reporting.

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Salaries and Benefits Expense. Salaries and benefits expense increased by $3.2 million, or 7.2%, to $47.0 million for the 2021 period compared to the 2020 period. The change in salaries and benefits expense consisted of the following (in thousands):

															Nine Months Ended September 30,
																					2021						2020												$ Change
Cash salaries and benefits:
Salary expense																					$	27,302					$	26,872											$	430
Bonus expense																					11,496						11,874												(378)
Benefits related expenses																					3,968						4,908												(940)
Total cash salaries and benefits																					42,766						43,654												(888)
Non-cash equity-based compensation:
Stock option grants (1)																					2,101						3,146												(1,045)
Employee equity grant expense																					904						573												331
Total non-cash equity-based compensation																					3,005						3,719												(714)
Non-cash (gain) loss in deferred compensation plan (2)																					1,190						(3,566)												4,756
Total salaries and benefits																					$	46,961					$	43,807											$	3,154

________

(1)The decrease in stock option grant related expense in the 2021 period primarily relates to the forfeiture of 98,603 options from the voluntary resignation of Douglas A. Kessler, Senior Managing Director of the Company, in May of 2020 and due to the Company not issuing any stock option grants during fiscal years 2020 and 2021 (when the Company began to issue restricted stock in lieu of stock options under its equity incentive program).

(2)    The DCP obligation is recorded as a liability at fair value with changes in fair value reflected in earnings. The loss in the 2021 period and the gain in the 2020 period are primarily attributable to increases and decreases in the fair value of the DCP obligation, respectively. See note 12 to our condensed consolidated financial statements.

Cost of Revenues for Design and Construction. Cost of revenues for design and construction decreased $220,000, or 7.3% to $2.8 million during the 2021 period compared to $3.0 million for the 2020 period due to reduced capital expenditures by our clients as a result of COVID-19.

Cost of Revenues for Audio Visual. Cost of revenues for audio visual decreased $3.3 million, or 12.6%, to $22.6 million during the 2021 period compared to $25.9 million for the 2020 period, primarily due to the timing of the onset of COVID-19 in March 2020 partially offset by a recovery in operations in the second and third quarters of 2021 compared to the second and third quarters of 2020.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by $5.7 million, or 19.0%, to $24.5 million for the 2021 period compared to the 2020 period, primarily due to the write-off of $6.4 million of FF&E in the third quarter of 2020 related to FF&E formerly leased to Ashford Trust under the Ashford Trust ERFP Agreement upon Ashford Trust’s sale of the Embassy Suites New York Manhattan Times Square and the sale of FF&E in the fourth quarter of 2020 to Braemar for FF&E formerly leased to Braemar under the Braemar ERFP Agreement at the expiration of the lease. Depreciation and amortization expense for the 2021 period and the 2020 period excludes depreciation expense related to audio visual equipment of $3.7 million and $3.7 million, respectively, which is included in “cost of revenues for audio visual” and also excludes depreciation expense for the 2021 period and the 2020 period related to marine vessels in the amount of $728,000 and $453,000, respectively, which are included in “other” operating expense.

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General and Administrative Expense. General and administrative expenses increased by $3.4 million, or 21.0%, to $19.4 million for the 2021 period compared to the 2020 period. The change in general and administrative expense consisted of the following (in thousands):

															Nine Months Ended September 30,
																					2021						2020												$ Change
Professional fees (1)																					$	6,984					$	4,345											$	2,639
Office expense																					6,048						5,490												558
Public company costs																					503						253												250
Director costs																					1,611						1,033												578
Travel and other expense																					4,158						4,779												(621)
Non-capitalizable - software costs																					140						164												(24)
Total general and administrative																					$	19,444					$	16,064											$	3,380

________

(1)    The increase in professional fees in the 2021 period is primarily due to $1.5 million of expenses related to Ashford Securities to raise capital in order to grow the Company’s existing and future platforms. Expenses are allocated to the Company per the Amended and Restated Contribution Agreement entered into on December 31, 2020. See note 13 in our condensed consolidated financial statements.

Impairment. During the 2021 period, as a result of the strategic rebranding of our segment formerly known as JSAV to INSPIRE, we performed an impairment test and calculated the fair value of our indefinite-lived JSAV trademarks using the relief-from-royalty method which includes unobservable inputs including royalty rates and projected revenues for the time period that the Company is expected to benefit from the trademark. As a result of the evaluation, we recognized intangible asset impairment charges of $1.2 million, which was the full impairment of the indefinite-lived JSAV trademarks within the INSPIRE segment for the 2021 period. In the first quarter of 2020, as a result of our reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic, we concluded that sufficient indicators existed to require us to perform an interim quantitative assessment of goodwill and intangible assets. As a result, we recorded goodwill impairment charges of $170.6 million and intangible asset impairment charges of $7.6 million. In total, there were $178.2 million in impairment charges for the 2020 period. See notes 4 and 6 to our condensed consolidated financial statements.

Other. Other operating expense decreased $1.3 million, or 8.9%, to $13.4 million for the 2021 period compared to the 2020 period. The decrease was primarily driven by a loss of $6.4 million due to the write-off of FF&E in the third quarter of 2020 related to FF&E formerly leased to Ashford Trust under the Ashford Trust ERFP Agreement upon Ashford Trust’s sale of the Embassy Suites New York Manhattan Times Square. The decrease in other operating expense in the 2021 period was offset by an increase in operating expenses from RED of $4.9 million compared to the 2020 period due to increased demand for RED’s recreational services. Other operating expense includes cost of goods sold, royalties and operating expenses associated with OpenKey, RED, Pure Wellness and Marietta.

Reimbursed Expenses. Reimbursed expenses increased $8.2 million to $135.8 million during the 2021 period compared to $127.6 million for the 2020 period primarily due to an increase in hotel management expenses incurred by Remington due to a recovery in hotel operations in the second and third quarters of 2021 compared to the second and third quarters of 2020.

Reimbursed expenses recorded may vary from cost reimbursement revenue recognized in the period due to timing differences between the costs we incur for centralized software programs and the related reimbursements we receive from Ashford Trust and Braemar. Over the long term, these timing differences are not designed to impact our economics, either positively or negatively. The timing differences consisted of the following (in thousands):

			Nine Months Ended September 30,
			2021						2020						$ Change
Cost reimbursement revenue			$	136,079					$	127,830					$	8,249
Reimbursed expenses			135,816						127,638						8,178
Net total			$	263					$	192					$	71

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Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities was a loss of $160,000 and earnings of $301,000 for the 2021 period and the 2020 period, respectively. Equity in earnings (loss) of unconsolidated entities primarily represents earnings (loss) in our equity method investment in REA Holdings. See note 2 to our condensed consolidated financial statements.

Interest Expense. Interest expense increased to $3.8 million from $3.7 million for the 2021 period and the 2020 period, respectively, related to increases in our Term Loan Agreement and notes payable, lines of credit and finance leases held by our consolidated subsidiaries. See notes 2 and 5 to our condensed consolidated financial statements.

Amortization of Loan Costs. Amortization of loan costs was $209,000 and $242,000 for the 2021 period and the 2020 period, respectively, related to our Term Loan Agreement and notes payable held by our consolidated subsidiaries. See notes 2 and 5 to our condensed consolidated financial statements.

Interest Income. Interest income was $207,000 and $29,000 for the 2021 period and the 2020 period, respectively. The increase in the 2021 period is primarily due to interest income from Remington’s note receivable from a third party hotel owner. See note 1 to our condensed consolidated financial statements.

Realized Gain (Loss) on Investments. Realized loss on investments was $3,000 and $386,000 for the 2021 period and the 2020 period, respectively. The realized loss on investments for the 2021 period and the 2020 period primarily relates to losses of $378,000 and $386,000, respectively, on shares of common stock of Ashford Trust and Braemar purchased by Remington on the open market and held for the purpose of providing compensation to certain employees. The realized loss on investments for the 2021 period was offset by a gain of $375,000 on the sale of an unconsolidated investment previously held by Remington accounted for under the equity method.

Other Income (Expense). Other expense was $256,000 and $499,000 in the 2021 period and the 2020 period, respectively.

Income Tax (Expense) Benefit. Income tax (expense) benefit changed by $5.9 million, from a $7.4 million benefit in the 2020 period to a $1.6 million benefit in the 2021 period. Current income tax expense changed by $1.9 million, from $5.5 million in expense in the 2020 period to $3.6 million in expense in the 2021 period. Deferred income tax benefit changed by $7.7 million from a $12.9 million benefit in the 2020 period to a $5.2 million benefit in the 2021 period. The difference in income tax (expense) benefit is related to a change in accrued liabilities, increase in operations and a decrease in non-deductible GAAP items, primarily impairment.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. The noncontrolling interests in consolidated entities were allocated a loss of $509,000 in the 2021 period and a loss of $757,000 in the 2020 period. See notes 2 and 9 to our condensed consolidated financial statements for more details regarding ownership interests, carrying values and allocations.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests. The redeemable noncontrolling interests were allocated a loss of $208,000 in the 2021 period and loss of $1.7 million in the 2020 period. Redeemable noncontrolling interests represented ownership interests in Ashford Holdings and certain of our consolidated subsidiaries. For a summary of ownership interests, carrying values and allocations, see notes 2 and 10 to our condensed consolidated financial statements.

Preferred Dividends, Declared and Undeclared. Preferred dividends, declared and undeclared increased $2.2 million to $26.0 million during the 2021 period compared to $23.8 million for the 2020 period, due to the increase in the dividend rate of the Series D Convertible Preferred Stock on November 6, 2020, from 6.59% to 6.99% and due to accumulating and compounding dividends related to undeclared preferred stock dividends. See note 10 to our condensed consolidated financial statements.

Amortization of Preferred Stock Discount. The amortization of preferred stock discount decreased $1.5 million to $933,000 during the 2021 period compared to $2.4 million from the 2020 period, primarily due to the increase in the dividend rate of the Series D Convertible Preferred Stock on November 6, 2020, from 6.59% to 6.99%. See note 10 to our condensed consolidated financial statements.

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LIQUIDITY AND CAPITAL RESOURCES

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, and subsequently spread to other regions of the world, which has resulted in significant travel restrictions and extended shutdown of numerous businesses throughout the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Our clients, Ashford Trust and Braemar, have reported that the negative impact on room demand within their respective portfolios stemming from COVID-19 is significant, which has resulted and is expected to result in significantly reduced occupancy and RevPAR. Furthermore, the prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry has experienced postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, the Company dramatically reduced staffing and expenses at its products and services businesses and at its corporate office. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. In addition, one or more possible recurrences of COVID-19 case surges could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash flow in 2021 and potentially beyond. As a result, in March 2020, the Company amended payment terms pursuant to certain hotel management agreements to better manage corporate working capital, reduced planned capital expenditures, significantly reduced operating expenses and reduced the cash compensation of its executive officers and other employees, including an arrangement pursuant to which Mr. Monty J. Bennett received his base salary in the form of common stock issued under the Company’s 2014 Incentive Plan, as amended. Additionally, the Company did not declare dividends which were due with respect to its Series D Convertible Preferred Stock for the second and fourth quarters of 2020 and the second quarter of 2021. As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021.

During the first quarter of 2021, base salaries for the Company’s executive officers and other employees were restored to pre-reduction levels and the arrangement by which Mr. Monty J. Bennett received his base salary in the form of common stock ended. Additionally, the Company declared $8.4 million in dividends in each of the first and third quarters of 2021 which were due with respect to its Series D Convertible Preferred Stock. The dividends were paid on April 15 and October 15, 2021, respectively.

When preparing financial statements, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In applying the accounting guidance, the Company considered its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its unconditional obligations due over the next 12 months.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in the inability of our portfolio companies to borrow unused amounts under their respective lines of credit. As of September 30, 2021, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements. INSPIRE executed the INSPIRE Amendment on December 31, 2020, which extended the maturity date of the loan and includes a fixed charge coverage ratio covenant which commences with the quarter ending March 31, 2023. On September 22, 2021, the INSPIRE Amendment was further amended to reduce INSPIRE’s requirement to fund an operating reserve account from an initial amount of $3.0 million to $1.0 million. Additionally, INSPIRE’s results from operations exceeded management’s forecast for the third quarter of 2021. Primarily due to these factors, management has determined that INSPIRE is not reliant on Ashford Inc. to make contributions to cover INSPIRE’s interest and upcoming principal payments on its outstanding debt. All such contributions, if needed, are subject to the discretion of Ashford Inc. As such, the Company reclassified $19.3 million of INSPIRE’s outstanding loans from current “notes payable, net” to noncurrent “notes payable, net” in our condensed consolidated balance sheet as of September 30, 2021.

We cannot predict when hotel operating levels at our clients, Ashford Trust and Braemar, will return to normalized levels after the effects of the pandemic subside, whether our clients’ hotels will be forced to shut down operations again or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future. As a result of these factors resulting from the impact of the pandemic, we are unable to estimate future financial performance with certainty. However, based primarily on our assessment of the ability of our key clients, Ashford Trust and Braemar, to pay their obligations to the Company in accordance with the advisory agreements, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Additional factors considered in our assessment include our completed loan amendments, other agreements, our current cash on hand, our forecast

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of future operating results for the next 12 months from the date of this report and the actions we have taken to improve our liquidity. Facts and circumstances could change in the future that are outside of management’s control, such as changes in Ashford Trust’s and Braemar’s financial position and liquidity, additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19, which could subsequently change our assessment. See notes 5 and 13 to our condensed consolidated financial statements.

Loan Agreements—On March 29, 2021, the Company amended its Term Loan Agreement (the “Term Loan Agreement”) with Bank of America, N.A. (as so amended, the “Seventh Amendment”). The Seventh Amendment (a) increases the required amortization rate from 1.25% to 2.50% each quarter commencing July 1, 2021, (b) requires the Company to maintain a minimum liquidity of $15.0 million at all times, including pro forma for preferred dividends, and (c) restricts dividends and stock repurchases, other than preferred dividends, so long as there is no default under the Term Loan Agreement. Principal payment amounts are subject to maintaining a fixed charge coverage ratio below specified thresholds, which if not met, increase the principal payment due each quarter from 2.50% to 5.0% of the outstanding principal balance. Upon signing the Seventh Amendment, the Company made a $5.0 million prepayment to Bank of America, N.A. as consideration for their execution and delivery of the Seventh Amendment. The Company is also subject to certain financial covenants. As of September 30, 2021, our Term Loan Agreement was in compliance with all covenants or other requirements and debt held by our subsidiaries was in compliance with all covenants or other requirements. The Company does not expect our Term Loan Agreement and debt held by our subsidiaries to violate any loan covenants within one year of the issuance of the financial statements. See discussion in “COVID-19, Management’s Plans and Liquidity” above.

Certain segments of our business are capital intensive and may require additional financing from time to time. Any additional financings, if and when pursued, may not be available on favorable terms or at all, which could have a negative impact on our liquidity and capital resources. Aggregate portfolio companies’ notes payable, net was $29.9 million and $29.1 million as of September 30, 2021 and December 31, 2020, respectively. For further discussion see notes 5 and 16 to our condensed consolidated financial statements.

Preferred stock dividends—The Company declared dividends which were due with respect to its Series D Convertible Preferred Stock of $8.4 million for each of the first and third quarters of 2021 which were paid on April 15, 2021 and October 15, 2021, respectively. As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021. All dividends, declared and undeclared, are recorded as a reduction in net income (loss) in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid dividends, declared and undeclared, totaling $33.9 million at September 30, 2021, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.”

The independent members of the Board plan to revisit the dividend payment policy with respect to the Series D Convertible Preferred Stock on an ongoing basis. The independent members of the Board believe that the deferral of certain preferred dividends will provide the Company with additional funds to meet its ongoing liquidity needs.

Each share of Series D Convertible Preferred Stock: (i) has a liquidation value of $25 per share; (ii) accrues cumulative dividends at the rate of: (a) 6.59% per annum until November 6, 2020; (b) 6.99% per annum from November 6, 2020 until November 6, 2021; and (c) 7.28% per annum thereafter; (iii) participates in any dividend or distribution on the common stock in addition to the preferred dividends; (iv) is convertible into voting common stock at $117.50 per share; and (v) provides for customary anti-dilution protections. In the event the Company fails to pay the dividends on the Series D Convertible Preferred Stock for two consecutive quarterly periods (a “Preferred Stock Breach”), then until such arrearage is paid in cash in full: (A) the dividend rate on the Series D Convertible Preferred Stock will increase to 10.00% per annum until no Preferred Stock Breach exists; (B) no dividends on the Company’s common stock may be declared or paid, and no other distributions or redemptions may be made, on the Company’s common stock; and (C) the Board will be increased by two seats and the holders of 55% of the outstanding Series D Convertible Preferred Stock will be entitled to fill such newly created seats. The Series D Convertible Preferred Stock is held primarily by Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, Mr. Archie Bennett, Jr., who is Mr. Monty J. Bennett’s father, one of our other executive officers and several other individuals.

To the extent not paid on April 15, July 15, October 15 and January 15 of each calendar year in respect of the quarterly periods ending on March 31, June 30, September 30 and December 31, respectively (each such date, a “Dividend Payment Date”), all accrued dividends on any share shall accumulate and compound on the applicable Dividend Payment Date whether or not declared by the Board and whether or not funds are legally available for the payment thereof. All accrued dividends shall remain accumulated, compounding dividends until paid in cash pursuant hereto or converted to common shares. See also note 10 to our condensed consolidated financial statements.

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ERFP Commitments—On June 26, 2018, the Company entered into the Ashford Trust ERFP Agreement with Ashford Trust. The independent members of the board of directors of each of the Company and Ashford Trust, with the assistance of separate and independent legal counsel, engaged to negotiate the Ashford Trust ERFP Agreement on behalf of the Company and Ashford Trust, respectively. On January 15, 2019, the Company entered into the Braemar ERFP Agreement (collectively with the Ashford Trust ERFP Agreement, the “ERFP Agreements”) with Braemar. The independent members of the board of directors of each of the Company and Braemar, with the assistance of separate and independent legal counsel, engaged to negotiate the Braemar ERFP Agreement on behalf of the Company and Braemar, respectively. Under the ERFP Agreements, the Company agreed to provide $50 million (each, an “Aggregate ERFP Amount” and collectively, the “Aggregate ERFP Amounts”) to each of Ashford Trust and Braemar (collectively, the “REITs”), respectively, in connection with each such REIT’s acquisition of hotels recommended by us, with the option to increase each Aggregate ERFP Amount to up to $100 million upon mutual agreement by the parties to the respective ERFP Agreement. Under each of the ERFP Agreements, the Company will pay each REIT 10% of each acquired hotel’s purchase price in exchange for FF&E at a property owned by such REIT, which will be subsequently leased by us to such REIT rent-free. Each of the REITs must provide reasonable advance notice to the Company to request ERFP funds in accordance with the respective ERFP Agreement. The ERFP Agreements require that the Company acquire the related FF&E either at the time of the property acquisition or at any time generally within two years of the respective REITs’ acquisition of the hotel property. The Company recognizes the related depreciation tax deduction at the time such FF&E is purchased by the Company and placed into service at the respective REIT’s hotel properties. However, the timing of the FF&E being purchased and placed into service is subject to uncertainties outside of the Company’s control that could delay the realization of any tax benefit associated with the purchase of FF&E.

On March 13, 2020, the Company entered into the Extension Agreement related to the Ashford Trust ERFP Agreement. Under the terms of the Extension Agreement, the deadline to fund the remaining ERFP commitment under the Ashford Trust ERFP Agreement of $11.4 million, was extended from January 22, 2021 to December 31, 2022. As of September 30, 2021, the Company has no remaining ERFP commitment to Braemar under the Braemar ERFP Agreement. See note 8 to our condensed consolidated financial statements.

On April 20, 2021, the Company received written notice from Ashford Trust of Ashford Trust’s intention not to renew the Ashford Trust ERFP Agreement. As a result, the Ashford Trust ERFP Agreement terminated in accordance with its terms on June 26, 2021. The expiration of the Ashford Trust ERFP Agreement will have no impact on the Extension Agreement, which continues in full force and effect in accordance with its terms.

On November 8, 2021, the Company delivered written notice to Braemar of the Company’s intention not to renew the Braemar ERFP Agreement. As a result, the Braemar ERFP Agreement will terminate in accordance with its terms at the end of the current term on January 15, 2022 (the “Expiration Date”). Following the Expiration Date, Braemar and the Company will continue to be parties to the Fifth Amended and Restated Advisory Agreement, dated April 23, 2018, as amended, and the Company will continue to serve as advisor to Braemar.

Other liquidity considerations—On December 5, 2017, the Board approved a stock repurchase program pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, having an aggregate value of up to $20 million. No shares were repurchased under the stock repurchase program during the nine months ended September 30, 2021.

During the first quarter of 2021, we paid the remainder of contingent consideration due to the sellers of BAV in connection with the acquisition of BAV, including $350,000 related to the earn-out which was paid on January 11, 2021, and the final stock collar consideration payments in the amounts of $870,000 and $888,000 which were paid on February 1, 2021 and March 4, 2021, respectively.

In connection with the transactions contemplated by the Credit Agreement, the Company entered into the SNDA with Ashford Trust and Oaktree pursuant to which the Company agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement, (1) prior to the later of (i) the second anniversary of the Credit Agreement and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of the Advisory Fee Cap, (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder, and (3) any payments to Lismore Capital II LLC (formerly known as Lismore Capital LLC) (“Lismore”) in connection with the transactions contemplated by the Credit Agreement. See additional discussion in notes 3 and 13 to our condensed consolidated financial statements.

On October 12, 2021, Ashford Trust entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”) with certain funds and accounts managed by Oaktree Capital Management, L.P., as lenders, and Oaktree, as administrative agent. Amendment No. 1, subject to the conditions set forth therein, among other things, suspends Ashford Trust’s obligation to subordinate fees due under the advisory agreement if at any point there is no accrued interest outstanding or any accrued

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dividends on any of Ashford Trust’s preferred stock and Ashford Trust has sufficient unrestricted cash to repay in full all outstanding loans under the Credit Agreement, as amended.

Additional information pertaining to other liquidity considerations of the Company can be found in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments.”

Sources and Uses of Cash

As of September 30, 2021 and December 31, 2020, we had $40.2 million and $45.3 million of cash and cash equivalents, respectively, and $34.6 million and $37.4 million of restricted cash, respectively. Our principal sources of funds to meet our cash requirements include: net cash provided by operations and existing cash balances, which include borrowings from our existing lending agreements. Additionally, our principal uses of funds are expected to include possible operating shortfalls, capital expenditures, preferred dividends and debt interest and principal payments. Items that impacted our cash flow and liquidity during the periods indicated are summarized as follows:

Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $12.4 million for the nine months ended September 30, 2021 compared to net cash flows provided by operating activities of $44.7 million for the nine months ended September 30, 2020. The decrease in cash flows from operating activities in the nine months ended September 30, 2021 was primarily due to an increase in current “other liabilities” in the nine months ended September 30, 2020 as a result of the transfer of cash from Ashford Trust into a Company escrow account for insurance claims and increased cash payments received as deferred income in the nine months ended September 30, 2020 due to Ashford Trust and Braemar’s respective agreements with Lismore to seek modifications, forbearances or refinancing. The decrease in cash flows from operating activities was also due to the timing of receipt of our receivables from Braemar and third parties and the timing of payments of accounts payable. These decreases in cash flows provided by operating activities were offset by an increase in earnings due to a recovery in operations in the second and third quarters of 2021 and the timing of receipt of our receivables from Ashford Trust in the nine months ended September 30, 2021.

Net Cash Flows Provided by (Used in) Investing Activities. For the nine months ended September 30, 2021, net cash flows used in investing activities were $7.0 million. These cash flows consisted of capital expenditures of FF&E of $3.4 million, capital expenditures of $2.3 million for RED’s marine vessels, the issuance of a note receivable of $2.9 million, purchases of Ashford Trust and Braemar common stock related to Remington’s employee compensation plan of $873,000 and an investment in an unconsolidated entity of $250,000. These were offset by cash inflows of $2.2 million in proceeds received in 2021 from the sale of FF&E to Ashford Trust and Braemar and cash inflows of $535,000 from Remington’s sale of an equity method investment during the period.

For the nine months ended September 30, 2020, net cash flows used in investing activities were $4.8 million. These cash flows consisted of capital expenditures of $2.4 million primarily for audio visual equipment, a $1.3 million working capital payment to the sellers of Remington Lodging related to the acquisition in November of 2019 and $1.2 million of capital expenditures related to marine vessels for RED.

Net Cash Flows Provided by (Used in) Financing Activities. For the nine months ended September 30, 2021, net cash flows used in financing activities were $13.3 million. These cash flows consisted of $8.4 million of payments for dividends on our preferred stock, $7.8 million of payments on notes payable, $255,000 of payments on finance leases, $151,000 of net payments on our revolving credit facilities, purchases of $121,000 of treasury stock and $116,000 of loan cost payments. These were offset by $2.9 million of proceeds from borrowings on notes payable, $367,000 of contributions from noncontrolling interests in a consolidated entity and employee advances of $190,000 associated with tax withholdings for restricted stock vesting.

For the nine months ended September 30, 2020, net cash flows provided by financing activities were $11.5 million. These cash flows consisted of $44.8 million of proceeds from borrowings on notes payable, $457,000 of contributions from noncontrolling interests in a consolidated entity, and employee advances of $79,000 associated with tax withholdings for restricted stock vesting. These were offset by $17.0 million of payments on notes payable, $12.7 million of payments for dividends on our preferred stock, $1.8 million of net payments on our revolving credit facilities, $1.4 million of contingent consideration paid to the sellers of BAV, $637,000 of payments on finance leases, and $290,000 of loan cost payments.

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Seasonality

Quarterly revenues may be adversely affected by events beyond our control, such as the COVID-19 pandemic and government-issued travel restrictions in response, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel and hospitality products and services. To the extent that cash flows from operations are insufficient during any quarter due to temporary or seasonal fluctuations in revenues, we expect to utilize cash on hand or borrowings to fund operations.

Off-Balance Sheet Arrangements

In the normal course of business, we may form or invest in partnerships or joint ventures. We evaluate each partnership and joint venture to determine whether the entity is a VIE. If the entity is determined to be a VIE, we assess whether we are the primary beneficiary and need to consolidate the entity. For further discussion, see note 2 to our condensed consolidated financial statements.

Long-term liability of our subsidiary compensation plan

We do not record on the balance sheet the long-term liability portion of the Ashford Trust and Braemar shares purchased by Remington Lodging on the open market and held for the purpose of providing compensation to certain employees as granted under our subsidiary compensation plan. The long-term liability was $772,000 and $134,000 as of September 30, 2021 and December 31, 2020, respectively.

Contractual Obligations and Commitments

There have been no material changes since December 31, 2020, outside the ordinary course of business, to contractual obligations and commitments included in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Form 10-K.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in our 2020 Form 10-K. There have been no material changes in these critical accounting policies.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our primary market risk exposures consist of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates as well as foreign currency exchange rate risk.

Interest Rate Risk—At September 30, 2021, our total indebtedness of $59.7 million included $55.5 million of variable-rate debt. The impact on our results of operations of a 100 basis point change in interest rate on the outstanding balance of variable-rate debt at September 30, 2021, would be approximately $555,000 annually. Interest rate changes have no impact on the remaining $4.2 million of fixed rate debt.

The amount above was determined based on the impact of a hypothetical interest rate on our borrowings and assumes no changes in our capital structure. As the information presented above includes only those exposures that existed at September 30, 2021, it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.

Foreign Exchange Risk—The majority of our revenues, expenses and capital purchases are transacted in U.S. dollars. INSPIRE has operations in Mexico and the Dominican Republic, and therefore, we have exposure with respect to exchange rate fluctuations. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in our income statement as incurred. We have chosen not to hedge foreign exchange risks related to our foreign currency denominated earnings and cash flows through the use of financial instruments. RED’s operations outside of the U.S. are primarily transacted in U.S. dollars, which is the official currency of the Turks and Caicos Islands.

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ITEM 4.CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the evaluation date, our disclosure controls and procedures are effective (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In June 2020, each of the Company, Braemar, Ashford Trust, and Lismore, a subsidiary of the Company (collectively with the Company, Braemar, Ashford Trust and Lismore, the “Ashford Companies”), received an administrative subpoena from the SEC. The Company’s administrative subpoena requires the production of documents and other information since January 1, 2018 relating to, among other things, (i) related party transactions among the Ashford Companies (including the Ashford Trust Agreement and the Braemar Agreement pursuant to which each of Ashford Trust and Braemar engaged Lismore to negotiate the refinancing, modification or forbearance of certain mortgage debt) or between any of the Ashford Companies and any officer, director or owner of the Ashford Companies or any entity controlled by any such person, and (ii) the Company’s accounting policies, procedures and internal controls related to such related party transactions. In addition, in October 2020, Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, received an administrative subpoena from the SEC requesting testimony and the production of documents and other information substantially similar to the requests in the subpoenas received by the Ashford Companies. The Company and Mr. Monty J. Bennett are responding to the administrative subpoenas.

On December 20, 2016, a class action lawsuit was filed against one of the Company’s subsidiaries in The Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees who were allegedly deprived of rest breaks as a result of the subsidiary’s previous written policy requiring employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees who were not paid for allegedly missed breaks upon separation from employment. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2021, no amounts have been accrued.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters, matters relating to compliance with applicable law (for example, the ADA and similar state laws), and other general matters. The likelihood of loss for these legal proceedings is based on definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow. However, our assessment may change depending upon the development of these legal proceedings, and final results of these legal proceedings cannot be predicted with certainty. If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

ITEM 1A.RISK FACTORS

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner.

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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

The following table provides information with respect to purchases and forfeitures of shares of our common stock during each of the months in the third quarter of 2021:

Period						Total Number of Shares Purchased						Average Price Paid Per Share (1)						Total Number of Shares Purchased as Part of a Publicly Announced Plan (2)						Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock:
July 1 to July 31						200						$	—					—						$	20,000,000
August 1 to August 31						123						$	—					—						$	20,000,000
September 1 to September 30						598						$	—					—						$	20,000,000
Total						921						$	—					—

________

(1) There is no cost associated with the forfeiture of 200, 123, and 598 restricted shares of our common stock in July, August and September, respectively.

(2) On December 5, 2017, the Board approved a stock repurchase program pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, having an aggregate value of up to $20 million. No shares were repurchased under the stock repurchase program during the three months ended September 30, 2021.

ITEM 3.DEFAULT UPON SENIOR SECURITIES

As of September 30, 2021, the Company had aggregate undeclared preferred stock dividends of approximately $25.6 million, which relates to the second and fourth quarters of 2020 and the second quarter of 2021. All dividends, declared and undeclared, are recorded as a reduction in net income (loss) in the period incurred in our condensed consolidated statements of operations. All accrued dividends accumulate and compound until paid in cash or converted into common stock of the Company pursuant to the Certificate of Designation for the Series D Convertible Preferred Stock. Unpaid dividends, declared and undeclared, totaling $33.9 million at September 30, 2021, are recorded as a liability in our condensed consolidated balance sheets as “dividends payable.” As previously disclosed, each share of Series D Convertible Preferred Stock (i) accrues cumulative preferred dividends at the rate of (a) 6.59% per annum until November 6, 2020; (b) 6.99% per annum from the November 6, 2020 until November 6, 2021; and (c) 7.28% per annum thereafter and (ii) will participate in any dividend or distribution on the common stock in addition to the preferred dividends. See note 10 in our condensed consolidated financial statements for a full description of all material terms of the Series D Cumulative Convertible Preferred Stock. The Series D Convertible Preferred Stock is held primarily by Mr. Monty J. Bennett, the Chairman of our Board and our Chief Executive Officer, Mr. Archie Bennett, Jr., who is Mr. Monty J. Bennett’s father, and one of our other executive officers.

ITEM 4.MINE SAFETY DISCLOSURES

None.

ITEM 5.OTHER INFORMATION

None.

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ITEM 6.EXHIBITS

Exhibit						Description
3.1						Amended and Restated Certificate of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.2						Articles of Amendment to the Certificate of Incorporation of Ashford Inc. (incorporated by reference to Exhibit 3.3 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.3						Articles Supplementary establishing the Series B Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.3 of Form 8-K, filed on August 8, 2018) (File No. 001-36400)
3.4						Certificate of Correction, filed on November 4, 2019, to Articles Supplementary establishing the Series B Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.4 of Form 10-Q, filed on November 7, 2019) (File No. 001-36400)
3.5						Articles Supplementary establishing the Series C Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.4 of Form 8-K, filed on August 8, 2018) (File No. 001-36400)
3.6						Amended and Restated Bylaws of Ashford Inc. (incorporated by reference to Exhibit 3.4 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.7						Certificate of Designation of the Series D Convertible Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.2 of Form 8-K, filed on November 6, 2019) (File No. 001-36400)
3.8						Certificate of Designation of Series E Preferred Stock of Ashford Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K, filed on March 16, 2020) (File No. 001-36400)
10.1						Amendment No. 1 to the Third Amended and Restated Limited Liability Company Agreement of Ashford Hospitality Holdings LLC. (incorporated by reference to Exhibit 10.2 of Form 8-K, filed on September 14, 2021) (File No. 001-36400)
10.2						Fourth Amendment to Loan Documents by and among Presentation Technologies, Inc., J & S Audio Visual Communications, LLC, J&S Audio Visual Dominican Republic, LP, J&S DR GP, LLC, PT DR Holdings, LLC, PT Holdco, LLC and Comerica Bank, dated September 22, 2021. (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on September 23, 2021) (File No. 001-36400)
31.1*						Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
31.2*						Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
32.1**						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following materials from the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2021, are formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Equity (Deficit); (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document			Submitted electronically with this report.
101.CAL						Inline XBRL Taxonomy Calculation Linkbase Document			Submitted electronically with this report.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document			Submitted electronically with this report.
101.LAB						Inline XBRL Taxonomy Label Linkbase Document.			Submitted electronically with this report.
101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document.			Submitted electronically with this report.
104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

___________________________________

* Filed herewith.

**Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ASHFORD INC.

Date:

November 12, 2021

By:

/s/ MONTY J. BENNETT

Monty J. Bennett

Chief Executive Officer

Date:

November 12, 2021

By:

/s/ DERIC S. EUBANKS

Deric S. Eubanks

Chief Financial Officer

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